Accountability and Outcome is a Shared Responsibility in the RFP Process

It never fails to amaze me that given the amount of research which goes into the production of each PI Window on Business Show, there are always a number of new insights that come to light during the live broadcast.  In fact this is one of the reasons why social media is so critical to the procurement profession, as it broadens the lens through which we can view a particular subject.  In short, if we as professionals confine ourselves to a single venue of collaboration, thereby limiting what I refer to as the cross-pollinization process, we ultimately and quite unintentionally risk the ongoing veracity of the insights we wish to gain and share.

One such example of these important on-air insights came during my interview with SRS founder and visionary Andy Akrouche.

During the segment, which was centered on how the RFP process is being re-defined by the emergence of intuitive technology platforms such as SRS’ newly launched RFPBlaster solution, I made the observation that while important, technology in and of itself is not the answer to the problems posed by eroding supply bases and decreasing supplier response to RFPs.

As Andy succinctly put it, the relationship between buyer and supplier is one that has to be based on trust, otherwise suppliers will not even come to the table.  A fact that was driven home by a senior VP from Colgate-Palmolive who had attended one of my seminars a few years ago.  Referencing Colgate’s efforts to institute an Ariba reverse auction application, the VP stated that after a considerable expenditure of resources, when the time came to run the first event they did not receive a single bid.

The problem as is the case with most RFPs is the prevailing believe that the system by its very nature is tilted to a certain degree toward a known and proven vendor thus reducing the exercise to one of price verification rather than competitive supplier selection.  Against this backdrop, phrases such as transparency and a fair and open bid process fall largely on deaf ears.  Hence the reason for my position that technology is not the driving force or initiator of the RFP process, but is instead a facilitator that streamlines, manages and monitors bidding activity.  This means that the precursor to success is the level of trust that Akrouche had referred to during our interview.

Trust however is a two-way street, and technology such as RFPBlaster serves as the proverbial olive branch between a buying organization and its suppliers.  How does the RFPBlaster fulfill the role of peacemaker with what for many organizations is a highly cynical supply base.  To fully answer this question, one must first understand the reasons behind the growing chasm that has and continues to occur between transactional partners.

To begin, and as referenced many times in this blog, studies and reports indicate that buyers tend to limit their focus on known supplier relationships simply because of time constraints and limited resources.  For many purchasing professionals whose mandate can quickly vacillate between the need to fill an immediate service demand and the necessity of obtaining the best value (re price), simplifying through compression of options is the only viable option.

This of course creates a limited range of engagement as only those suppliers with whom the buyer feels most comfortable are likely to be seriously considered.  A practice by the way that is further fuelled by misaligned vendor raltionalization strategies that create artificial pricing metrics that further removes the buying organization from market realities.  No wonder a Best Buy can pay up to a 23% premium, or the Department of National Defence in Canada pay a 157% delta above market price for Indirect IT service parts.

Collectively, the above scenario creates the perfect conditions for undetected margin creep, and gradually declining service levels.  It also creates unfavourable conditions for the successful introduction of an RFP application, explaining why the Colgate-Palmolive Ariba “initiative” failed.  This scenario also sheds light, at least in part, on why 85% of all public and private sector e-Procurement initiatives fail to achieve the expected results.  In short, what we are talking about is not a technological problem alone, but an expertise or practical experience issue that is a reflection of the minimal degree of involvement purchasing professionals have actually had in their organization’s efforts to automate the supply chain practice.

Where a solution such as the RFPBlaster changes the game, in essence filling the knowledge vacuum that has come about as a result of initiatives being viewed as primarily an IT or Finance department undertaking, is found in its practical purchasing expertise origins.

As Akrouche emphasized during our interview, he and the SRS team incorporated their vast purchasing and supplier relations expertise into the development process at the beginning.  They then structured the RFPBlaster’s functionality around these realities of experience, providing a practical “relational” engagement vehicle in which the real challenges of buyers and suppliers are addressed.

Unlike an Oracle or an SAP, which if you think about it are software companies first, and therefore view a problem through a technological lens, SRS developed its RFPBlaster through practical understanding using technology as the delivery platform.  There is a world of difference.

For this reason, the interview with Akrouche is both telling and insightful.

Remember to use the following On-Demand Player to access the replay of the “Live” November 19th broadcast “Redefining the RFP Process” on the PI Window on Business Show:

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