Author Archives: thedoctor

Why Create RFP Hell?

Over ten (10) years ago, over on the LawMarketing Blog, Larry Bodine asked “Why Go to RFP Hell?” in response to a fellow lawyer who asked how her firm could get more RFPs for legal work from corporations. This question is as relevant today as it was then.

As Mr. Bodine quite astutely noted, RFPs are onerous chores leading to hideous events where clients get the chance to dictate terms, chisel down your fees and turn you into a fungible commodity. Nobody wants to be fungible. Moreover, RFPs were liked to competing to be the first to be hanged.

Why? RFPs were typically 50-page monstrosities divided into a dozen sections that required a complete history of relevant litigation, minority hiring statistics, alternative fee arrangements, financials, references, industry knowledge, and so on — all to make a short-list. At which time, if the firm was not considerably better than the incumbent in the eyes of the buyer, they would not see a penny. It is a hell.

A hell unnecessarily created by buyers who believe that they cannot even consider a supplier for an event before they know everything there is to know, even though a single piece of information can disqualify the supplier from consideration before any negotiations ever begin.

This is not a good thing to do. A company with a reputation for putting its potential suppliers though RFP hell is not one that many suppliers will want to deal with. The more a supplier’s peers complain about RFP hell with Company X, the fewer are the suppliers who will even acknowledge the existence of an RFP from Company X. As the word of RFP Hell from Company X spreads, the only suppliers that will respond to an RFP from Company X are those that are desperate. Those in bad financial shape, those without a stable customer base, and those with a bad reputation. These are not suppliers you want to deal with.

If you need to cast a wide net to find new suppliers, start with an RFI that only requests enough information to determine whether or not an RFP response from a supplier can be seriously considered. And before this RFI is issued, make sure to understand the category need in detail and what the absolutes are and that the RFI addresses each absolute. If multi-lingual support is an absolute, if a platform that encrypts 100% of data is an absolute, if a company with a headquarters in a country where it can be held responsible and liable for its products is required, or if a company with a factory with certain equipment is required, the relevant questions should be asked in the RFI. You should never ask a supplier to complete a 50-page RFP until you are sure the supplier can meet every absolute requirement. You can ask them even if their chances, based upon their initial RFI response, are less than 1% (as long as you make the award criteria, and weightings, abundantly clear), but not if their chances are known to be zero. (With complete requirements, award factors, and weightings clearly known, a supplier should be able to determine its own chances and determine whether or not its investment of time is worth it.)

And then, make sure that if you need a supplier to complete a lengthy RFP, that the RFP is well written. For details on how to write better RFPs, see the ongoing series over on Spend Matters Plus (membership required) by the anarchist, the maverick, and the doctor, of which 3 parts are already up.

  • I: Intro & Issues
  • II: Requirements
  • III: Provider Secrets

Forty Years Ago Today

Apple, Inc was formed by Steve Jobs, Steve Wozniak, and Ronald Wayne. And while they might have been thought to be April fools at the time, it now occupies the 5th place on the Fortune 500, well ahead of Amazon at 29, Microsoft at 31, and Google at 40.

And while it might not seem like that long, as Apple only became a household name for many with the launch of the first iPhone back in (June of) 2007, there are those that remember the Apple 1, and those of us that remember the first MacIntosh computers from the mid eighties which were released with an easy to use graphical user interface, about eight years before Windows 3.1 (that launched Microsoft into the modern GUI era).

Keelvar: The Little Engine that Could

In case you haven’t guessed, this post is about The Little Engine That Could not only get up the big hill, but after scaling the hill, decided to follow the tracks up to Alaska, tackle, and climb, Mount McKinley (also known as Denali), which is the highest mountain in the United States at 6,190.5 meters (or 20,310 feet), and not stop until it reached the summit.

For those of you who missed our prior posts, namely Keelvar: Strange Name. Uncommon Results., Keelvar: Are They Right for You, and Re-introducing Keelvar, An Optimization-Backed Sourcing Platform, Keelvar, which is the newest, and still the smallest entrant, to the strategic sourcing decision optimization game, and one of the few (correction: two) vendors to provide a fully integrated optimization-backed sourcing platform (with integrated RFX and e-Auctions), has been making great strides since it spun-out of the 4C research laboratory (in the Department of Computer Science) at the University College of Cork a mere four years ago in 2012. Since then, it has been advancing faster than all of its peers except Trade Extensions, and has emerged to become a top contender for the provision of optimization-backed sourcing platforms. In fact, as hinted at in an upcoming Pro piece, the doctor expects that Keelvar will grow faster than 4 of its 5 five competitors over the next few years.

So what’s so great about this little upstart? The first thing to note is the ease-of-use of the platform. The platform, which embeds a simple-to-follow seven-step best practice sourcing platform, literally guides even the most junior of buyers through the most complex events the platform can handle, and the side-bar navigation makes it a breeze to quickly access any step in the process. (The tried-and-true best-practice methodology is strikingly similar to what MindFlow used back in the day, but it never had such an easy to use, clean, and modern interface.)

The second thing is the speed of improvement. Since SI last reviewed the platform last fall, a number of considerable of enhancements have been made that go well beyond usability. Extensive supplier self-service has been added (which allows the supplier to manage not only the response and bid process, but the team assigned to it – all the buyer has to do is invite one supplier rep, and that supplier rep can create the supplier organization’s records, add users, give them appropriate, fine-grained read/edit rights to the documents and bids, and manage all of their effort without any buyer involvement whatsoever). Single-sheet smart-load (which allows the platform to detect field-types, field-status, and other relevant information without a user having to define a lot of meta-data or use the cell-based encoding required by other platforms) has been developed. And parametric bidding is in quality assurance.

Parametric bidding is, in a world, cool. Often in the acquisition of fleets, computers, cell phones, etc., the buyer doesn’t precisely know the exact configuration details that are desired until the last minute. In this situation, the buyer has to either create a huge number of potential configurations for bidding, or pick a few and hope for the best. With parametric bidding, the supplier can bid on a base configuration and define all of the options they offer against that configuration as well as the price increments (or decrements) for that option. When the final configurations are selected, the system will automatically calculate the appropriate costs (and discounts) from the parametric sheet for the optimization model, with no effort at all required by the user. This is a feature that is jut not seen in first generation sourcing platforms. Watch for it.

Keelvar, which was first named as a SpendMatters company to watch last year (and which will soon be covered in depth on Pro by the doctor and the public defender), is a company that you should be keeping a really close eye on. Optimization-backed sourcing platforms are the future. and right now there are one of only two providers with a single, integrated, end-to-end, solution. We may see more in the future (with BravoSolution working on integrating its two product lines, SciQuest’s acquisition of CombineNet, and Determine’s acquisition of Selectica), but Keelvar (and Trade Extensions) have an early lead that gets larger every day their competitors work on integration (as opposed to innovation).

Now, you’re probably worried about adoption, because first generation platforms were, for the most part, so damn hard to use (to put it bluntly), but second generation optimization-backed sourcing platforms are actually quite easy to use and focussed around adoption. For more information on how to get Higher Adoption, check out the linked white-paper. And for more information on Keelvar, we recommend checking out their new, open, Keelvar support portal.

Geopolitical Sustentation 28: Customs Acts

As per our damnation post, customs is the agency, authority, or regulatory body in a country that is responsible for collecting tariffs on, and controlling the flow of goods in, and out, of the country. Customs is necessary, not just for keeping borders safe (which is often the rationale for their existence these days), but for keeping economies running. Customs levies are not only one of the oldest types of tax, but the foundation for the revenue engines necessary to keep most governments running.

Nor is there anything wrong with, or damning about, creating regulations and acts that clearly define the purpose of a customs agency, the authority it has, the documentation it requires, the taxes that can be levied, and the penalties it can apply for non-compliance. The damnation comes into play when the number of sheets of paper required to capture the rules, regulations, and constant updates to the regulations exceed the quantity of goods flowing into, and out of, a country. For example, in the US, an average importer/exporter has to be fully knowledgeable of half-a-dozen multiple-binder-thick acts as well as a dozen or so global acts. It really is damnation to the power of 100.

So what is Procurement to do?

1. Global Trade Document Management Solutions

That can not only help you with the (e-)paperwork and the e-filing, but also help you identify the acts you have to adhere to, the forms that need to be filed, and the times by which they need to be filed. Some have to be filed before you hit the port, and others before you even leave the port of origin.

2. Customs and Trade Act Monitoring

As per our post on Environmental Sustentation 15, Waste, RoHS, and WEEE, the last thing you want to do is become aware of a new act the day it comes into effect. By the time it is signed into law, even if there is a six month grace period before its enacted, that’s too late. You want to know about a piece of proposed legislation the moment it gets released for public presentation or, if it was drafted in private, the first time it gets red in a regulatory body. A good monitoring solution will not only let you know when acts are updated, but when news is made, you need to know.

3. FTZ Mastery

A FTZ, short for Free Trade Zone, is a zone that allows you to ship goods through country X on their way for sale in country Y without having to pay import taxes or that allows you to delay imports until the goods or materials are actually needed. This can be a blessing to an organization with a tight cash-flow. But more importantly, if country X all of a sudden bans your product or a material in your product, it gives you a way to get your product out of the country and into another where it is not banned, which is much better than having it seized and destroyed on import.

4. State-of-the-Art Logistics Management Platform

If, all of a sudden, due to strikes, trade embargoes, or new legislation that makes your product, or a component, illegal, you have to re-route a shipment in real time, you need a state-of-the-art logistics management platform that will let you identify an alternate route and accomplish the re-routing.

5. Multiple Manufacturing Locations

If something happens and you can’t export or import, and you still need to get a good to market, if you have a local manufacturing location that you can rev up, there’s no better way to meet a need that cannot be otherwise met.

6. Standardize its Design and Cost Structures to the highest common denominator

While it might be cheaper to manufacture different versions of a product for different markets, using the cheapest formulation possible that will get a product through customs, if a company manufacturers to the highest common denominator, and the good meets the regulatory requirements of a number of countries, and one market becomes unavailable, the good is easily redirected to a different market. This is a good lesson for automotive, where each state and province can have different requirements, as inventory can be quickly shifted as consumer preferences change.