In today's busy world of procurement, a solid eRFx process has become crucial for organizations aiming to streamline their supplier selection and negotiations. Having a solid and well-documented eRFx process encompass several benefits, such as increasing efficiency, cost savings, and enhancing supplier relationships.
Let’s find out what the most common mistakes are that organizations make when they run their RFx projects.
1 - Inadequate Planning
An effective eRFx requires meticulous planning from the start. If you skip or rush through the crucial planning stage, you can come across a host of issues later in the process. Consider avoiding these mistakes during the planning stage:
You Don't Define Objectives
If you don’t establish clear objectives for your eRFx, you simply don’t know what you’re trying to achieve, nor you know how to measure success.
If you want to succeed, you need to clearly define the purpose of the eRFx. Ask yourself the question ”What am I trying to achieve”? Are you looking to reduce costs, consolidate your supply base, improve supplier relations, or enhance product quality? Having well defined objectives from the start is essential to guide your entire eRFx process.
You Don't Have a Realistic Timeline
Setting unrealistic deadlines or simply not providing adequate time for suppliers to reply can lead to rushed submissions and low supplier participation and thereby result in inferior results.
To be successful you need to create a well-structured timeline that includes amongst other things:
- Q&A deadline for suppliers (to ask questions)
- Q&A deadline for buyer (to answer questions)
- eRFx deadline
- Deadline for providing suppliers feedback on their submissions
- Dates for final negotiations
- Contract start date (and duration)
Also, you must ensure that the timeline aligns with your objectives, a potential contract expiry date and the complexity of the eRFx project at hand.
You Engage Stakeholders Inadequately
Neglecting to involve key stakeholders such as end-users, legal, finance and IT, can result in unforeseen eRFx amendments that will lead to supplier frustrations and unnecessary delays.
You should engage stakeholders early in the project to gain much needed insights, set realistic expectations, and secure everyone’s commitment. This input from stakeholders will be invaluable when it’s time to craft the eRFx documents, to evaluate supplier responses, to make the final decision, and to implement the new contract.
There is no Internal Alignment
Failing to align internal teams and departments during the eRFx process can often lead to conflicts and spark confusion.
Your best option is holding cross-functional meetings to ensure everyone is on the same page. Don’t forget to clearly communicate roles, responsibilities, and the overall strategy to avoid any internal conflicts.
No Resource Alignment
If you are dependent on resources from other departments e.g. to draft the specifications, to answer technical questions from suppliers during the eRFx, to test the product/solutions suggested by suppliers, then there needs to be alignment between the resources availability and the timeline set.
Failing to align internal teams and departments during the planning phase will often lead to conflicts and spark confusion.
Your best option is holding cross-functional meetings to ensure everyone is on the same page. Don’t forget to clearly communicate roles, responsibilities, and the overall strategy to avoid any internal conflicts.
2 - Poorly Defined Requirements
For any eRFx project to be successful it also needs a clear and comprehensive set of requirements to go alongside it. Vague or incomplete requirements often can derail the entire project, so make sure you don’t make these mistakes either:
You Provide Unclear Specifications
Providing vague or even ambiguous specifications can lead to supplier misunderstandings and ultimately result in unsatisfactory submissions.
Make sure you invest time in crafting detailed and precise specifications. Try to use industry-standard terminology and go the extra mile and provide examples or visuals to clarify your expectations.
Drafting precise specifications is typically easier for products/services already sourced by your company, it can however be quite difficult for products/services that are new to your business. In such cases, encourage your suppliers to share their ideas and recommendations, consider hosting a supplier forum or workshop, so that you can foster collaboration and learn from them instead of trying to draft specifications for something where you lack basic knowledge.
Disregarding supplier expertise and insights can often become a missed opportunity to benefit from their industry knowledge and innovations.
3 - Not Setting Supplier Evaluation Criteria
Another crucial part of the planning phase is to determine the evaluation criteria you will use to analyze the supplier responses. Avoid the following:
You Establish the Criteria during the eRFx Evaluation
The evaluation criteria should be established prior to the creation of the eRFx, as these should guide the construction of the eRFx. If not established at the beginning, you risk constructing the eRFx in a way that best case will complicate your evaluation and worst case make your evaluation impossible.
You Don't Communicate the Criteria to the Suppliers
It is important to consider whether some/all of the evaluation criteria should be communicated to the suppliers. It is easier for the suppliers to shape their offer if they know what they are being measured on. Is it e.g. 40% quality and 60% price, or it is all about price.
You Quantify the Criteria
It is important to quantify the criteria in order to make a good evaluation after the eRFx deadline. The evaluation will be based on gut feeling, if the criteria has not been made measurable in some way. Several options are available e.g., to segment criteria into Must have vs. Nice to have, and disqualifying suppliers not meeting the Must haves.
Scoring can also be applied in the eRFx making it possible to document the importance of each criteria and the weight of each underlying question, and ultimately score the answer provided by each supplier.
4 - Neglecting Supplier Qualification
Another aspect that is crucial for the success of any eRFx project is ensuring that your selected suppliers meet the necessary qualifications. Avoid making these mistakes if you don’t want to neglect supplier qualification:
You don’t Adequately Qualify Suppliers
Inviting unqualified suppliers to participate in the eRFx has the potential of not only wasting both your time and resources, but also the suppliers.
Therefore consider whether you should implement a prequalification solution, like Scanmarket SRPM, to easily assess suppliers’ financial stability, industry experience, and compliance with regulatory requirements before they have a chance to participate.
An alternative is to divide your eRFx process into multiple steps, where the first step would be a pre-vetting RFI to investigate high level whether the suppliers in question are qualified to participate in the final eRFx. The RFI will therefore focus on a set of must-have qualifications and will serve as a way to shortlist supplier for the final eRFx
You Ignore their Past Performance
If you neglect to review suppliers’ paste performance, you can be inviting underperforming suppliers that are costing your organization a lot of resources and time.
Therefore, make sure to work collect already available internal information to evaluate a supplier’s current or past performance e.g. in terms of quality, delivery accuracy, disputes, customer support etc. This internal analysis could eliminate some suppliers from the further eRFx process, and thereby save you a lot of time.
5 - Ignoring Supplier Collaboration
For an eRFx project to be deemed truly successful it must also go beyond the form of a simple transaction. Successful eRFx projects foster collaboration and build stronger relationships. Here’s what you should do to avoid neglecting supplier collaboration:
You Don't Communicate with Your Suppliers (in a timely manner)
Treating eRFx projects as one-sided business transactions can lead to weak relationships and a panoply of missed opportunities.
It is imperative that you establish open and transparent lines of communication. Encourage your suppliers to seek clarification if needed and provide feedback throughout the entire process. For transparency reasons, make sure to keep the communication within the eRFx tool. If supplier meetings/calls are necessary make sure to document the call in the eRFx project to ensure all details are documented. This is especially important for eRFx projects that stretch over several months.
Neglecting to respond to supplier inquiries or concerns in a timely manner can also damage supplier relationships and hinder the process.
Adopting a solution like Scanmarket eRFx, ensures that you get alerts when any supplier inquiries are created, ensuring that you reply with the necessary promptness and information.
You Don't Invest in Supplier Education
Continuing with an eRFx process that isn’t yielding the desired results despite all evidence, is simply a recipe for disaster.
Be willing to abandon or modify any processes that are consistently failing to deliver the expected outcomes and remember that flexibility is crucial for continuous improvement.
6 - Inflexibility
In the current fast paced and dynamic business environment, flexibility is key. Here are a few more mistakes you must avoid if you want to secure the success of any eRFx project:
You are Resistance to Change
Resistance to modifying your eRFx in response to new information can also lead you to missed opportunities.
WE all hope to construct the perfect eRFx, but should you fail to do this, then quickly embrace change as an opportunity for improvement, instead of postponing the decision to adjust until it is too late.
Continuing with an eRFx project that isn’t yielding the desired results despite all evidence, is simply a recipe for disaster.
Be willing to terminate an eRFx project that is not benefitting the business instead of clinging to a false hope.
In Conclusion
Solid eRFx processes have truly revolutionized procurement and supplier management, offering efficiency, cost savings, and improved relationships with suppliers.
However, organizations must remain vigilant if they want to avoid common mistakes that can undermine the effectiveness of their process. By addressing issues related to planning, requirements, collaboration, communication, qualification, and flexibility you can streamline your eRFx process and ensure they become truly successful.
Remember that an efficient eRFx process not only benefits your organization but also strengthens supplier relationships, ultimately leading to better outcomes for all parties involved.
