What is a request for proposal (RFP)?

A request for proposal (RFP) is a document that announces a project, describes what it entails, and solicits bids from qualified contractors to complete the project. Essentially, an RFP is a communication document. It tells prospective suppliers what you want to purchase and your expectations for delivery, customizations, or service needs.

While it sounds relatively straightforward, writing an RFP that nets you the bids — and eventually, project deliverables — that meet your standards is both an art and a science. It’s estimated that almost half of all supplier collaborations fail; often, it’s because the supplier/buyer relationship doesn’t have the right foundation from the outset. A clear, organized, and streamlined RFP process can make the difference between success and failure in your supplier relationships. Here’s how an RFP works — and how to make it work for your business. 

How does an RFP work?

A request for proposals is a tool that can help your organization cast a wider net over suppliers and gives you greater leverage in negotiations — increasing your odds of a successful acquisition. Managing your RFP process carefully is key to ensuring you receive high-quality bids and find the best possible supplier for your procurement needs. 

[Read more: The ABCs of RFPs] 

The process starts with writing the request for proposals (RFP). The RFP should be as clear and comprehensive as possible, including sections that outline: 

• Your company: what you do and the history of the project
• Your needs, goals and purpose: your specific requirements for the project
• How the vendors will submit a bid: including how to apply, what details they should submit, and the deadline
• Selection criteria: how will candidates be selected? 
• Timelines: after bids are submitted (provide a deadline), provide an estimate of when project will be awarded and the project will kick-off. 
  

[Read more: How to write an RFP that really stands out] 

Once you start receiving bids, you can review each document to find the best price, specifications, and all-around fit for your needs. Managing bids is often the most time-consuming aspect of the entire process, and to streamline the process, consider bringing in an RFP tool. 

RFP tools help you source more bids, work efficiently, and handle a wider variety of sourcing events by automating many of the time-consuming manual aspects of the RFP process. Fairmarkit’s RFP tool empowers procurement teams to make the RFP process more efficient, thereby improving the bids you are receiving and increasing your ability to conduct RFPs. And, it links seamlessly with other procurement tools—helping you unify all your sourcing events in one view and adding value and insights across the entire procurement process.

[Read more: 5 benefits of a streamlined RFP process]  

Benefits of a request for proposal (RFP)

RFPs provide transparency and accountability — not just in the initial decision-making but also for future sourcing efforts since the document can become a reference for new purchases and a way to help standardize your organization’s procurement activities.

RFPs have a bad reputation for being time-consuming, complex, and labor-intensive. But, with tools like Fairmarkit, running RFPs has never been easier, which helps organizations keep their procurement risk low and optimize spending. Digital RFP platforms remove the manual work and streamline steps in the RFP process, and can be used for both complex events and smaller, less complex sourcing needs. 

Likewise, by instituting the right tools, organizations can minimize the time it takes to host an RFP event — and increase the number of RFP events they host each year. With tools that are flexible and adaptable, RFPs can allow organizations to find the goods and services that the company needs at the best price. Procurement teams can then spend more time focusing on building long-term supplier relationships. 

How to make the most of your request for proposal (RFP)

Every RFP is different, but there are some ways to make any RFP more effective. Here are some tips to help you get the most out of each request for proposal.

1. Write with your vendor in mind. If you make your RFP overly complex,  you could discourage strong, well-qualified vendors from applying. Respect their time and capabilities. 
2. Request only what you can review. If you’re stretched for time and resources, and not able to review every application thoroughly, reevaluate how many vendors you’re inviting to bid. Ideally, you should cast a wide net — but not if you can’t take the extra work. 
3. Ask specific questions. Provide an easy way to compare vendors side-by-side by asking how various product options will help you solve your problem. Aim to learn more about the bidders’ solutions, rather than product features. 
4. Build good relationships. Be transparent, clear, and trustworthy in your negotiations. Good relationships are key for getting sustainable prices and overcoming unforeseen market challenges. 

Make technology work for you. The best way to cut down on complexity in your procurement processes is with the right tool. 
To learn more about requests for proposal, check out our blog, The Source.