Requests for proposals are commonly used by various businesses to obtain materials, products, and services needed to operate. However, the system involved is confusing for most people, as there is no one, standardized way to create an RFP. However, there are basic guidelines every company can use to create RFPs that work.
What Is an RFP?
While the answer may appear obvious on the surface, things are not always as clear and concise as people would believe. In its basic form, an RFP is a questionnaire issued to potential vendors when an organization plans to acquire any goods or services. The questions included must outline the purchaser’s needs and allow enough flexibility to make responding to the questions possible.
The actual RFP process is generally defined as the steps required to select the best vendor for the needed materials or services in a cost-effective manner. That’s a pretty broad definition, but the central idea is clear—the vendor is selected based on the information included in the RFP.
The idea is to select the best vendor, but the “best” isn’t always easy to identify. That’s why industry experts recommend using an RFP process guide to generate the needed documents. However, before the RFP is developed, a great deal of information is required.
Who Is Involved in the Process?
To reach a successful conclusion, numerous people are included in the RFP process. As a rule, the following people will participate in the procurement process.
- The Business Owner or Management Team. Everyone in the business must be on the same page during the RFP process. The goals must be clearly defined, and input from anyone involved should be obtained to ensure the RFP itself is constructed properly, and the wording reflects the company’s needs.
- Procurement Experts. These professionals are crucial, especially for large, complex projects. They review the RFP draft to make sure it is accurate. Once the RFP is completed, the procurement professionals distribute it to vendors and are available to respond to questions or concerns vendors may have. In some cases, outside consultants are called on to ensure the RFP process flows smoothly.
- Vendors. The objective is to obtain bids for goods or services from several potential suppliers. The vendors complete the RFP documents and return them to the issuer for review.
While the process will differ in some ways, the goal is always to find the best prices and purchasing conditions. That’s why producing a quality RFP is crucial.
When are RFPs Used?
RFPs are not required for all purchases. The costs involved wouldn’t make sense for some purchases, as the objective is to cut costs and enhance overall efficiencies within the organization. In other words, reserve the use of RFPs for larger, important purchases. Most organizations determine when RFPs should be used as part of the overall business plan. Usually, purchases over a set amount will require an RFP. However, RFPs may prove indispensable if the business intends to make multiple, smaller purchases from the same vendor on a regular schedule.
Drafting an RFP
Drafting and issuing a quality RFP should never be taken lightly. The document must be carefully crafted to minimize the potential for costly purchasing errors. Businesses that issue RFPs routinely rely on RFP templates to help them organize the information effectively and ensure nothing is omitted. If you’re currently considering issuing an RFP, research the process and take advantage of advice from experts during the process.
