What is RFP/RFX?
RFX is an acronym with X as wild card character used to cover different sourcing communications such as Request for proposal (RFP), Request for quotation (RFQ) Request for Information (RFI) etc. e-RFX is the process of automating the purchase activities using web technologies or as an extension of ERP system. The eRFX tools make it easy to manage the to and fro communication between buyer team and multiple suppliers.
How an RFP tool can help you?
Organizations/procurement teams looking for a solid business case for moving to an esourcing solution or to review their procurement policy can keep following points in mind. An RFP tool can help you in many ways as explained below:
Information consolidation – One of the most significant benefits of an RFP tool is the centralized data repository that allows for all of the organization’s supplier and sourcing related information to be stored in one common location and accessed by all relevant organizational stakeholders.
Reusable procurement procedure: Each RFP is unique in its nature; the procurement team is expected to prepare it from scratch, the product specification, item level description are not common; despite there is standard information which is to be attached to each RFP. Writing a business proposal is not so simple, it requires a deeper understanding and the senior management’s intervention is quite high. But wait a minute; has your organization procured a similar service/product earlier? What if you have a standard Request for quote or Request for information templates? What if there are RFP samples from your previous RFP event? Key benefit of erfx tools is their ability to standardize the RFP process and enhance repeatability by displaying/copying past events at click of button.
Objectivity: A day to day challenge for procurement professional is to remain objective. Subjective evaluation can be questioned during audit process. Just because you know a supplier, would perhaps not be a good reason for you to trust his quality. Rather, you can use esourcing tools for an objective evaluation; you can ask questions, queries, information from your potential suppliers and then grade the responses from different suppliers to arrive at a score, making it apple to apple comparison rather than notional decision-making.
Automatic Scoring – Once you have decided the objective criteria and incorporated it into your tool, the tool can automatically calculate the scores and supplier rankings based on pre-defined evaluation criteria. To achieve this, you need to create questions with pre-defined responses to choose from and each choice is tagged to a score making the evaluation completely objective and fool-proof.
Collaboration – Most of the erfx tools have this feature of collaborative authoring and approval workflow. The documents can be saved/shared for review even while it is in “in progress” status, the leadership, financial and approving teams can review and incorporate changes, before sharing with the supplier. Once the RFP is shared with the supplier, it becomes difficult in the manual process to communicate any scope change. The erfx tools make it easy for the buyer, the change are maintained as different versions with track of what has changed and it can be automatically communicated to all stakeholders (suppliers, procurement teams, approvers). For a supplier, the tools works as a replacement of RFP response template; responding in a pre-defined flow of screens and information.
Analytics – What was your maverick spend in last quarter? How much of it was overbilled? Which supplier got maximum business from you in last quarter? How many scope change requests your received after an RFP has been published? All of these and many more such questions might have been a headache for your earlier, but with a structured erfx process being followed diligently across all categories, the answers are just a click away!
Audit – erfx tools keep full audit trail all RFX activities right from specification creation to supplier communication to response timings, evaluation, PO release & so on, making it easy for you to face the audit teams with all the relevant details readily available.
Sourcing Cycle Time Reductions: In an agile supply chain environment as a buyer you are expected to come quickly with your research and best supplier who can deliver a product or services. The information symmetry across supplier, buyer and approvers makes it easy to focus on core issues at hand rather than spending time on non-productive activities like follow-ups clarifications, documentation, etc. Techniques like pre-approved suppliers, standard templates, message boards, auto reminders, auto summarization, etc drastically reduces the turnaround time and enables buyers to full the purchase requisitions on time, every time.
Supplier management made easy: Every supplier is important for you, so what if they did not get the current order. It’s important to keep them engaged; they should understand why they did not get the order. The erfx tools bring the much required objectivity in communication. Supplier need not call you to download their invoices or to check what was their quote or rank on last RFP. They can check their rfp responses anytime by logging into the tool. Moreover, any updates on supplier side like adding more locations for delivery or a new certification that they have got, can be updated immediately by supplier himself and is readily available for buyer to consider for his next RFX.
Understand the Requirements: erfx is beyond just tools. Writing a business requirement document is an evolution process; specifically for a new service or product, your internal teams may come up with loads of suggestions, your suppliers may have lots of queries, the erfx tool helps you organize the chaos smartly and come up with a well drafted requirement document. You can use the tool to first conduct a RFI round for firming up the specifications and other details, and then move to a comprehensive RFP round.
End to end process management: to conclude, an erfx tool helps you be on top of an RFP event, end to end. You can collaboratively create an RFP, get supplier responses in time, do the necessary analysis and award the project quickly to get things moving. Moreover, workflow can be configured for relevant stages with necessary tracking and detailed trail for each and every activity make the review effortless.
An RFP tool brings the process centric purchase approach which institutionalizes the best practices in organization and builds knowledge in the tool to do smart purchasing rather than being dependent on the individual’s skills. People may come and go but the legacy and experience gets added up every time a new event is conducted on the tool.