Is It Really The End Of The RFP Process As We Know It?

Percentage of Suppliers Responding to RFP Requests

No definitive, broad-spectrum statistic exists for the percentage of suppliers who respond to RFPs across all industries. Response rates vary widely depending on industry, RFP complexity, supplier capacity, and perceived opportunity value. Here’s an analysis:

• General Estimates:
  • Industry reports and expert commentary suggest response rates typically range from 20% to 50%. For example, a Responsive.io blog (Web ID: 18) implies low response rates are a common challenge, with procurement teams often struggling to get adequate replies, suggesting a baseline below 50%.
  • Tendium.ai (Web ID: 2) notes that professional bidders handle high-value RFPs, but a “too-tight deadline” often results in “no-bid” decisions, potentially dropping response rates below 30% in such cases.
  • Sievo.com (Web ID: 0) indicates that familiar suppliers (e.g., contracted or preferred vendors) are more likely to respond, pushing rates toward 40-50%, while unfamiliar suppliers might dip to 20-30% due to lack of context or trust.
• Public Sector Insight:
  • Public sector RFPs, often mandated for transparency (e.g., government contracts), may see slightly higher response rates (30-50%) due to legal requirements and broader visibility, per TechTarget (Web ID: 6). However, complex compliance demands can deter smaller suppliers, lowering participation.
• Private Sector Insight:
  • Private sector RFPs, especially closed ones sent to a select group, might achieve higher response rates (40-60%) because invited vendors feel pre-qualified and motivated, per Responsive.io (Web ID: 24). Open private RFPs, however, may align closer to 20-40% due to less targeted outreach.
• Best Estimate:
  • Across both sectors, a reasonable average is 30-40%, with public sector RFPs averaging closer to 30-35% (due to broader but less tailored distribution) and private sector RFPs ranging 35-50% (higher for closed RFPs). This aligns with anecdotal procurement feedback on X posts, where users note 1-3 responses per 5-10 RFPs sent (20-30%).

Total Estimated Costs Of The RFP Process (Issuer)

Estimating the exact costs in time and money for an organization to prepare, distribute, receive, and analyze responses for an RFP can vary significantly based on several factors, including the complexity of the RFP, the number of vendors involved, and the technology used. However, here are some general estimates:

Estimated Costs

Time Costs:

• RFP Creation: Typically takes 1 to 3 weeks, involving procurement managers and stakeholders.
• Vendor Selection and RFP Issuance: Takes about 3 to 6 weeks.
• Proposal Submission and Review: Vendors usually have 4 to 6 weeks to submit proposals, and the review process can take an additional 1 to 2 weeks.
• Total Time: The entire process can span 6 to 10 weeks or more, depending on complexity and the number of proposals received.

Monetary Costs:

• Labor Costs: The most significant expense, involving proposal managers, writers, and subject matter experts. For a complex RFP, this could amount to tens of thousands of dollars.
• Consultant Fees: External consultants may be hired for specialized expertise, adding to costs.
• Software and Tools: Proposal management software and other tools can incur subscription fees.
• Material and Production Costs: Printing, binding, and shipping physical proposals can add up, especially for large or complex RFPs.
• Travel and Accommodation: Site visits or presentations may require travel expenses.

Factors Influencing Costs

• Proposal Complexity: More complex proposals require more time, expertise, and resources.
• Proposal Volume: Responding to multiple RFPs simultaneously increases costs due to the need for additional personnel and resources.
• Client Requirements: Specific client requirements can increase costs, such as detailed technical specifications or unique formats.
• Geographic Location: International opportunities may involve higher travel and accommodation expenses.

Overall, the total cost can range from tens of thousands to hundreds of thousands of dollars, depending on the scope and complexity of the RFP. Time commitments can also be substantial, with teams dedicating significant hours to each proposal.

TODAY’S TAKEAWAY (TWO QUESTIONS)

What is the “real ROI” of the current RFP process?

Excluding the RFP review process – which would have to increase to 4 to 6 weeks from 1 to 2 weeks what if you could reduce RFP issuance, distribution, and supplier response by 75%? Would you do it?

You will find the following post either interesting and exciting or left wondering what this world is coming to.

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