I hope that you have enjoyed the article, “7 RFP Planning Tips, Part II.”

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Like the first article in this two-part series – “7 RFP Planning Tips, Part I” – this new article was based on a podcast that I did with Bill Dorn, Vice President of Operations for Source One Management Services and the co-author of Managing Indirect Spend: Enhancing Profitability Through Strategic Sourcing.  One of my goals for these podcasts is to get one article’s worth of great material.  However, when I have guest experts as insightful as Bill, I get much more!  Not only did I get two articles worth of great material, I got one additional RFP tip that I’ll share with you on this blog.

So, without further ado, here is the 7th and final RFP tip that came out of the podcast:

RFP Tip #7:  Don’t ask suppliers to pay to participate in your RFP process.  In a disturbing observation, some organizations have been involved in different situations where they have asked suppliers to pay to participate in the organizations’ RFP processes.  “In the most common scenario, a company puts together some type of RFP package, they notify the potential suppliers, and then they tell them they have to go to a particular website or eSourcing platform to retrieve the RFP,” explains Dorn.    “Once there, the supplier is asked to pay a…subscription fee, or a network fee, or a registration fee and that’s anywhere from $50 to $500 just to retrieve the RFP.”  This emerging and disturbing practice violates one of the important principles of good procurement, which is the more competition you have, the lower your prices will be.  So, if you’re reducing your competition because either a supplier may not have the exorbitant amount of money you’re asking for or it’s against their principles to pay it, you’re reducing your competition and as a result you’re not going to be getting the better prices that you would be getting.  If a comparison would be done, I would bet that the revenue that the procurement department brings in with this pay-to-play process is probably dwarfed many times over by the aggregate amount of the higher prices they pay.

 

Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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