Archive for March, 2018

Do you know how a price index plays into e-procurement best practices?

Thursday, March 29th, 2018

 

Todays post is a repost by Ron Southard, CEO at SafeSourcing Inc.

From a simplistic perspective an index is a system used to make finding information easier. There are any numbers of indexes or indices available to help procurement knowledge workers insure they are sourcing products at the best possible pricing. The key word here is price as what we will be discussing are specifically price indices.

According to Wikipedia a price index (plural: ?price indices? or ?price indexes?) is a normalized average (typically a weighted average) of prices for a given class of goods or services in a given region, during a given interval of time. It is a statistic designed to help to compare how these prices, taken as a whole, differ between time periods or geographical locations.

Price indices have several potential uses. For particularly broad indices, the index can be said to measure the economy’s price level or a cost of living. More narrow price indices can help producers with business plans and pricing. Sometimes, they can be useful in helping to guide investment.

Normally an index reflects the current and historical price of a variety of commodities ranging from metals to grain. A common index used in sourcing petroleum products is OPIS or the Oil Price Information Service which you can learn more about by visiting www.opisnet.com.? However in order to drive the best possible fuel pricing there are other dependencies such as whether you are doing spot buys or bulk purchases and these strategies will determine what specific index you would want to review as well as it?s relation to other product information sources such as Platts or the Gulf Coast spot assessments.? This will put you in a better position to determine how to bid the product and also earn a discount relative to the lowest common denominator.

All other commodities have similar sourcing issues dependant on what the highest cost item is in their product makeup. An example here might be the cost of grain in the feeding of cattle or poultry.

Ask you solution provider to explain these tools to you and to recommend how you might use them toward the best outcome.

If you’d like more information, please contact a SafeSourcing Customer Services Account Manager.

We look forward to and appreciate your comments.

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Growth in the Internet Has Impacted Our Economy

Wednesday, March 28th, 2018

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Today?s post is written by Ivy Ray, Account Manager at?SafeSourcing Inc.

Toys R Us is closing their doors following a disastrous Christmas season. ?Amazon, Walmart and Target all ratcheted up toy discounts during the holidays. ?Toys R Us typically does?well against the competition?between Thanksgiving and Christmas, because of significant inventory offerings and a strategy of selling late at high margins after competitors sell out of ‘hot’ inventory and attracting last-minute shoppers who fear that online deliveries will not be made in time.??This?year, however, was different. ?As a result of a general decline in toy sales, competitors had full product offerings through the end of the holiday season and same-day and two-day delivery guarantees eased customer fears regarding online shopping.

Toys R Us was once king of the toy castle. In the 1990s, it was the biggest toy seller in the US, expanding rapidly as it pushed out smaller chains. But by 1998, things had changed, and Walmart began selling more toys than Toys R Us in the US.

A winner of the Nobel Prize in Economics, Paul Krugman wrote in 1998,??The growth of the Internet will slow drastically,?as?the flaw in ?Metcalfe?s law??the Internet?s impact on the economy has been no greater than the fax machine?s.? ?This seems silly now. ?The Internet has had a major impact on our economy, and the shift has had an effect on everything in the marketplace, from home goods, to auto purchases, and to entertainment.

Most brick and mortar stores have had to recreate themselves to stay in business with the internet competition. ?Even print media is fighting to stay alive in our internet culture. Change is good, if you?re on the right side of it, or if you know when to get ahead of it.

For more information on how SafeSourcing can assist you in exploring your procurement solutions for your business or on our ?Risk Free? trial program,?please contact a SafeSourcing Customer Service Representative.? We have an entire customer services team waiting to assist you today.

We look forward to your comments.

 

References—————————————————-

http://www.businessinsider.com/amazon-walmart-target-killed-toys-r-us-2018-3

http://www.digitaljournal.com/article/346996

 

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New Pollution Laws in China Will Raise Prices of Vinyl Gloves and Cause A Shortage

Tuesday, March 27th, 2018

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Today?s blog is by Ashley Riviello, Account Manager at SafeSourcing.

As China?s pollution levels hit an all-time high, factories are being forced to shut down throughout Northern China. China has depended very heavily on coal to make itself the second-largest economy in the world, United States being number one. With the new pollution laws in China, how is this going to affect our vinyl glove cost and market?

The shortage of vinyl gloves will have a huge impact on the world. China is a major producer of vinyl used in latex-free gloves and in January of 2017, a production ban was imposed on vinyl glove factories due to record levels of air pollution. Vinyl has spiked in price by more than 55?percent?in the past few months, from $946 per ton in September 2017 to $1,500 per ton today.?That is a huge change.?With a minimum of 170 production lines shut down in one area alone, this equals to around 1.7 million cases of disposable gloves.?Longterm, all suppliers of vinyl gloves will be affected. Not only will there be a significant price change in the gloves, there will most likely be a shortage due to production being down. Anyone in the food, medical or surgical markets will be highly affected. Some companies have already started thinking of alternatives for vinyl gloves, such as a higher quality disposable nitrile glove or the octoglove which is a better quality than vinyl at half the price.

As we see the increase in price for vinyl gloves, and the shortage of supply, we will definitely be seeing a huge incline in new and alternative gloves for food and medical markets, most of which will be better quality at a cheaper price. Working with suppliers on a daily basis I would love to see this change and start saving people money, because that?s what SafeSourcing does.

For more information on?how?SafeSourcing?can?help your?procurement efforts,?or?on?our Risk Free trial program,?please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

 

 

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Is your fleet prepared for Vehicle Emergencies

Friday, March 23rd, 2018

 

Today?s post is by Troy Lowe; Vice President of Development at?SafeSourcing.

If you have been driving for a while, you know that unexpected things can happen. ?Most of us spend hours in our cars and don?t think twice about emergencies that can occur while on the road. ?These emergencies may not even involve you and your automobile. ?With all of the traffic and congestion on the roadways, it is possible that you could end up stuck for hours because of bad weather or accidents. ?It is important to be prepared and ready for these unexpected?problems. ?One way to prepare yourself is to have an emergency car kit in all of your vehicles.??These?kits?can be purchased or you can make your own kit stocked with all of the necessary items. ?These emergencies don?t always happen in convenient places where cell phone service is available nor may a tow truck be nearby. Therefore, you need to be prepared for any conditions that may occur. ?Below are some suggested items that you should include in your emergency car kit:

  • Jumper Cables
  • Tool Kit
  • First Aid Kit
  • Fire?Extinguisher
  • Reflective Warning Triangles
  • Tow Strap
  • Foam Tire Sealant
  • Gloves
  • Flashlight
  • Duct Tape
  • Cell Phone Charger
  • Warm Blanket
  • Windshield Ice Scraper
  • Drinking Water
  • Non Perishable Snacks
  • Matches or a Lighter

If you need help?researching emergency kits for?your?vehicles, feel free to contact?SafeSourcing. ? We can gather all the necessary information for you and help you decide which?kit meets your needs. ?If you would like more information on how?SafeSourcing?can help you, please contact a?SafeSourcingCustomer Service representative. ?We have an entire team ready to assist you today.

 

 

 

 

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How Fast Can You Change?

Thursday, March 22nd, 2018

 

Does intelligence = Adaptability?

Today?s post is by Mike Figueroa, Assistant Director of Customer Services at SafeSourcing.

Our CEO Ron Southard has decided to repost this message because if you are not changing you are falling behind. So, how fast can you change? It better be immediately if not faster. And it may be that every associate?needs to think of themselves as?the agent of change both personally, professionally and for their company.?So get cracking because in the time it takes you to read this post you will have lost ground with your competition.

What is?intelligence??Encarta defines it as ?the ability to learn facts and skills and apply them, especially when this ability is highly developed.? Another definition,?famously attributed to Albert Einstein,?is??The measure of intelligence is the ability to change.??If we consider the attributes we typically assign to?intelligence, we can easily see how they all involve change:

  • Learning requires memorizing new information, which requires a change in the structure of the brain.
  • Someone?whose?circumstances demand a change in behavior, is not considered intelligent if they never perform the needed change.
  • A business that adapts and reinvents itself in tandem with its changing environment is considered to be very well-led and innovative.
  • In any career, it?s the dynamic and adaptable people who fill top management. Those who are given new directives and take a long time to enact those changes typically don?t gain traction.

If the ability to change is directly correlated to intelligence, then can a?lack?of intelligence be defined as stagnation??An?inability to adapt and change??In short, yes,?Dr. Edward Miller, CEO of the hospital

at Johns Hopkins University, stated in a 2005 interview,??If you look at people after coronary-artery bypass grafting two years later, 90% of them have not changed their lifestyle.??It?s been well-established in the medical community that even when the threat is?death,?the majority of people will not change previously established bad habits.?Similar findings have been well established in business management studies. The old-school way of thinking is to assume that everyone just needs more threats, pressure, and dire consequences to get moving. But a one size fits all approach has never worked well in managing human beings. The truth has always been that negative pressure leads to?faking?change in order to make the boss, the doctor, the spouse,?etc, happy with what they?re seeing, even though the truth is performance is still severely lacking.

While some amount of negative pressure will always exist, and will always be essential, what?creates?long term change is consistent?benefit?incentives. For example, when people don?t have any hope for the future of their health, their jobs, relationships,?etc, adding pressure that says ?things are just going to get worse if you don?t change??just adds to the hopelessness of the individual, which they interpret as more reason?not?to change. However, when someone is given a compliment at work, starts seeing results from exercise, or getting praise from a spouse, they will often see it as a glimpse into something better that is proven to be attainable.

Once we have created the right environment for change, the hard work of implementation can begin. This implementation has to start with?paying attention. When a new policy shows up on our desk, we have to take it seriously, read it, memorize as much as necessary, and then change our behavior accordingly. When we see something go wrong,?and we don?t change, most people would call that unintelligent.?However, when something goes wrong and change happens quickly, effectively, and long-term, we are certainly displaying intelligent behavior. ?In a world of constant change, the spoils go to the nimble.?1

Please leave a comment or for more information on how SafeSourcing can assist your team with this process or on our ?Risk Free? trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

Referances——————————————————–

  1. https://hbr.org/2011/07/adaptability-the-new-competitive-advantage

 

 

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Spend Visibility ?

Tuesday, March 20th, 2018

 

Today?s post is by Dave Wenig, Vice President of Sales and Services?at SafeSourcing.

How well do you understand your spend??Recently, I have been?having more frequent conversations about?understanding?spend. What has been interesting?lately?is that this question seems to be on the top of the minds of procurement professionals. It seems that, collectively, this topic has had a bit of a renaissance and we will all be better off as a result.?It has always been fairly common that companies don?t have a very clear view into?their spend?and there have been many different approaches on?how to overcome this challenge.?Some set out on a lengthy,?labor-intensive?process, perhaps?turning?to spend cubes and the like.

Regardless of the?method used for analyzing?spend;?there are often some common concerns. One such concern is the time and resources required to complete this analysis. This is particularly true when an organization approaches this task on its own. Another concern is?whether or not?the output of the effort is actionable.

At SafeSourcing, we have?been addressing this question for our clients for years. Our approach is called?SafeSpendAnalysis?. SafeSourcing?s clients that leverage this solution are able to understand?their spend?in just about two weeks.?Better yet, the results of this solution are actionable immediately. SafeSpendAnalysis??analyzes 100% of our clients? spend for a 12-month period and assigns?all vendors into Categories and Subcategories.?SafeSpendAnalysis??also determines?the estimated savings opportunity for each based on?SafeSouring?s extensive category experience and data.

When we review the results with our?clients, we typically spend an entire day onsite meeting with the teams that will benefit from the new information. When that day is done, we have a clear picture of what the top targets are and where to focus. We also typically have over 100 categories identified for eProcurement.

As a result of the SafeSpendAnalysis?, our clients can answer confidently that they understand?their spend?well. Beyond that, they are able to make decisions and take actions to control?their spend.

I?ll ask again ? How well do you understand your spend??For more information, please contact?SafeSourcing.??

We look forward to your comments.

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How are you attacking your shrink?

Thursday, March 15th, 2018

 

Todays post if from Ron Southard, CEO at SafeSourcing Inc.

Shrink never goes down. Read all of the trade rags and the numbers stay pretty constant even with the newest technologies and services offerings. And, turnover is as high as ever so unless you have great awareness campaigns in place problem will just recycle itself.

If you want to have a huge impact and have it immediately, clean out those back rooms and move your overstock items using a forward auction. We all know that with all of the new products, store resets, aged inventory and poor sell through that most backrooms are full of items you did not receive money for. That is also shrink!

The first benefit if this strategy is it will force you to look for it. The second benefit once you find it is that it will reduce your inventory shrink.

Why is it that we never hear of retailers running forward auctions? There are dozens of sources waiting to buy your overstock which all retailers know will reduce shrink and improve bottom line profitability.

If you go to any internet search engine and type in the term overstock, the data returned is in the millions of pages. Many of these links are locations? for Business to Business (B2B) and Business to Consumer (B2C) companies that will gladly agree to participate in e-negotiation events in the form of a forward auction to purchase your overstock or liquidated products for resale through their on line offerings.

Online forward auctions are an ideal way to get the best price for capital equipment, materials, overstock and services you may want to sell, such as when you need to liquidate excess inventory.

There are two basic types of forward auctions. The first is a liquidation auction where sellers are reducing inventory from overstock or liquidation and buyers are seeking to obtain the lowest price for items they have an interest in for resale and other purposes. The second type is more of a marketing auction where sellers are trying to sell unique items and buyers wish to obtain unique items. This is typical of an eBay type of offering.

Much of retail shrink happens in the back room or receiving area of retail stores. It just so happens that this is also the location of much of the overstock in the retail community. Much of this product sits there month after month resulting in significant margin hits to quarterly and annual earnings and as such to a company?s stock price.

Contact a SafeSourcing customer services representative to see how we can help reduce your overstock and shrink with forward auction tools.

We look forward to and appreciate your comments.
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How do you procure?

Wednesday, March 14th, 2018

 

Today?s blog is by Margaret Stewart,?Manager of HR and Administration at SafeSourcing Inc.

Whether for business or personal use, we all procure goods and services we need. Many of us even go further and shop around for what we need, especially if we want a certain quality, price, or customization. But the tools you use and the way you approach obtaining your needs can make a difference in what you pay.

Tools?? First, the tools you use can help you get the results you want. If you need a repair on your car, you?d likely use the tools available to you, such as Yelp or Google reviews and Maps. These tools can provide you nearby mechanics and also let you know?how to get in touch and get pricing. Just like for personal use, there are tools available if your business needs to source a service or good. Tools like contract management and large supplier databases can help your organization find the suppliers that meet your needs and can help monitor agreements you may make.

Partner???Next, getting help from others is highly beneficial in your procurement efforts. For the car repair example above, using a partner could simply mean getting reviews and feedback from other customers or seeking recommendations from people you know. For a business, reaching out to a professional procurement partner can help in a number of ways. They have the experience and know much of the suppliers available for whatever project you need. They can assist with specifications, pricing, and often have sets of tools you may not have had.

Timing???Finally, timing is significant when it comes to your sourcing project. If you need a mechanic in an emergency and the one you chose with the best price and quality isn?t open on weekends, you will have to change plans. Timing your project accurately can help you get the service you want at the time you want. This is the same for your business. If you wait to source your needed goods until your contracts are expired, your current supplier could dramatically raise prices. This could mean paying much more for what you were already getting until your procurement project can be completed.

The way you approach your procurement can affect your pocket in multiple ways. SafeSourcing can be your procurement partner and work with you every step of the way, bringing experience, tools, and dedication to help you get what you need the best way possible.

For more information on?how?SafeSourcing?can?help your?procurement efforts,?or?on?our Risk Free trial program,?please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.

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When should I use a Request for Quote or RFQ

Tuesday, March 13th, 2018

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Today?s post is from Ronald D. Southard, CEO at SafeSourcing Inc.

I?d like to thank my SafeSourcing associates both past and present for their constant quality input to my posts and whitepapers and upcoming book.

The Request for Quote (RFQ)

A Request For Quote is typically used to solicit price and price related details such as freight, that meet minimum quality specifications for a specific quantity of specific goods and/or services. ?RFQs are usually not advertised publicly, and are used commonly for (1) standard, off-the-shelf items, (2) items built to known specifications, (3) items required in small quantities, or (4) items whose purchase price falls below sealed-bidding threshold. Suppliers respond to an RFQ with firm quotations, and generally the lowest-priced quotation is awarded the contract.? 4

Though the above historically represented the industry standard as to what an RFQ was, it is important to expand on each of the points and understand the pieces from a historical and practical standpoint. With online eProcurement tools suppliers have an indication of where they stand and an opportunity to adjust their pricing should they choose. In standard practice this is done by phone calls or e-mails and one at time. As such it is very time consuming and does show some savings, but not nearly the rate of success online tools have historically provided.

Standard, off-the-shelf items. This is a standard misconception of procurement departments everywhere. The fact is that virtually any product or service can be taken through the eRFX process.? Strategic Sourcing solutions providers with extensive global supplier databases can invite a number of new suppliers to participate in the bidding process on whatever items or service may be required.? Many will have some level of experience in successfully participating in eRFX events in a variety of functional areas within the organization such as HR, Marketing, Construction and IT to name a few.

Items built to known specifications. While this is a valid concern, it is also the biggest reason why projects are never taken out to bid; not having specifications or having the time to assemble them. Working with 3rd party procurement solution providers companies are more able to cover all of their needs, taking into consideration all of the moving parts that affect these items. Such as freight, fuel surcharges, additional fees and hourly rates.? Results can be achieved that are comprehensive enough to allow strong decisions once the project has been completed.

Items required in small quantities. Another misconception about RFQs are the quantities of items that can be sourced and duration of time for which those quantities are needed. There should be no limits at all, including number of items to have the suppliers bid on. With that established, however, there are always unique strategies to every event so that the host company can end up with the most complete set of information while allowing suppliers to focus on those areas that need the most attention.? This is part of the service that needs time to be considered as sourcing projects are strategized and developed.

Items whose purchase price falls below sealed-bidding thresholds. The recommended approach for pricing within the RFQ should be analyzed based on the historical spend, also taking into account any price indexes that can affect future pricing increases. Using historical spends and any additional information available, a max quote is often established that the suppliers must meet prior to participation. Setting a price decrement is also strongly recommended, and often plays a key role in the strategy as to how you would like to have the suppliers act, giving them the flexibility to make price adjustments they are comfortable with while driving savings as part of the process.

Understanding the differences between historical RFQ strategies and changes that are resulting in stronger results is the beginning of assembling the right strategy for your project. Strategies that have proven successful in the past generally have similar features in common and drive the two most important aspects of every project; valuable results and supplier participation.

Details, Details, Details- In the RFQ, send an invitation to potential suppliers containing a detailed list or description of all relevant parameters of the intended purchase, such as:

  • Personnel skills, training level or competencies
  • Part descriptions/specifications or numbers
  • Quantities/Volumes
  • Description or drawings
  • Quality levels
  • Delivery requirements
  • Term of contract
  • Terms and conditions
  • Other value added requirements or terms
  • Draft contract

An RFQ event can have many suppliers participating in your project. They will all be actively participating during the RFQ in a preset timeframe, which is usually 15 minutes, but can be adjusted when the line item count grows over 25 items. Within the 15 minutes, suppliers can lower their bid pricing an unlimited amount of times. Like sealed bidding, suppliers cannot see one another?s pricing. There is only one way they know they have a low quote on an items and that is through the use of a low quote indicator when they achieve that milestone by phishing for it.

Missing Pieces– An easy way to establish specifications and develop base pricing is from the RFP responses submitted earlier. Many times a list of suppliers is established that has already been educated on entering pricing through an online sourcing or bidding tool. The RFQ gives the supplier the opportunity within the live event to view whether or not if they have any low quotes and to ?sharpen their pencils? in order to lower their pricing if they wish to do so. From this event an award of business based on the results can be made.

Training and Communication – Suppliers should be trained as to how to use the eProcurement system, how to place their bids, how to look for the low quote indicator, and at the same time communicated with on questions and the pricing and products and services you are looking for. The overall goal is to drive the best overall value, so suppliers should have an opportunity to enter notes within the RFQ during the live event. This additional information often offers additional hidden savings opportunity, i.e. if 1,000 cases are purchased rather than 900 cases, additional discounts, or other value added services such as freight waived for the first 6 months of a 1 year contract if awarded the business. These additional notes can provide and overall benefit, rather than just a low price wins.

Returning to our original RFI example of a company owning a building they intend to repurpose as a Distribution Center, the process began as an RFI in order to understand what was needed so it could be followed by an RFP in order to collect further detailed information and base pricing. These two steps were then followed by an RFQ in order to compress the pricing from suppliers who participated in the RFP and were invited to this final stage. In this last stage running the line items as a complete list of materials rather than an item by item list, total cost of freight, total installation pricing- which could include teardown pricing which could also be listed as its own line item can have great value and provide the opportunity for the suppliers to keep their focus where it is needed rather than on 100?s of individual line items submitted during the RFP. The four items mentioned here represent the largest spend items of the proposal and have the opportunity to lower pricing by 20% or greater from the original RFP pricing.

Determining what stage of the eRFX process to begin with and how to assemble those pieces can be a difficult puzzle to put together especially if a procurement team is already engaged in a myriad of other daily activities. A good Strategic Sourcing solution provider can help put these pieces together in a way that requires less of your company?s time and resources.

For more information on how SafeSourcing can help you through the complex minefield of eRFX strategies, please contact a SafeSourcing Customer Service representative.

We look forward to and appreciate your comments.

Resources————————————————

http://www.businessdictionary.com/definition/request-for-quotations-RFQ.html

 

 

 

 

 

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When should I use a Request for Proposal or RFP

Friday, March 9th, 2018

 

Today?s post is from Ronald D. Southard, CEO at SafeSourcing Inc.

I?d like to thank my SafeSourcing associates both past and present for their constant quality input to my posts and whitepapers and upcoming book.

A Request for Proposal (RFP) is a document used in sealed or electronic bid procurement procedures through which a purchaser advises the potential suppliers of (1) statement and scope of work, (2) specifications, (3) schedules or timelines, (4) contract type, (5) data requirements, (6) terms and conditions, (7) description of goods and/or services to be procured, and (8) instructions for preparation of technical, management, and/or cost proposals. As an example, Government RFPs are publicly advertised and suppliers respond with a detailed proposal, not with only a price quotation. They provide clearly quoted specifications for negotiations after sealed proposals are opened, and the award of contract may not necessarily go to the lowest bidder.2

Breaking down each of these 8 pieces of information will help to form an understanding as to whether there is enough detail to move straight to an RFP,? thus skipping the Request For Information altogether.

Scope of Work: This refers to all of the elements that should be included in the proposal for the project and is generally specific to each customer along with the data and metrics provided to shape it. Simply, this is the definition of the needs and expectations for the work needing to be completed.

Specifications: ?An exact statement of the particular needs to be satisfied, or essential characteristics that a customer requires (in a good, material, method, process, service, system, or work) and which a vendor must deliver. Specifications are written usually in a manner that enables both parties (and/or an independent certifier) to measure the degree of conformance. They are, however, not the same as control limits (which allow fluctuations within a range), and conformance to them does not necessarily mean quality (which is a predictable degree of dependability and uniformity).?3

Generally specifications will be broken into either performance or technical specifications that define the types of goods or services needed from the vendor community. Developing strong specifications ensures proposals containing exactly what is needed. As a result vendors will know not to over bid or under bid.

Schedules or Timelines: This is the time frame of the expectation of when the RFP is sent to the vendors, when questions (about the specifications or the RFP process) are due from the vendors, when the vendors can expect the questions with answers to be returned, and when the RFP is due to be completed.

Contract Type: This defines to the vendor if the contract is a spot buy, a one year, two year, or longer contract. There may also be additional special contractual requirements added within this area.

Data Requirements: This can vary from RFP to RFP, but every project should collect basic information about the vendors such as, their name, address, primary business, who the primary contact will be with their specific contact and other related information, usually a list of 3-5 references and a list of current businesses that are similar in size to the company running the RFP.

 

Terms and Conditions: General and special arrangements, provisions, requirements, rules, specifications, and standards that form an integral part of an agreement or contract.

Description of Goods and/or Services to Be Procured: This description defines what is being requested. It is a bridge between the scope of work and the specifications. This area is typically where vendors are asked to give their proposal of price based on the needs defined and within the guidelines of the specifications.

Instructions for preparation of technical, management, and/or cost proposals: These are the details on how to complete the RFP. Typically the supplier will be given a deadline to complete the RFP, to complete training on how to enter Responses and Pricing, and the additional information the customer may need as supplemental documentation and how to submit that information.

In the example I used in the RFI section, (Owning a new or used facility and turning it into a distribution center) It may be known where the racking should be located, how much racking is required (this would include a set materials listing), the details of labor to install new materials and remove and re-rack another area. All of these details are required for the suppliers to bid the job appropriately. Within a very detailed RFP there are fewer chances for over or under bidding from the suppliers. The quality of an RFP is very important to successful project management because it clearly delineates the deliverables that will be required.

The details received from an RFI can be used to build the specifications for an RFP. Multiple suppliers have verified and provided details needed to complete the project. The RFI may also produce details not previously known, for instance in the racking project: if the location is in California or other geographic areas prone to seismic activity a seismic analysis will also be required to complete the work. This can be completed, but for an additional charge from the supplier. Suppliers may all have similar products, but they may not be compatible to other supplier?s materials. In other words, their product will be proprietary and not interchangeable if a repair is required in the future. These details and more need to be inserted into the new RFP.

So how can an RFI be combined with an RFP? If there needs to be a high level of knowledge about a product, project, or service, but the same supplier has been used exclusively for a long period of time and it is unclear as to whom additional sources of supply might be. An RFI could be combined by asking the questions specifically related to the new potential suppliers; who are they, where are they located, what is their business structure, who the contacts are, what areas or locations can they service, what are their references, etc.? Along with the specifications and details of the RFP, an overall picture will develop of who the company is, what they can or cannot provide, and what their pricing structure will be.

With an idea of how to collect information on a project with little initial data through an RFI and details on collecting RFP responses with the known information, the next step is ensure understanding relative to the best value, data and price from the suppliers that can handle the opportunity.

For more information on how SafeSourcing can help you through the complex minefield of eRFX strategies, please contact a SafeSourcing Customer Service representative.

We look forward to and appreciate your comments.

Resources————————————————

  1. http://www.businessdictionary.com/definition/request-for-proposals-RFP.html
  2. http://www.businessdictionary.com/definition/specification-spec.html

 

 

 

 

 

 

 

 

 

 

 

 

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