Years ago, the process of purchasing was simpler. If you needed to buy hardware or software, you simply talked to vendors, learned the pros and cons of each solution, and chose the best solution that fit your budget. Like many other things, the world is more complicated today, and if you work for a large company, you may need to understand how to navigate the new tools in procurement.
Although there are more acronyms, the most common today are: RFI (request for information), RFQ (request for quote), and RFP (request for proposal). Earlier this year we worked with a large company that required using these tools in the decision to replace their fleet toner-based machines. We used these tools to better understand the advantages and disadvantages of toner versus inkjet equipment and the unique advantages and disadvantages of different equipment.
Request for Information
If you research the purchasing options online, you may find differences of opinion as not everyone agrees with the advantages and disadvantages of these solutions. Therefore we will share our experience and definitions. We believe the purpose of the RFI is to gather information to help decide which vendors have equipment to consider. The RFI is often the first step in the process that tries to gather information, identify key metrics and comparable terms in developing an RFP or RFQ process.
Request for Quote
For our purposes, an RFQ is an effective tool if you were well-versed in the product specifications. Using that definition, an RFQ limits the bidders to identify possible differentiation or advantages of various solutions. In other words, you ask all the vendors to adhere to the same specifications which allows you to place these proposals side-by-side and bid on price. For example, if you’re interested in copier paper, you might specify the size, weight and brightness.
Request for Proposal
An RFP allows vendors to describe their own products and services, identify how they’re different, and describe the advantages and disadvantages of that approach. Although somewhat more difficult to make side-by-side comparisons, this approach offers vendors a creative license to articulate the unique advantages of their products or their company that might otherwise not be included in the purchasing decision.
The Process in Action
We started with an RFI to narrow the field to three bidders and then used an RFP process. We requested all bidders include the following in the bidding process: the total cost of operation based on existing volumes, SLAs (service level agreements), and the estimated number of SLA exceptions that occurred over a year that resulted in unexpected changes.
Utilizing the RFP process allowed bidders to be creative in describing the advantages of their solutions. Assessing the unique advantages and disadvantages outlined in the RFP required a higher level of understanding of each vendor solution which necessitated site visits to other companies using the same equipment.
At least one, and sometimes two, tours of other facilities using the same equipment was made by individuals on the procurement team. Each team member had a specific area of expertise such as customer service, prepress, IT, printing, and finishing/mailing.
The goal was for each person to talk to their counterpart about the unique challenges in each area such as the installation, training, quality, productivity, maintenance, and support. After the tour, everyone scored their experience which became part of the evaluation.
If you’re working for a large company, you may eventually need to utilize these procurement tools. However, the problem is that many of these procurement tools are designed to eliminate the unique advantages of specific equipment for suppliers.
In some cases, eliminating these unique advantages result in a safe decision that may not be the best decision. As the knight protecting the grail says at the end of Indiana Jones and the Last Crusade, “You must choose. But choose wisely”.