A Definition of RFP and RFIs and Their Application to the Procurement Process - Research Paper Example

ID NUMBER ASSIGNMENT “RFP’s are Sick, Not Dead 0 Introduction An RFP can be describes as a solicitation that is made mainly through bidding processes by agencies or companies that are interested in procuring a service or a good to any potential suppliers so that they may submit their business proposals (Lysons & Farrington, 2008). On the other hand, an RFI can be described as an ordinary business process that is meant to collect any written information regarding the capabilities of different suppliers (Bailey, Farmer, Crocker, Jessop and Jones, 2010). This paper describes the potential problems and issues that organizations require to consider when they are making decisions concerning the most appropriate routes for making pre-contract engagements with their suppliers. 2.0 Company Example The St. Paul meeting center that is located in Mississippi uses RFP’s or information to find visitors to their ideal locations that they have established for holding conferences, conventions, trade shows and other similar events. The company’s RFP requires any personal or event information that their customers may require so that can prepare in advance for the meetings. It also contains the preferred contact methods and any other information that the customers may require on their site. The requirements include things like hospitality suite and audio visual requirements and descriptions of the catered dining events among other similar issues (Cendyn, 2012). 3.0 Discussion on the use of RFP’s According to the article, “RFP’s are sick, not dead” some senior representatives who were attending the Business Travel Market session 2012 debated on the issue with some proposing while others were opposing the motion. The critics insisted that RFP’s had been very long and required too many details that were in fact placing heavy burdens on their suppliers with the hope of winning business (Leach, 2012). However, one Bruno Fornasiero who was a global sales optimization director defended the process claiming that the principles behind the processes had remained strong over time though improvements could be made on this process. In his defense, he explained that he had viewed on many occasions RFP’s that asked questions like, “How many key strokes are required to make a booking”. Some other participants like Russell Green, a corporate sales director from the UK & IHG Company strongly resented the traditional processes and advocated for the use of the less official RFI (Request for Information) process. Telefonica’s HR, Sarah-Jayne Aldridge did however support the use of these RFP’s by suggesting that it was the suppliers who did not comprehend the reason some information was required in the RFP’s. According to her this implied that the buyers could not have been aware of some of the practices that were required in the travel markets. She finally suggested that the RFP’s procedure could be improved by having better relations between the suppliers and the buyers. During this meeting, most of the participants consented that the RFP’s do not require to be implemented every year or in similar times of every year. The debate led Jean Squires, who was the Lanyon business development director into concluding that ‘RFP’s were not dead, but sick.’ (Leach, 2012) 4.0 Problems Associated With RFP’s According to previous research, RFP’s do reportedly have many problems that affect the relationship between vendors and buyers when seeking a company’s marketing services. They suggest that RFP’s are good for a business since they enable companies to clearly define what they require while defining them through specifics (Emmett and Crocker, 2005). In writing RFP’s, previous reports indicate that serious errors have been made thereby damaging the relationships that exist between the purchasers and suppliers of various commodities (Rushton, Oxley and Croucher, 2010). For instance, the invitation of vendors to bid for businesses they are really not serious in undertaking for the purposes of making comparisons with the number of in-house bids may bring problems. This is mainly because a lot of resources and time are wasted when undertaking the process since both parties to the process may have to wait for each other’s response (Compton and Jessop, 2009). The requirements of the buyer-to-be in the process may also be tightly defined such that the sellers may be hindered from presenting solutions that are innovative and beyond their customer’s expectations (Jespersen and Skjott-Larsen, 2012). According to previous reports, the making of invitations to vendors who may want to bid prior to meeting them face-to-face may also bring problems to the process (Lysons & Farrington, 2008). These reports indicate that the chemistry that takes place between the two parties prior to the production and judgment of an RFP is vital before any party can begin going through the rigors of this process (Hugo, 2008). The RFP processes have also encountered any problems due to the judgments made on the basis of prices alone. This is because there are other costs that may be incurred during the decision making process and prior to the procurement process (Lysons & Farrington, 2008). The major reason for having an RFP during is the procurement process is to identify any risks or benefits in good time before the actual business can take place (Christopher, 2011). Additional problems may arise in case the RFP does not have specifications of what the customers propose or need to purchase. This may create an uncertainty for a business since it may not be able to ascertain what they are required to do (Rushton and Walker, 2009). According to previous research, RFP’s may be used for the purposes of inquiring about the history of a corporation, their technical capabilities, financial and product information. Problems may arise when the supplier company is unable to respond to the queries which may be forwarded by their prospective customers (Emmett and Crocker, 2008). They may also encounter difficulties if they cannot provide the specifications of various products or services that they are handling to their customers (Emmett and Crocker, 2009). When an RFP is incorrectly written, it may also generate no bids and may result in time wastage for the bidding company. This therefore implies that successful RFP’s should clearly distinguish between what a company needs and what it wants and satisfy the requirements of the bid (Emmett and Crocker, 2010). 5.0 Solutions to the Problems with RFP’s A company that requires some needs should first consider whether they really require undergoing the formal process or writing an RFP so that they may have their needs satisfied (Christopher, 2011). In case the bidding company has a working relationship with other suppliers and know the prices being charged, their services and have knowledge of their activities they do not need to write one (Rushton, Oxley and Croucher, 2010). The company only has to inquire from the suppliers what they should do so that they have their needs addressed adequately. Meeting with the companies that a seller intends to interact with may also go a long way in ensuring that they comprehend their intellectual capital, knowledge and overall skills of handling the business (Compton and Jessop, 2009). Invitations to bid should also be made only to companies that the vendors may be willing to conduct business with. This may help in doing away with the wastage of time and resources that may be used in evaluating the bids presented to the company (Lysons & Farrington, 2008). The different needs of the company should be clearly defined though they should not prescribe their desired solution to the bidders (Christopher, 2011). Vendors should require that the bidders should be innovative or creative enough in addressing their opportunities or challenges. Finally, the decision concerning the winning bids should be based on the overall approaches that a supplier is to use in solving their challenges. They should also consider their creativity in addressing their requirements, their reliability, skills, prices and levels of response (Rushton, Oxley and Croucher, 2010). The selection criterion used in selecting the winning bids should aim at ensuring the company’s needs, wants and challenges have been appropriately met so that they may achieve their objectives in an efficient manner (Rushton, Oxley and Croucher, 2010). Using an RFI may not help in effectively solving the problems that companies are encountering with their RFP’s. This is because RFI’s are not invitations to bid and may also not be binding to any seller or buyer. This implies that they may also lead to an RFP or they may not lead to one (Lysons & Farrington, 2008). The use of an RFI may come when major procurements need to be carried out or where some major requirements for the procurement can be accomplished through different alternative means (Compton and Jessop, 2009). 6.0 Conclusion The paper provided a definition of RFP and RFI’s and their application to the procurement process. It also provided some of the problems encountered through the use of RFP’s, their solutions and the use of an RFI which cannot be substituted for the RFP. This is because it does not create a binding agreement between the vendors and their suppliers. In conclusion, this research may be vital in enabling parties in the procurement process to avoid any foreseeable problems and create successful bids (Lysons & Farrington, 2008). References Bailey, Farmer, Crocker, Jessop and Jones, 2010, Procurement, Principles And Management- 10th Edition, New York, Prentice Hall-Financial Times Press. Cendyn. (2012). Minnesota Meeting Place Event Center: St. Paul Meeting Center Saint Paul Twin Cities MN Area Business Corporation, Retrieved from http://www.stpaulmeetingcenter.com/rfp-rfi/default.asp [Accessed on the 2nd of November]. Christopher, 2011, Logistics And Supply Chain Management, ISBN 10: 0273681761. Compton and Jessop, 2009, The Official Dictionary Of Purchasing And Supply, ISBN 13:9781903500019. Emmett and Crocker, 2005, The Relationship Driven Supply Chain, ISBN 13: 9780273713791. Emmett and Crocker, 2008, Excellence In Supplier Management, ISBN 13: 978190499467. Emmett and Crocker, 2009, Excellence In Inventory Management, ISBN 9781903499337. Emmett and Crocker, 2010, Excellence In Procurement, ISBN 13: 9781903499405. Hugo, 2008, Essentials Of Supply Chain Management, ISBN 10:0471776343. Jespersen and Skjott-Larsen, 2012, Supply Chain Management-Theory And Practice, ISBN 13: 9788763001526. Leach, A, 2012, Supply Management, Retrieved from http://www.supplymanagement.com/2012/rfps-are-sick-not-dead/ [Accessed on the 27th October 2012]. Lysons, K & Farrington, B, 2008, Purchasing And Supply Chain Management, 7th Edition, New York, Prentice Hall-Financial Times Press. Rushton and Walker, 2009, International Logistics And Supply Chain Outsourcing, ISBN 10: 0749448148. Rushton, Oxley and Croucher, 2010, The Handbook Of Logistics And Distribution Management, ISBN 13: 9780749446697. Read More