The RFP process has come a long way. Gone are the days of scribbling down a few requirements and choosing the lowest bidder. The evolution of the RFP process, as with many other processes in the procurement field, has proven its value to the procurement function beyond just getting what the company needs.
But let’s be honest, there are still poorly written RFPs released into the wild every day. These ambiguous RFPs happen because a company has mandated the use of a generic template (which reduces the flexibility to remove or add additional information) or it just hasn’t placed a significant emphasis on its RFP process. So, what are the consequences of a poorly written RFP
The consequences of an unclear RFP are many, but let’s look at the top 5.
1. Some Go High, Some Go Low
Nebulous RFPs can leave vendors unable to accurately bid for the required product or service. Some bidders, who foresee an elevated level of risk within an unclear RFP, will submit artificially high bids to cover that risk. Others, seeing an opportunity to recoup profit due to highly probable change orders, will submit exceptionally low bids just to get the business. The wild difference in bids leaves the buyer with an inaccurate view of how much they should budget for their needs.
2. Apples to Oranges
In a similar vein to high and low bids, it is also likely that bidders won’t interpret the organization’s needs the same when looking at a vague RFP. As a result, bidders will make assumptions on what the company is asking for, thus creating incompatible bids. When buyers receive bids that are contradictory, they can’t compare the bids to effectively evaluate the suppliers against each other.
Shhhh, do you hear that? Listen…it’s no bids. Confusing RFPs leave suppliers wary of their ability to meet expectations, keep risk at a minimal level and, most importantly, make a profit. As a result, in some instances, bidders will refrain from bidding altogether. This can be disastrous for a buyer in a time crunch or who needs specific items to continue running the business.
4. You Get What You Didn’t Ask For
Just as buyers will receive incompatible bids, they’ll also receive bids that focus on products and services they didn’t ask for. This is because an unclear RFP will leave requirements up to interpretation, which will ultimately allow for responses that don’t focus on what the buyer wishes to purchase. In this situation, the buyer’s RFP team needs to have a keen eye to ensure that the bid focuses on the correct product or service and mitigates any potential risk of signing a contract for the wrong requirements.
5. … and Now Legal is Involved
And what happens when a contract is signed, the supplier can’t deliver or delivers the wrong thing, and the relationship tanks? The legal department gets involved. In some cases, legal issues can be resolved quickly, but in other cases it could drag on for years. No one wants that headache. Besides, you’ll need your RFP to cover yourself in this type of situation, so it’s best to ensure the document is written clearly and concisely.
Sign up to our newsletter
The web-based RFP Builder automatically populates our market intelligence into easy-to-use templates to help you save time
Webinar: 3 Major Procurement Trends 2019
In 2018, we heard a LOT about tariffs, the blockchain, Brexit, trade wars with China, natural disasters and labor shortages. As we look ahead to 2019, there’s a good chance we’ll continue to hear about those topics. How can you be proactive and tackle these issues head-on? What will really matter to your stakeholders and your supply chain in the coming year?
Webinar: Improve Your RFP Process by Avoiding These 5 Pitfalls
Let’s get back to the basics with 4 Degrees North’s Phil Bode, an expert on how to craft great RFPs. He’ll talk about 5 common pitfalls that are tripping up your process and offer simple, actionable solutions to get you back on track.
Webinar: Tariffs, Trade Wars Supply Chains: How Can Procurement Prepare?
Do you fully understand how tariffs and perceived trade wars will affect your supply chain and your bottom line? Join business analysts from ProcurementIQ as we discuss key takeaways and highlight several strategies buyers can take to minimize the financial impact of the recent tariffs