How do you find the right software vendor to support your company’s digitalization? That’s a question that comes up again and again during the many conversations I have had with supply chain directors and executives. In this article, I’ll discuss that classic RFP (Request for Proposal) processes aren’t bringing added value to the selection process. Instead, I’ll make the case for a Request for Understanding instead of drowning potential suppliers in lengthy Excel sheets.
From Excel to understanding
Currently, the classic RFP (Request for Proposal) process often fails to test possible suppliers for a thorough understanding of a requester’s business processes, its market, or its challenges in that market. Important elements in the daily workings of a company get left by the wayside, such as HR problematics, economic macro indicators, or even a basic mapping of the company’s supply chain. Most of the times, the supplier simply has to tick as many boxes as they can in a quite extensive technical Excel file that almost goes as deep as IT programming levels.
In my opinion, this process is quite like picking out a new car without knowing on which roads it’ll have to drive, in what weather and with which kind of driver at the wheel. You might end up trying to cross a desert with a Nascar car that can only turn to the left. That’s why I firmly believe an RFP process should always begin with an RFU, a Request for Understanding.
The Request for Understanding saves time, effort, and money
Typically, an RFP process takes a lot of time and effort. Not only from the requester but also from the potential suppliers. Let’s say a company is looking for a new supply chain management tool. It organizes a lengthy process during which 10 possible suppliers showcase their solution in a 1-day workshop. If you presume that about 30 people/resources take part in each workshop, you have spent 300 labor days on 1 tool! And when you add the follow-up discussions with the short-listed parties, your total RFP costs go through the roof.
Of course, not all of this investment comes from the company requesting the RFP. The potential suppliers also invest time and effort in their proposals. But, in my experience, these costs tend to be added to the eventual contract once the RFP has been won. So, once again, these costs end up on the requester’s table, much like when a tourist during high season has to pay a higher hotel bill to compensate for the empty rooms and lower profits during low season.
In my opinion, you can save a lot of time, effort, and money if you start your RFP process by taking a look at which tool your market competitors are using (vertical approach), and/or what the rest of your supply chain is using (horizontal approach). Perhaps you can even enlist the help of a consultant who has experience in other markets with similar challenges. You might be surprised how much DIY and Food have in common when you look at the shelf-life of, let’s say, sheets of drywall or sweet candies.
Don't choose a tool, pick a partner
At Solventure, we urge our customers to first find a trustworthy partner for their new tool or business transformation. And this trust doesn’t come from a thoroughly filled-in Excel sheet. It comes from hands-on experience and actually talking to the customers of the potential supplier. What are their needs, requests, or challenges whenever they’re working with the supplier? It sounds logical: you don’t, for instance, choose a hotel based on an extensive Excel, that would take way too long. Instead, you ask or read personal reviews from people who actually stayed there to form your opinion.
And only by really getting to know the situation ‘on the ground’ can you get a real understanding of the company you would like to supply with your solution. But I get it, companies writing out RFPs are scared to make mistakes. That’s why most of them hide behind these enormous Excels and hope that they will protect them from making these mistakes. To them, I’d like to say: trust your gut. You’re the best expert on your own company and only you can choose the best partner for your next project.
In the end, the whole RFP process was invented some 15 years ago, and we’ve just been doing the same thing over and over again like a long row of lemmings heading towards a cliff. I think Martijn Lofvers, Chief Trendwatcher Supply Chain Media, said it best:
“To ensure your new software selection is a success, you should approach a small number of vendors – possibly with the help of an independent consultant – with a clearly specified challenge and ask about their functionality, technology, domain expertise, and for references in your own industry. […] If you think you can skip all these steps and simply send a questionnaire about functionality, your RFP will become a ‘Request For Problems’."