Taking RFQs to the Next Level

In the strategic sourcing process, many buyers believe a complete and thorough RFQ that contains detailed part or service descriptions will help create a more competitive negotiation environment. But to take a RFQ to the next level, it’s important to ensure that it allows suppliers to get a better sense of the buyer’s philosophy and outlook on Spend Management. This might include: • A complete overview of the company and its supplier development programs • A statement that describes the company’s philosophy on the strategic sourcing process and perhaps most important, a reiteration of the factors that the buyer considers to be important when making award decisions (if applicable, particular emphasis should be made that lowest bidder does not necessary win the bid; it's also critical to state that suppliers who submit bids below “cost” will not be considered for future business with the buyer) • A discussion on when, how, and why the buyer uses reverse auctions and other negotiation strategies (this helps explain whether the company takes a partnering view toward their suppliers or a transactional “beat them with a hammer” approach) It’s also critical to provide some history behind the part or service as well as an explanation of why it is now up for bid. In the case of direct materials or industrial MRO, it is also important to include good, clear drawings (especially in the case of build to print parts) – with no markings or identifiers of incumbent suppliers. For build to print parts it is critical to include specific descriptions of tooling requirements, including age, drawings, condition, etc. By providing insight into these areas, it will help suppliers develop a total cost understanding of working with the buyer over the course of the contract. The more comprehensive the RFQ, the more likely it is for suppliers to want to participate and respond. Smaller suppliers with limited staff are hesitant to devote resources to bid development when the information appears sloppy, incomplete or even inaccurate. -Jason Busch

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