RFPs seem to go from one extreme to the other, some are a pleasure to work on as the request pack supplied is informative, concise and the request is well articulated. This normally results in all the recipients being completely engaged and on a mission to find the best solution and most suitable pricing for the business. Then there are others that are about as much fun as being strapped down to a dentist chair getting root canal surgery. This is normally a result of inaccurate or missing information or data and the requester has not sufficiently articulated the requirement or use case for the pricing.
Having facilitated and responded to more than my fair share of request for pricing (RFP) tenders over the course of my career I wanted to share some observations, insights and tips with the hope it may help you with your next RFP.
Seek background for context
As a responder to an RFP what gets me engaged the most is the opportunity to learn about another business. Knowing a company’s business model, strategic objectives, supply chain and consumer distribution set up is also very important information to understand how a responder’s business can strategically align. This is most important within an ecommerce environment with logistics & supply chain functions acting as a crucial lifeline for the business. Many of the challenges an ecommerce business will face can be solved here so background info can fill many information gaps and forms important context for the pricing tender.
Being forthcoming with this information may also reduce all the back-and-forth questions from responders and alleviate the need for a Q&A forum which from my experience normally turns into some type of chook raffle!
Responders should be using this information to not only find a rate solution for the request but also look at other potential areas their business could support in the future. The transparency here would also serve as an opportunity to build a rapport with the potential client and they could also highlight the relevant strengths of their business by reciprocating with a background overview of their own within their response.
Articulate a purpose and use case
In my opinion requests for pricing ( RFP) and Request for answers to question ( RFQ) have merged together because in many cases they will yield the same output. A business conducting an RFP also should be open to new ideas and suggestions on solutions and services that will improve cost and efficiencies.
A use case is how the requester currently uses or intends to use the service or product they are seeking pricing. Its important to outline some examples and include workflow or process diagrams of the service and what the key objectives are for the pricing and provide a long term snapshot.
Accurate and detailed data
RFP tenders can quickly become a long-drawn-out project when data is missing or inaccurate. Data is crucial information to support your request as it will form the basis for the rates that are offered it will also help to paint a picture on how your supply chain and distribution operates. Data is even more important when a request will normally result in the responder coming back with a rates for a bespoke solution that is tailored specifically for your business.
Information that are a MUST are normally the basic attributes needed to ascertain the profile and the requirement such as frequency, volumes, origin and destination details, shipment specifications and service level. Ideally the data set should be a full year or 12-month period as this will give a responder a view of any seasonal volume changes throughout the year that can affect the pricing and the reliability of what they can offer.
Share what you're paying
A question I get asked all the time is – should I share what I’m currently paying in the data I supply?
My answer is yes but only if the responder has agreed to conduct a comprehensive analysis of your freight and plan to share their findings with you. Otherwise, a target rate range that meets the budget for your business can be supplied as guide. This way you will weed out the responders early on that can’t get close to the target which avoids wasting each other’s and saving both from the back-and-forth negotiation which will be inevitably disclosed in the closing stages of the RFP anyway.
Be honest, transparent
It’s better to disclose Information that relate to the pricing request. Outline any challenges or pain points and if its an existing service highlight any aspects that you want to improve and the key things about the existing service you are very happy with that you would like to keep. If certain information is not disclosed the pricing supplied by the responding party may be calculated on false pretences which will eventually lead into price adjustments once the service is up and running.
The responder should uphold the same honesty and transparency and highlight areas that are outside their capabilities and provide accurate performance and service metrics on what they are proposing to set the right expectations from the beginning.
Closing notes
The best of data is still the most daunting of tasks to process and respond, that's why we've built an ultra-slick RFP simulator tool (bulk freight assessments) using which anyone can process historical customer bookings / invoices in minutes and overlay it with dynamic pricing strategies in order to create an interactive proposal - instead of sending a vague rate card in excel.
Published on July 15, 2024 • Insights & News