RFP spam, how to select a procurement outsourcing provider

When you consider outsourcing some or all of your procurement and sourcing operations, don't make your main decision criteria the price of their solution.  You will pay more for it.

I’ve blogged over and over again about a phenomenon I call RFP Spam.  It’s an epidemic continues to plague the procurement profession.  And while most companies are starting to get much more sophisticated with their procurement practices and stopped this horrible practice, we’ve ironically seen a substantial increase of RFP Spam driven by none other than the Procurement BPO providers themselves. 

These RFP Spam distribution companies are in-fact the low-cost Procurement BPO providers that claim to be strategic sourcing professionals.  They're expected to be bringing procurement best practices to the table, drive savings and build better supplier relationships for your organization; but they're in many cases doing exactly the opposite. 

As a brief reminder, “RFP Spam” is the action of really poorly trained procurement practitioners coupled with an outdated 3-bid-and-a-buy purchasing process.  RFP Spam is the act of throwing a few poorly-defined requirements or questions into some type of RFX document, and blasting it to as many info@companyname.com email addresses you can in the hopes of getting “bids” back.   I won’t rehash all the reasons in this blog post on why this practice is terrible, we’ve covered that all in the past.  Just know this, if your procurement organization is relying on RFP Spam as their primary sourcing strategy; you ARE OVERPAYING for the products and services you buy and likely aren’t even using the right supplier partners for your organization.

I’m not going to mix words here.  When you choose your procurement BPO provider primarily on the price of their services; you will be buying a procurement BPO solution that must rely on a low-value, unskilled, untrained workforce that focuses on speed rather than quality.  There is no splitting hairs about this.   You simply cannot get qualified sourcing professionals and sourcing processes at rock bottom prices, even if you look offshore.  

When you do pick your Procurement BPO provider on lowest price, here’s what you can really expect:
  • A couple of real supply chain professionals that will act as your interface; and sit in your strategy meetings; but ultimately are not really involved in the day-to-day execution operations of your outsourcing procurement and sourcing practice.
  • A bunch of tactical workers whose only prior exposure to procurement is a new-employee handbook that defines popular terms like “supplier” and “spend”.
  • A group of people who don’t speak the subject matter language of your stakeholders and only know how to copy and paste requirements they receive into a template or platform and click ‘send’.  So when your marketing folks talk about their Creative Agency, they don’t know how that differs from a Media Buyer; or when IT department defines the amount of core licenses they need, the BPO doesn’t know how that differs from a user license.
  • A procurement BPO solution will also often come bundled with some sort of e-sourcing platform.  It often has lots of bells and whistles and looks great with demo data, but no one really knows how to use properly, it never gets fully implemented, has bad data in it and no one knows how to run a report from it.  Worse; it amplifies the problem of RFP Spam.
  • You’ll most likely get an outsourced sourcing team that does everything in its power to NEVER have a real conversation with a potential supplier.  They simply don’t work the same hours, don’t understand what they’re client is asking for, and are only motivated to check a box that they completed the following steps:
    • (x) Email 3-5 suppliers 
    • (x) Send supplier NDA  
    • (x) Send supplier RFI (transposed from client request) 
    • (x) Send them RFP (generic questions asking for size, location and price)  
    • (x) Avoid verbal communication  
    • (x) Avoid answering custom questions  
    • (x) Compile responses and forward back to stakeholder.

Ultimately, when you pick a Procurement BPO provider on cost, you’ll get a couple of practitioners that loosely know about procurement who will direct large numbers of tactical workers in the most tactical way possible; which is to slap poorly defined business requirements into poorly defined RFP templates or e-sourcing systems... RFP Spam.

Here’s my latest experience that led me to rant about this topic again.  I’ll change some dates and names to protect the innocent.  A case study in low cost procurement business process outsourcing:
  • 11/9/17 We receive an unsolicited email from a very well known Procurement BPO to info@ourcompanyname.com.   It identifies their client (a HUGE tech company) and that they are inviting us to and RFI for “servicetype A”    It explains that a NDA needs to be executed and returned by 11/3/17  (six days prior to the day we received the email).
  • 11/9/17 A follow up email arrives because they forgot to include the NDA in the first one.
  • 11/9/17  Minutes later.  We receive the same original email from a different individual and email address at the BPO
  • 11/9/17 a couple of hours later.  We receive 4 additional emails; from four different emails (people) all the same, except they’ve now changed “servicetypeA” to be B, C, and D respectively.  Note, the services they asked for where all incredibly similar, they were just for different spend categories.
  • 11/9/17  We complete one NDA and return to the original requester.  We explain to the other email requesters that we completed the first NDA already and it should work for all of the RFI requests.
  • 11/13/17 We are instructed by the BPO that we need to complete 4 separate NDAs (that all have the same information in them) if we want to participate.
  • 12/1/17  We are sent a single email with 2 attachments defined as the RFI.   The due date to reply is now established in the email as 11/6/17  (nearly a month before we received the RFI, and before we even got the original NDA request).
  • 12/1/17  Minutes later.   We received an updated email with replacement attachments because the first email still had one of our competitor’s names and information in it.
  • 12/1/17  Upon exploring the RFI, its not an RFI at all. Its just an RFQ.  They don’t want any information, just a price. Instead it’s a simple document that has a hyperlink to a service offering on our website.   It then asks us for the per user licensing cost for a subscription that that service.  (For reference purposes, that service they link to isn’t a subscription service, user based service; and isn’t offered under a licensing agreement.)
  • In the document itself, which was created on 11/27, it lists the due date of the RFI response as 11/7. As an aside, they also note NOT to include any supporting documentation and they never even really defined what they are looking for.  

So there you have it, that’s what the other side (your potential suppliers) see when you engage a low-cost BPO provider to take over your sourcing.   This is just one example, we have many more, and some they are way more comical.   Let me know if you’d like to see more.

So, in summary, when you are trying to decide on who to outsource all (or a portion of) your Procurement to, think about the total cost to your organization.  Don’t just focus on the cost of their service or solution; think about what you’ll be paying to your suppliers and if you really think your chosen BPO can find you the right suppliers at the best price.  

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William Dorn

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