Rethinking procurement: Upsetting the RFP apple cart
An over-reliance on template-driven RFPs and apples-to-apples comparisons can stifle innovation and creativity in procurement, reinforcing the perception of procurement as mere RFP administrators and savings calculators. When procurement professionals focus too narrowly on finding exact matches between supplier proposals, they can easily overlook unique solutions that could drive significant value for their organizations. This mindset limits the scope of potential solutions and can lead to missed opportunities for strategic partnerships and innovative approaches.
Consider the broader implications of this apples-to-apples mentality. By insisting on strict comparability, procurement may inadvertently enforce a culture of conformity, where suppliers are discouraged from proposing creative or unconventional solutions. This not only hampers the potential for breakthrough innovations but also reduces the competitive edge of the procurement function.
Broadening procurement horizons
The challenge for modern procurement professionals is to balance the need for comparability with the need for flexibility and creativity. This requires a shift in mindset from simply administering RFPs and calculating savings to becoming strategic partners in business transformation. By fostering an environment that values diverse perspectives and solutions, procurement can unlock new avenues for value creation and competitive advantage.
The role of RFPs in procurement
I appreciate the value of RFPs. They are an essential tool for gathering proposals, qualifying supplier capabilities, and evaluating pricing. However, they are not a one-size-fits-all solution for every procurement process. RFPs are just one tool among many, including reverse auctions, scenario-based optimization, and direct negotiations. While RFPs facilitate like-to-like comparisons, they are less effective for solving complex business problems or driving transformation.
The pitfalls of solution-defining requirements
Building out requirements is crucial for any major initiative. It helps articulate the problem, desired outcomes, and constraints to the market, enabling suppliers to present their best solutions. However, when requirements become too prescriptive, defining solutions rather than problems, they limit the potential for creative and innovative problem-solving. This approach can restrict procurement to a narrow set of predefined options, missing out on potentially transformative solutions.
The common theme of many of the best projects and customers on which I have worked is an unrelenting focus on business outcomes. This combined with the current state and potential solutions drove a collaboratively designed roadmap, tailored to the unique business needs and objectives for that organization. Some of these even started with RFPs – from which the solution ultimately deployed had little to no resemblance. Some ended with RFPs – as a last-minute box checking exercise focused on process over results. Either way, both were a waste of time for all involved as the right answer was found through engagement, communication, and collaboration.
Practical steps for strategic procurement
Here are simple steps you can take to ensure your procurement process is strategic to optimize for its business value.
- Broaden your perspective: Look beyond traditional RFPs and consider other tools and techniques to solve complex problems.
- Engage suppliers creatively: Encourage suppliers to propose innovative solutions rather than fitting into a predefined box.
- Focus on outcomes: Define procurement requirements in terms of business problems and desired outcomes, not specific solutions.
- Leverage technology: Use digital tools to streamline processes and enhance visibility into procurement activities.
- Promote continuous improvement: Regularly review and update procurement strategies to incorporate new insights and technologies.
Elevating the role of procurement
If you want a seat at the table, earn it. Be strategic. Learn how to evaluate more than apples. Engage suppliers to get creative solutions to your problem. Demonstrate that procurement is more than just getting to a price so you can calculate savings. Strategic procurement means identifying apples, oranges, bananas, and ducks to bring to the table and determining which is the best fit solution for the problem you are trying to solve, the outcomes you are trying to achieve, within the organizational constraints in which you need to work. How do you like them apples?
