Most of your business associates are likely aware of the term RFP and what it stands for. They might not understand how it is used by purchasing professionals, however they should know it is a formal procurement document sent out to solicit responses from other businesses or suppliers.
The RFP document is a Request for Proposal form and a company would typically opt to send it out to three or more vendors or suppliers. When issued, it is expected the vendors or suppliers you decide to select or include are qualified to generate a desired response to the Buyer’s needs.
A qualified vendor is often:
1. A supplier you have done business with before
2. One you recently pre-qualified using a formal process
3. They come recommended from other business associates or
4. Have client references you can check
Always narrow your vendor list down to supplier’s you know will submit a quality product and service. It is not considered a best practice to submit requests to vendors which may provide a sub-standard service or poor quality product.
Much is at stake when making a selection Read the rest of this entry
The Art of Negotiating with Suppliers
The art of negotiation comes in useful in many different areas and skilful negotiators will be able to get the very best deals with suppliers leading to larger margins and more profits for your company.
Here are a few tips and tricks to remember when negotiating with suppliers.
1 – Always try to research the costs of the product – if you know how much of a mark-up your supplier has then it can help you to know if you are really getting a good deal. If you know the manufacturing costs it puts you in an even stronger position for negotiation.
2 – Build a rapport with your suppliers in order to negotiate the best deals – be attentive, listen well, respond to any issues they have and work on communication. The better working relationship you have with your suppliers the better arrangements you will be able to negotiate.
3 – Find areas of mutual gain – if you supplier stands firm and won’t budge on price focus on other areas instead. This could be the payment terms, down payments, length of warranty, discounts for volume purchases etc. If you can come up with something which benefits both parties you’re on to a winner.
4 – Get quotes from Read the rest of this entry
Request For Proposals Explained
A request for proposal is a solicitation often made through a bidding process by a company or agency interested in acquiring a service, commodity or asset from a supplier. This document is intended to provoke potential suppliers to submit proposals for the supply of the requested items. An RFP is normally submitted in the early stages of the procurement cycle either at the procurement or at the preliminary study stage and dictates the preliminary requirements for the service or commodity being requested and may also prescribe, to some extent, the exact format and structure the supplier should respond to the request.
Effective request for proposals will typically reflect the plan and long/short term objectives of the business; providing a detailed insight through which the supplier is able to offer a corresponding reply to the request. This form of request is quite similar to a request for information and a request for quotation.
Principally, a request for proposals will:
• Inform the supplier that the organization is looking to purchase services or goods from them and encourages them to Read the rest of this entry
Yes, there are plenty of challenges when generating a RFP and the objective of this series is on How to Improve your RFP and how can we make this task easier for you as the Buyer? Sorry, there is no easy answer with the exception of hiring a third party professional. Yes, you can hire someone to create or write your RFP’s. Sign me up right, as I for one am not a big fan of writing them from scratch, which is why we started offering our forms to Buyers and Suppliers that have similar sentiments. First – few companies have the budget to hire professionals, second – it does defeats the purpose of educating yourself on how to improve your RFP skills (some call it your professional development) and last – your boss might ask what you were hired for…not good!
You can improve your RFP by improving your Read the rest of this entry
Negotiating aka haggling does come easier for some people. For example, my parents are from Europe and although I was born and raised in North America, my family was comfortable negotiating on both major and minor purchases. This was part of their upbringing and they are more accustomed to this form of trade or commerce. As a result of having witnessed this growing up they managed to instill these traits in all their children.
Looking back, after close to 30 years in the Materials Management field, I have come to realize becoming a purchasing agent had much to do with my upbringing. My parents used every opportunity to expose their children to real life financial transactions and nurtured the importance of achieving the best possible product at the best possible price. To be honest, for our family, negotiating an acceptable unit price on a major expenditure was a necessity.
One of these real life transactions — my Father had me actively involved in the negotiation of my first major purchase. An automobile and at the tender age of 16. Yes I had a car, which I bought and paid for with my own hard earned cash!
Watching my Father grind the Car Salesman sitting on the other side of the desk was an experience or life lesson I will never forget. On one side you have an eager yet scared Buyer (me cause I had to make car payments), on the other side is the wily sales manager. Representing the eager buyer was Read the rest of this entry
You want me to do what? You are a Buyer and just received a call or a reminder that an annual review for one of your companies key vendors is due. In your already busy 9-5 schedule you have to find time to crush off an annual vendor performance review, supplier evaluation or supplier scorecard. Whatever your company calls it does not matter, finding the time to establish a vendor rating system and properly evaluate a supplier is the challenge.
In today’s purchasing, the Buyer is responsible for motivating the supplier to improve higher performance levels at a lower cost. To do this, more emphasis is being placed on the relationship, closer cooperation and collaboration or Supply Chain Management. Regardless of the industry you presently represent, completing annual vendor evaluations is a vital part of the supply chain function and having a proven Vendor Rating System will make your life a whole lot easier.
Your rating system will improve each time you complete or apply it. The key is to establish a system, ask the right questions, involve the right user groups and simply start the process. The benefits of improving dialogue, measuring performance will help motivate your suppliers to improve service levels and lower cost. A good vendor scorecard will show the suppliers how their improvements are being effective and will provide an opportunity for the Buyer to compliment the supplier on achievement as well as highlight any downturns on performance.
What do you review and what types of questions you need to ask are all included in our Supplier Evaluation Form so take a minute and check out this preview of our sample scorecard.
Evaluating a Supplier, Sub-Contractor Evaluation, Performing a Site Audit? All of these forms are included in our Mega and Purchasing Manager Packs. How much is your time worth? Let our tools help you hit the ground running.
Detailed previews are available on our Channel– Please Subscribe and Like.