Sending out unsolicited Requests for Proposals is NOT strategic sourcing.
Let me clarify that.
- Inputting someone's email address into your favorite "sourcing system" and letting the system send out the invitation is not strategic sourcing.
- Finding a bunch of addresses of companies in a particular industry, cramming copies of documents into multiple envelopes and mailing them out is not strategic sourcing.
- Filling out a templated email and blasting it to a group of email addresses letting them know that they are going to get an RFP, blasting the RFP, and then sending a follow up email blast asking why they did not fill out the RFP is not strategic sourcing.
- Send an RFX out to companies that do not offer the product or service you are looking to buy is not strategic sourcing.
In fact, I do not think any of the above scenarios even barely qualify for "sourcing", let alone being "strategic".
Causes of "RFP Spamming"
So why do people/companies continue with this practice? There could be several reasons:
- The RFP was just a formality. (the #1 Reason)
The company (or the government agency) already had their selected vendor chosen, but either policy or law dictates that the RFP be sent out. In these cases it is not uncommon to see a RFP that only one company (the incumbant) would qualify for anyhow (see this).
- Over reliance on technology.
Many companies believe that simply because they put some expensive software into the mix that their procurement projects become magically automated.
- Lack of resources
The company simply does not have the peoplepower or technology to properly conduct a sourcing initiative.
- Lack of training
The procurement person (or team) simply does not know better.
- Elitist or entitled attitude
Let's face it, procurement teams sometimes get a "big head", especially when working for the government or a very large corporation. For some reason, some people think that suppliers should be tripping over themselves to win their business and that all of the hard work and effort should be the supplier's responsibility.
Unfortunate, but true, some procurement people are simply lazy, and only want to do the bare minimum to get by.
Now, chances are, if you are reading this blog, you do not fall into the "Laziness" category, so I will not even address that here. But, let's look at the reasons why "RFP Spamming" simply does not work.
The results of "RFP Spamming"
What results can you expect to see from "bulk blasting" of your RFP?
Well, the simple answer is that you can expect to see ZERO results.
You see, just as smart procurement professionals choose their suppliers carefully, smart suppliers choose their customers carefully. Good salespeople and good management teams know that 99.5% of the time an unsolicited RFP that arrives unexpectedly is not going to result in any type of business.
Marketing and sales are NOT fixed costs for businesses. That is to say, good companies do not need always need to spend 19-30% of their revenue on marketing and sales and WILL NOT invest proper resources in responding to an unsolicited request for proposal when they are reasonably confident that they will not actually win the business.
To quote a commenter on another site:
- Blind bids are for suckers
- If you don't have a relationship BEFORE the RFP, you won't have one after
The commenter goes on to suggest that suppliers should make it a condition that in order to respond to a RFP they are guaranteed a pre-brief meeting and a de-brief meeting regardless of the results of the RFP selection. This is a great suggestion, however the procurement team should be the ones initiating these discussions, you should not wait for the supplier to do so.
- Do not rely on your company's Fortune 100 status to make suppliers hungry for your business.
In fact, working for a mega-corporation often is a turn-off to many suppliers.
- Do not rely on your $15,000/month software package to conduct the sourcing event.
Just because you have fancy site that I can log-in to and see your specification, doesn't mean I have the desire to bid, or will even treat your bid seriously.
- Do not rely on your free sourcing software to conduct your sourcing event.
Same as above! We have seen hundreds of procurement professionals complain the sourcing software does not work, when their process has always been to just upload a specification, email it to 30 supplier's email addresses that they have found online and expect results. That is not a weakness of the software, it is a weakness of the process!
Now sure, some of you are going to tell me that the best supplier you ever awarded business to came from a random rfp you shot into their email box. But just think about the other suppliers that did not respond to you. One of them may have been better, but you will never know.
Granted, there a few commodity items out there that a unsolicited spam RFP might actually get you some pricing results, but it will also not provide the supplier the ability to discuss other creative ways to improve your supply chain.Stop the Spam!
- Make Contacts, Make Time - Take time to research your prospective suppliers. Take time to contact your prospective suppliers. Take 10 minutes to speak on the PHONE with prospective suppliers. Make sure your prospective suppliers understand your needs and wants and that they truly do have the opportunity to win your business. Calling a prospective supplier, asking for their email address, and telling them that they are getting a RFP before you hang up, does NOT qualify as taking time to speak with a supplier!
- Training - If you need to learn more about sourcing and procurement in general, and would like formal training on procurement best practices, contact a trusted training partner like Next Level Purchasing
- Get Help - Chances are, you just do not have the resources to conduct strategic sourcing initiatives, if that is the case, get help now, hire a Procurement Service Provider, like Source One.
Just be careful that you do not justify not getting help with any of these excuses.