Forms used by Purchasing Professionals
In order to manage the need to purchase supplies and services, purchasing professionals utilize certain forms to obtain the internally requested products or services.
Some standard forms you might be familiar with would be: Request for Quotation; Request for Proposal; Invitation to Bid; and there are others.
While most of these procurement forms are relatively straightforward, the Request for Proposal process is a tool that has continued to evolve since its first started to appear in the early ’80’s. Since then RFP’s have become more prevalent, have continued to be refined and in some cases are all some companies issue (not what we recommend). Regardless, companies that purchase goods and services need procurement forms to help manage their business. These forms are needed when your selection criteria might use factors other than price, like service capabilities or technical support.
Role players in an RFP / RFQ
Typically there are 3 or 4 role players when it comes to the RFP or RFQ process. There is a Tenderer aka Bidder / Offeror / Vendor; then there is the Owner which is the parent company — the user or internal department making the request — and last the procurement officer who is the person managing the RFP / RFQ. There are others like the accounting department which will pay the vendor and so on.
Supplier/Vendor: A seller of materials and/or supplies who submits a proposal or quotation on your requirements.
RFQPro is launching a Step by Step Guide which will help you manage the RFP Process from start to finish and best of all it includes each form you would use during each step identified in the process. All these forms will be provided in edit friendly Microsoft word documents. This comprehensive guide and template pack will be provided at a discount to all our subscribers with an additional discount to past or present customers before it is released to the general public. Subscribe and purchase any of our template packs today to receive this bonus.
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