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It’s the tool that procurement people love to hate: the RFP, a Request for Proposal—along with its cousins, the RFI (Request for Information) and the RFQ (Request for Quote).
Those who love RFPs are usually good at running or assembling them and can tout their many benefits: the risk mitigation, legal protections, standardization of details, and general orderliness. Plenty of procurement pros swear by an RFP when it comes to high-stakes purchases and wouldn’t enter a deal negotiation without one.
Those who hate them argue that they’re costly, time-consuming, stifling on the innovation front, and barely better than running a notice in a printed newspaper. Want to do a deal in 6 weeks, or 6 months? Procurement professionals in the anti-RFP crowd argue that, when you’re running a fast-growing company and need to move quickly, the RFP is simply overkill.
We asked 5 procurement and finance professionals with deep industry expertise whether the RFP still has legs.
“I can assure you the RFP is still very much around and well.”
As a procurement consultant with 18 years in the business, Chandhrika Venkataraman says RFPs have long been the standard. For good reason.
“RFPs were considered the choice for complex bids that balanced deliverables beyond cost,” she says.
Venkataraman began working with RFPs in manufacturing settings and moved on to using them to solve sourcing problems for builders, healthcare clients, and large grocery chains. Sure, there have been changes in the RFP’s format and applicability. But today’s RFPs have evolved into more digital, tech-oriented, user-friendly documents that are easier to turn around.
“I can assure you the RFP is still very much around and well,” she says. “Today, I see RFPs as the norm for several transactional categories especially in indirect procurement, as well as in tech procurement…both suppliers and buyers are very comfortable with RFPs, and I see them continuing to morph but retaining their relevance.”
“Structure is why RFPs are so attractive to procurement. Structure's not a bad thing, but that doesn't mean we can't do a better job using RFPs.”
Another 20-year procurement pro, Philip Ideson has used RFPs in his work for global companies like Visteon, Pfizer, and Ally Financial.
Ideson knows that RFPS have their perks. For most procurement people, they come in handy for managing workload and standardizing policies, processes, systems, and data.
“That structure is why RFPs are so attractive to procurement,” he says.
But the RFP also comes with plenty of baggage.
“Structure's not a bad thing, but that doesn't mean we can't do a better job using RFPs,” he says. “Procurement should always be thinking about how to get the same outputs without throwing out a document to suppliers and waiting for the responses to roll in. In some cases, there is a better way.
Hear more of Ideson’s thoughts in his podcast, here.
“The RFP is not dead—yet. The old-school way of writing and running an RFP is.”
Procurement advocate Katie McEwen worked with procurement teams at large enterprises before she branched out to found her own agency.
Is the RFP dead?
“There’s just one little problem,” she says. Plenty of organizations still have a very detailed and formal selection process. “Running an RFP is a necessary evil for many organizations looking to make a significant investment.”
So, yes and no. “The RFP is not dead—yet,” she says. “The old-school way of writing and running an RFP is. It is like a test created in a silo, addressing a specific problem at a single moment in time.”
As deals involving procurement speed up, elaborate RFPs can seem slower and slower. By the time a deal is done, for example, the circumstances and market conditions the RFP was created in may have already shifted—making the old-school RFP mostly irrelevant.
The traditional RFP needs a revamp, according to McEwen. Most RFPs seem outdated and generic, and fail to identify and communicate exactly what a company is looking for.
RFPs have their place, but for complex services requiring innovation, it's time to explore new avenues.
Her pointers for keeping pace with a fast-changing market:
- Collaborative solution sessions with suppliers
- Pilots to test new concepts
- Agile procurement practices to streamline RFPs
“I'd rather pick vendors based on what my fellow CFOs are using (I trust them) and hire a trusted partner to negotiate on my behalf.”
CJ Gustafson is CFO of the next-generation auto-part ordering platform PartsTech. He’s also author of the newsletter Mostly Metrics.
Gustafson’s particularly tech-savvy vantage point has given him a front-row seat to witness the death of the RFP.
He’s taken dozens of procurement platforms and e-sourcing tools for test drives, so he’s seen firsthand how quickly they streamline supplier selection. The platforms are almost always offering more dynamic and flexible alternatives to the traditional RFP, enabling real-time collaboration with suppliers and quicker response times, he notes.
“RFPs are slow, antiquated processes, dripping in bureaucracy,” he says. “If you work at a startup, you need solutions to your problem today, not in four to six months. I'd rather pick vendors based on what my fellow CFOs are using (I trust them) and hire a trusted partner to negotiate on my behalf.”
“If done correctly and in the right circumstances, RFPs can be great, but many times they are used incorrectly, wasting time and delivering low value.”
Michael Shields is Tropic’s in-house procurement expert and Head of Procurement Strategy. He’s the former Global Head of Procurement at Qualtrics and MX, and he’s run procurement for operations like the global aerospace juggernaut Honeywell.
Shields has worked with—and battled against—RFPs at many of those stops.
“If you are familiar with Dave Ramsey, he basically tells people not to use credit cards. Not because credit cards are bad but because so many people use them incorrectly and they do more harm than good,” Shields says.
“To be clear, I love my credit cards, but I have a similar view on RFPs. If done correctly and in the right circumstances, they can be great, but many times they are used incorrectly, wasting time and delivering low value.”
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