Over thousands of sourcing events, Source One's experts have come across every kind of RFP you can imagine. Both designing and responding to these documents, we've helped clients meet their cost reduction goals and identify the signs of a potentially valuable business relationship. Just as importantly, we've also learned when to caution our clients away from a particular organization.
Issuing an RFP - or responding to one - is an organization's opportunity to introduce itself, tell its story, and frame itself as a world-class strategic partner. For some, however, this stage is where they reveal their organization's less-than-ideal qualities. Failure to spot these red flags could leave you locked into a relationship with the absolute wrong organization.
Whether you're composing an RFP response or evaluating responses to your own request, diligence and attention to detail go a long way in avoiding inefficient partnerships and lost savings. Keep an eye out for these warning signs and you'll soon identify an organization worth pledging allegiance to.
RFP Red Flags
Fast-approaching deadlines are a fact of life for most Procurement professionals. Not too many organizations are known for issuing RFPs with long lead times. Typically, organizations expect to receive responses within a month or so of distributing their request. While stressful, this is rarely cause for concern. Occasionally, however, organizations set such tight deadlines that success (for anyone) seems all but impossible.
An unreasonable deadline is more than nuisance, it's an obvious red flag that could suggest one of a few unwinnable scenarios. It's possible, for example, that the company who issued the RFP has already made their decision. With a preferred vendor in mind, they may simply have distributed the document as a formality. Or, worse still, maybe the organization is a disinterested or disorganized one altogether. Regardless, it's rarely worth the and effort to respond to an RFP like this.
Organizations will often supplement their RFPs with samples of their standard contractual clauses. It's a smart move. The RFP issuer can make sure that organizations agree with their terms up-front and avoid wasting time and money negotiating brand new contracts with their selected vendor.
Assessing contractual language, you should pay particular attention to "termination without cause" or "termination for convenience" clauses. These empower the RFP issuer to cut ties with their selected vendor on short notice without providing a legal justification. These clauses aren't always a sign of trouble to come, but you should think hard before bidding on such an RFP. Loop your legal and financial teams into the process. If winning the business would mean making a big investment in new resources, it's very likely not worth the risk.
RFP Response Red Flags
Always evaluate each RFP response for signs that the agency truly understands your organization and its industry. Do their case studies lack specific details, or are they indicative of nuanced understanding and hands-on experience? At the very least, an RFP should suggest the agency did their due diligence and conducted some research.
The agency should not only reveal knowledge, but also express an interest in learning more. In follow-up conversations, their representatives should strive to fully comprehend your organization's processes, methodologies, common pain points, and unique internal culture. This curiosity and proactivity suggest a partner that will engage your organization effectively moving forward.
Failure to Follow Instructions
This one's a no-brainer. If an agency has failed to meet your requirements for an RFP response, it's rarely worth the time to even review what they've submitted. You've settled on your particular guidelines and requirements for a reason. Failure to follow them at this early stage conjures a frightening image of potential non-compliance to come.
Even your dream agency shouldn't get away with ignoring your instructions. If they've disregarded your word limits, they've wasted your time. If they've elected to employ their own format, they've shown themselves to be inflexible. Whatever the situation, it's clear this organization is not worth doing business with.
Formalizing your company's processes for developing RFPs and scorecarding responses is often the first step in identifying red flags before its too late. For some extra help, contact the Strategic Sourcing team at Source One today.