Looking for procurement management system to bolster your growing business? Perhaps you’re new to the world of procurement and looking for your very first procurement software solution. Or maybe you’ve just grown unhappy with your current system. Either way, the first step on the path to picking out a system that fits your operation is the creation of a strong procurement RFP.
According to a 2019 study, procurement software has blossomed into a five-billion-dollar market. This should come as no surprise since the usage of procurement software is on the rise to meet the growing demand of a ravenous customer base. As the customer base continues to expand the software market will grow to match it. Take a look at our comparison guide to see some of the top competitors out there.
Let’s get going and begin looking for that perfect procurement management system to complement your enterprise. If you aren’t sure where to start, have no fear, our RFP template will keep you on the right path.
What Is a Procurement RFP?
I’m sure you are eager to get the jump on finding a procurement management system, but first, we need to spend some time learning about the RFP process. If we want to truly understand what an RFP is and how to create one we need to look at the RFI and the RFQ. If this isn’t your first time dealing with the RFX process, feel free to skip down to our RFP creation discussion.
Each of these different requests focuses on gathering information at different levels of the software acquisition funnel. Starting most broadly at the top of the funnel we have the RFI, then further in is the RFP and finally the RFQ at the very bottom. Let’s take a look at each one in order to get a better sense of what we are after.
Request for Information
The RFI is your broadest stroke when it comes to learning about the products you are searching for. This is where you take a look at the vast array of procurement software vendors and begin making some general observations.
It may be tempting to consider a certain vendor or product as your final choice when looking around, but at this stage, you really shouldn’t put any of your eggs in any vendor’s basket. If this is your first journey into the realm of procurement software, the RFI is where you would begin the hunt.
This stage still holds value for anyone, regardless of their experience with the product or system they are looking for. An RFI allows you to observe the procurement management software market as a whole and gain some insight into how each vendor serves different enterprises.
Request for Proposal
Moving past the RFI and sliding further toward the middle of the funnel we have the RFP, which just so happens to be the focus of this guide. The RFP takes the general information gained from the RFI phase and takes it a step further.
Your RFI gave you a look at all of your prospective vendors as a whole. Now the RFP allows you to begin separating vendors you have an interest in from those who do not meet your specific requirements.
We’ll take a deeper look into the workings of the RFP further into this guide.
Request for Quote
Finally, we have the RFQ, the most specific of the three requests. The RFQ is one of your last steps before selecting your final procurement management software choice. By this point, you should have a shortlist of vendors ready that have made it through all portions of your funnel.
It’s about this time that you want some pricing information from your vendors, hence the need for a quote. You’ll also want to figure out how the integration of your new procurement system will go and how it will be deployed within your enterprise.
If you have any more specific questions, this is the time to find your answers. Leave no stone unturned as your final choice is very important to the functions of your operation.
How to Create Your Procurement Management RFP
Alright, now we have our bearings about the whole request process and we can dive into hammering out a strong procurement RFP.
So, what does your procurement software RFP need to accomplish in order to be considered successful?
Firstly, any vendors going over your RFP should get a good sense of your needs and what your procurement management software needs to accomplish. Next, your RFP should be professional and convincing in order to persuade stakeholders and upper-management that a new procurement system is necessary.
Let’s get started. You can look at these next steps as a guide for putting together your procurement management software RFP.
Define Your Procurement Management Requirements
This step is critical to creating your RFP as it gives vendors an idea of what you are looking to solve with your new procurement management system.
Now is the time to create your detailed list of requirements that a procurement software solution needs to bring to the table. Input from stakeholders and employees that will interact with the new procurement management solution is of utmost importance.
If you are on the hunt for a new procurement management system, you should keep a running list of outdated or frustrating functionalities you want to replace. Look out for weak points that a new system could strengthen or do away with altogether.
For procurement management based RFPs, you’ll want to contemplate some common features like billing automation, purchase order approval, delivery and spend data analysis. These may not be issues you face in your day to day operations, but you can usually count on them being included in most software suites.
Critical needs should always be met before wants. Spend as much time as you need on this step and make sure that every department that will interact with the new procurement system gets to relay their input.
Going through this whole process and hastily choosing a procurement package that comes with more problems than solutions not only wastes money but vast amounts of time.
Need some more guidance putting together your list? Our requirements checklist can help get you on the right track.
Build Your Procurement Management RFP
You’ve talked to your stakeholders and potential users, put together your list of requirements and are ready for the next step. It’s time to take that essential list of procurement software needs and work it into your RFP. This list will inform vendors of your specific needs and gives them a chance to show you how their product as a perfect fit for your enterprise.
If your RFP is still a little bit on the rough draft side of things, you should spend a few moments sharpening it up. A professional looking document will make vendors want to provide you with valuable information as well as taking your request seriously. It can be hard to present solutions to someone if their RFP is a mess or confusing to read.
Another good thing to consider is the addition of as much information about your operation as you can. Vendors need to know how you run your enterprise from a variety of perspectives in order to help solve your pain points. Let them know how big your business is, how many employees you have, what your budget looks like and what services you offer to your customers and clients.
Locking in a procurement software solution is more than just buying a product from a vendor. It’s an ongoing partnership that will help determine how effective and efficient your procurement processes are. Your software will be a large part of your client facing activity, so your relationship with your procurement vendor is very important.
Sometimes having a team to put all of this information together is the easiest way to go about it, if that isn’t an option consider outsourcing this step.
Identify Your Vendor Shortlist and Submit Your Procurement RFP
Remember the RFI step and that bird’s-eye view of the procurement software market you experienced? Well, now that information really comes into play.
By now you’ve learned a bit about the procurement management software market and most likely set aside at least five vendors you are thinking about speaking to. If you haven’t yet there is no shame in returning to the RFI phase and gathering more information, you can always come back.
Take your time here, moving forward while lacking information can lead to a destructive purchase of a system that may only cause more problems in the end. Take another pass at the RFI and pull in as much valuable information as you can. You don’t want to pick up a new procurement system only to have to go through the entire selection process again a few months down the road because the one you chose didn’t work out.
Once you have moved beyond this step, it may be helpful to use and find an RFP specific program and run your RFP through it. This can help your teams communicate with vendors and sift through any information they send your way.
If it takes vendors a while to get back to you, don’t worry. If you’ve taken the time to put together a coherent RFP that showcases your needs you’ve done all you can. Time is variable depending on who you are speaking to, but vendors will get back to you as soon as they can.
Review Any Responses to Your Procurement Management RFP
Patience is a virtue; if you haven’t heard back from some of your vendors after a week or two don’t discount them. In reality, they may just be spending extra time gathering data to prove they are your perfect fit!
If your RFP was in-depth and provided a large amount of information, they’ll need to spend some time looking it over and sending back something that answers all of your questions.
Some vendors may not even respond at all, though not because they don’t think they can help you. Some of the smaller vendors out there may not communicate through proposals and may be more responsive via other methods of communication.
Even if one or two don’t get back to you quickly, you’ll no doubt hear from at least a few of the vendors on your shortlist. This is another place to slow down and really dig into the information you’ve received. The data you are given by vendors will eventually lead you to your final procurement software solution, so go over everything with a fine-toothed comb.
Compare your various options and find out how each vendor means to tackle the problems you need to solve. Vendors should go above and beyond to secure your business and may even provide additional information into functions their product has that you haven’t even considered using.
If you get generic responses that look like they are from a general template, move on. You are looking for personalized responses that show a vendor wants to work to make you a client.
Finally, there is only one more step before all of your hard work is complete.
Following Up With Vendors
Your perfect procurement management solution is at the tips of your fingers. However, it’s around this time that you’ll want to courteously tell vendors you are no longer considering that you are not interested. For those that have made it to the finish line, they now have their chance to show you why they are meant to be your final choice.
Your final picks should be open to scheduling a live demo and showing you in real-time how their software tackles your issues. Look over any proofs of concept they want to present and gather some references.
Look for references from businesses similar to yours that operate in your industry. If you run a small shop, a reference from a huge corporation shouldn’t mean much to you.
Set up times for your future users to sit down with the procurement solution and operate as they would on a normal workday. If there are any lurking issues with your choice, they should come to light as your employees use the software.
Ask any questions you have left, get all the answers you require and listen to input from your teams. Figure out the logistics behind deploying your new procurement management software so that there are no last-minute surprises.
You’ve made it to the end; the only thing left to do is make your final choice. Before doing so, a final question to ask would be how your vendor’s support system works. There are always a few growing pains when adding a new software suite to an enterprise, but these are easily solved if there is a strong support structure ready to field questions.
Final Thoughts and Wrap Up
There you have it, you’ve reached the end of the RFP process. It wasn’t so bad, right? This should only be a one time process, so make sure to invest the proper amount of time. Slow down, relax and build up your list of requirements.
If your journey into creating a procurement management RFP is just beginning our comparison guide can give you a look at some of the top performers in the category.
When creating your RFPs, what have been some of your biggest challenges? Let us know with a comment down below!