In a recent post on this website (A Powerful RFQ Process for CNC Machine Tools), we looked at the pros of the RFQ (Request for Quote, also called a Request for Proposal) process and how you can execute an excellent RFQ. Philip Ideson recently interviewed Chris Mele, a pricing and RFQ expert at Software Pricing Partners, who explained why Rfqs can be a sore spot for suppliers and lead to pitfalls. Chris offered some amendments to the RFQ process to yield better outcomes for both buyers and sellers.
Snatched Ideas
Picture this: sellers toil away crafting ingenious strategies in response to RFQs, only for buyers to snatch those gems and say, “We’ll handle this in-house.” Sellers grind their teeth at this, feeling like they’ve been played. It’s like that feeling when someone takes a bite of your sandwich without asking – infuriating.
So, sellers often find themselves tip-toeing a tightrope. They’re hesitant about revealing too much in their RFQs because, well, why give away the farm for free? But then, if they hold back too much, their proposals lose their punch. It’s a lose-lose situation, really. “It grates on the seller’s nerves so badly because it feels as if you were taken advantage of” says Chris.
To address this, why not sprinkle some trust into the buyer-seller relationship? Adding a privacy clause for participants’ intellectual property or designing a compensation plan for proposals could do wonders. It’s like saying, “Hey, we respect your brainpower, and we won’t run off with it.”
Selecting the Winning Seller Is Only the Beginning
While announcing the winner for an RFQ feels like a victory lap, it quickly turns into a marathon for sellers. If there has been poor communication between the buyer’s procurement team and their business team, there’s a gap to close. Sellers have to rehash their entire game plan to convince a new set of stakeholders that they’re the real deal. It’s like starting a TV series from the second season – they’ve got some catching up to do.
Questions Shared
RFQs often spill the beans by sharing sellers’ questions with everyone. That’s like sitting in a poker game where your opponent shows their cards to the table. Not cool, right? Chris points out that sharing questions might as well be a gift basket for competitors. If you’ve got a unique edge, do you really want others to peek behind the curtain?
“If you are a leader in your market space and have differentiated value,” Chris said, “we ask questions that are very different. Do you think that we would want our questions to be shared with our direct competitors? It wouldn’t even be worth the risk of giving them a tip off of what we’ve been up to.”
Anonymizing questions might help, but even those can be as distinct as a fingerprint. Maybe it’s time to accept that the playing field was never level, and sharing questions isn’t necessary.
Silencing the Dialogue
RFQs without dialogue are worse for the wear. Sellers are left to make educated guesses, keep their questions to themselves, and essentially play a game of blindfolded darts. And boy, do those assumptions pile up, leading to endless hours of head-scratching.
Chris argues that the best conversations happen after someone’s won the game. But in the equipment procurement world, early dialogues about configurations and support are gold. Dynamic conversations from the get-go lead to better outcomes for everyone involved.
Time to Rethink the RFQ
Maybe it’s time to kick the RFQ model to the curb. Procurement could consider a different approach: engaging with suppliers directly, having real conversations, and structuring the selection process around those talks. Who needs paperwork when you can chat it out?
Chris suggests replacing RFQs with something less acronym-friendly but more seller-friendly – a request for a dynamic discussion. It’s all about pros getting together, respecting each other’s time, and hashing things out.
Sources
The Reimagining the Art of RFP-Possible podcast
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