Dec. 29 2006 12:20 PM

The Request for Proposal (RFP) process is an excellent method to use for selecting vendors and products for many reasons. The equipment in your shop may be outdated and in need of replacement. New software programs may mean a digital solution to a manual process. You may want to analyze whether outsourcing a particular function will bring savings to your company.


No matter what you purchase equipment, software or services how you make the purchase is most important. You can improve your chances for success by following these steps:


  • Conduct research


  • Hold meetings inside and outside of your company


  • Assemble an RFP team


  • Draft and publish the RFP


  • Conduct vendor reviews


  • Call references


  • Compare the bids


  • Award the bid


  • Receive and accept the equipment or service


    It's important to begin by researching the product or service you want to purchase. Conduct an Internet search to find out who offers that product. Check out vendor Web sites and have literature sent to you. Read through publications like Mailing Systems Technology, reviewing both advertisements and articles about the product you're investigating.


    Use trade shows effectively. Visit vendor booths, especially vendors you don't know. Take the time to network with fellow professionals. Find out who's using what vendors and why. Collect business cards and ask permission to follow up with additional questions.


    Next, hold meetings with people inside and outside of your company. Meet with your procurement department to learn the company's procedures for the RFP process. Gather internal customers together and determine their needs and desires. Solicit input from product users, especially if those users are part of your staff.


    Start to meet with potential vendors. Let the salespeople know that you're just beginning the RFP process and are only gathering information at this point. Put together a meeting of your peers from other companies. Conduct a panel-like discussion. Focus on what people have done and what they're planning to do.


    With this information, you're ready to put together an RFP project team. The size of your team will be dictated by the scope of what you want to purchase. The more money being spent and the more departments impacted by your decision, the larger the team should be. Select people who demonstrated interest during the research meetings. Keep the team size manageable, but try not to exclude any particular group.


    You'll definitely want to have representatives from legal and procurement on your team. Depending on the policies of your company, procurement may take the lead role on the project. If equipment or computers are involved, get people from facilities management and information technology on the team. You should also invite the key internal customers impacted by this project. And don't forget the lead operators and programmers that will have to work with the equipment or software you purchase.


    You may want to consider adding an external consultant to the team. An outside voice can be helpful when dealing with internal politics. But don't let the consultant tell you what to purchase. The selection of the software, hardware or service is up to you and your team. The consultant's role should be limited to guiding you through the decision process.


    You're now ready to draft and publish the RFP. Clearly state at the beginning of the RFP what you want to purchase. Stipulate exactly what the product or service must do in order to be considered. Then state what additional capabilities or options are also desired.


    Specify the format the vendors' responses should take. If electronic, identify both the software (e.g., MSWord, Acrobat) and the version (e.g., Windows 2000, Version 5.0). If you prefer hard copy, explain how you want it presented (e.g., stapled, bound) and how many copies you want. Most · importantly, provide a clear deadline for submitting responses with the date and time that the proposal must be received.


    To save time later on, include a copy of your company's standard purchase contract in the RFP. Ensure vendors add any requests for changes to the contract. Have your legal department review the responses to determine if any of the requests represent a serious problem. If you're a small company without a standard contract, ask the vendors to submit their contract with the response. Have your legal department review the contract for any major pitfalls or challenges.


    If you plan on conducting a lease/buy analysis, have the vendors help you out. Require that their bid have both purchase and lease options with a five-year cost-benefit analysis. Make sure the vendor includes any formulas used in their comparisons.


    You should consider holding a vendors' conference after the RFP is published. All vendors are invited to submit questions in writing by a certain date. You'll draft written responses to the questions and invite all participating vendors to one meeting. At the meeting, review the answers one at a time, allowing follow-ups and clarifications at the meeting. This ensures that all vendors receive the same information at the same time and keeps the process open and fair.


    When reviewing vendors, you need to consider more than just the bid. If possible, schedule a team visit to the factory or company headquarters. Think about how you would feel working in that environment. Also, visit customers who are using the equipment or service. Talk directly to the operators and programmers without any sales staff around.


    Bidders should be required to submit references from companies that are similar in size to your company and are using similar, if not the same, equipment or service. Call references and schedule a time to discuss the product and vendor. After the call, send a thank-you e-mail.


    Some questions that should be asked:


  • What specific product or service do they use?


  • How long have they used the product or service?


  • What are their general feelings about the product or service?


  • What are the operator requirements?


  • How is the repair service response time?


  • Have they used a competitor's product or service? Which ones?


  • Why didn't they choose another vendor?


  • What would they have done differently in the bidding or contract process?


  • Is a site visit possible?


    An effective way of comparing bids is to use a scoring chart. A scoring chart provides a practical method of measuring how closely a vendor's bid matches your goals. The chart consists of four columns Topic, Weight Factor, Raw Score and Weighted Score. (A shortened version of a chart to score inserter bids is provided.)


    The first column, Topic, lists those areas and characteristics that you want to use to compare the bids. Weight Factor, the next column, adds a numeric value to represent how important that characteristic is. This chart uses a scale of 1 (low) to 5 (high). The Weight Factor should be established when drafting the RFP. For example, machine speed is somewhat important (3) and machine accuracy is very important (5).


    The vendor's Raw Score is then determined by how well they meet that need. Here, use a broader scale of 1 (low) to 10 (high). The Weighted Score is derived by multiplying the Raw Score by the Weight Factor.


    When the responses are received, distribute blank scoring sheets to the RFP team. Each member should fill out the responses individually to prevent coercion (implied or otherwise) from the senior members of the team. Use an electronic spreadsheet to collect the information and calculate the average scores for each vendor.


    The RFP team then gets together to review the individual and average scores. Discuss any significant variances between scores. For example, one person may score the machine accuracy a "10" and someone else graded it at "4." This point needs to be discussed, opinions considered and, if appropriate, scores adjusted.


    Like price, the score shouldn't be the sole factor in selecting a vendor. Ask legal and procurement to conduct a comparison of the financial status of the top bidders. Review any feedback you received from references, both positive and negative. Request follow-up presentations from the vendors so the RFP team can ask more detailed questions.


    After the team has made a decision, notify the selected vendor and all the competitors. Call each vendor, and briefly explain the rationale for the team's decision. Send an e-mail or letter thanking all vendors for participating in the RFP process. You don't need to defend your decision to a vendor, but remember, you may be doing business with these vendors on another project.


    You've awarded the bid, but you're not done. The contracts will need a final review by legal and procurement. Make sure to include testing as well as delivery dates in the purchase contract, with financial penalties if a vendor fails to meet those dates. For service contracts, include a detailed service level agreement (SLA). The SLA will define mutually accepted measurements and standards. If appropriate, include a section on operator training. Specify the factory and site acceptance standards that must be met before payment is issued.


    Monitor the receiving and acceptance process very closely. Require the vendor to provide proper notification of delivery and installation. This is critical for equipment and software to ensure that the space is prepared or access to systems is available. Don't allow the vendor to leave your site until the installation is completed in accordance with the contract. Meet with the operators to ensure that they're properly trained. Sign the acceptance letter after you've verified that the product is performing to the established standards.


    When the project is complete, conduct an after-action review. Have the team members evaluate the process and the final decision. Encourage an honest discussion on how things could've been improved. Meet with the vendors and get their feedback as well. Share the final report with all members of the RFP team.


    You may want to consider becoming a site-reference for your vendor. If the process went well, the vendor will want to share your story with other prospects. Also, since they know that prospects will be calling you and visiting your site, you can be sure the vendor will pay special attention to your account.


    At times, the RFP process may seem long and tedious. By creating an RFP team and following this process, you'll increase your chances of success when purchasing equipment, software and services. Take your time and build an RFP that works.


    Mark M. Fallon is president and CEO of the Berkshire Company, a consulting firm specializing in mail and document processing strategies. For additional information, visit

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