What’s the problem? For both the client and sales teams, tackling contract/Statement-of-Work (SoW) variations can be challenging. Often, SoW variations … Continue reading How To Manage A Contract VariationREAD MORE
How do Procurement Score RFPs, Why as a Vendor do you need an RFP Scorecard & How to Create One
There are three parts to this article:
- When procurement writes an RFP, how do they build a scoring mechanism so that they can work out who the best supplier is?
- As a vendor, how do you sort out the “wheat from the chaff”?
- As a vendor, how do you build an RFP scorecard?
This guide is a one-stop shop to understand the RFP scoring process and how you as a vendor can maximise your win rate and average order value. Once you have finished reading this guide, you can also use our RFP Qualification Calculator to have as your own RFP scorecard template.
The procurement perspective
How does an RFP process work?
There are typically 7 steps to building and running an RFP process:
- Business requirements definition, volumes, targets, constraints, etc.
- Establish the right sourcing strategy (e.g. in-source, out-source, supplier consolidation, Joint-Venture, re-negotiation, etc)
- Supplier/market research and supplier short-lists
- Develop RFI/RFP, decide on the scoring criteria and relative weightings
- Run the RFP process, select preferred suppliers & negotiate terms, contracts and SLAs
- Implementation planning and transitioning
- Ongoing performance management
What Is RFP Scoring?
“RFP” is an acronym for “Request For Proposal”. It simply refers to a document which announces a project, describes the finer details/scope/objectives, and invites bids from qualified vendors to complete it.
RFP scoring is the process whereby a numerical value is added to each element of the vendor responses within an RFP response (proposal), to establish who should be short-listed. RFP Scoring is used so that a relatively fair and unbiased decision can be made about which vendor to put through to the next round.
Ultimately, as a buyer, what you’re trying to achieve is:
- Finding a way of comparing all vendors on a like-for-like basis.
- Enabling the budget holder and other key stakeholders to have influence over how criteria should be weighted.
- Enabling the scores of multiple stakeholders to be aggregated/compared once the responses are in
Types Of RFP Scoring
There are at least 6 different ways procurement set up the scoring for an RFP. You often won’t know as a vendor which they are using, unfortunately. However, a good quality RFP should make it clear what the criteria are for scoring responses.
Here are six ways RFP scoring is setup:
1. Basic scoring
To complete basic scoring during RFP scoring, there needs to be a set score given to each criterion (usually 1 to 10). Each criterion is given the same weight, as they are equally important within this type of scoring.
While this is the easiest and most basic scoring method, it’s not always the best method, as not all elements typically have the same value.
The combination method is a method whereby each criterion is given a weight by having its own score. One criterion may have a higher score than the other, due to the importance that they have within business requirements.
3. Distinct weightings
The distinct weighting method is often a great middle ground between basic and combination scoring. This method allows each criterion to be measured on the same scale, regardless of their importance. The main difference with distinct weightings is that criterion has a weight, which is then scored and multiplied to give it a total weighted score.
This method makes overall RFP scoring incredibly easy and is a great way of ensuring that the most important elements within a business’ requirements are represented fairly.
4. Hierarchical structures
While businesses may want an incredibly detailed evaluation method in place, it’s often the case that the more complex an RFP is designed to be, the more in-depth the evaluation method needs to be.
The benefit of a hierarchical structure is that it makes it possible to group criteria together, so that each group can be weighted, rather than each individual criterion.
5. Lowest cost compliant
Using the Low-Cost Compliant method is a two-stage process:
Firstly, a review of the technical/functional criteria using a minimum pass mark based on the sum of the weighted technical scores. Secondly, proposals which progress past this initial stage will be considered based on the cost, with the lowest-cost vendor being awarded a contract.
6. Best value
To carry out the Best Value method (often called Most Economically Advantageous Tender in Public Sector Procurement or MEAT), the cost and technical criteria are each given an individual weight. For instance, the cost might be worth 20% and the technical worth 80%. Using this percentage weighting for example, means that the technical elements are given much higher importance than the cost.
How Do Procurement Work out the Scoring and Weighting Allocation?
1. Develop your supplier evaluation criteria
These types of criteria can typically be divided into 3 main categories:
- Managerial Capability
- Technical Capability
To decide on the criteria and weightings, you need input from all stakeholders to ensure that nothing is missed. Asking each stakeholder to list the things which are most important to them will allow procurement to whittle down the list to form a comprehensive set of evaluation criteria.
The next stage is to use these answers to prioritise the business needs when evaluating vendors, for example:
- Functionality and Features: businesses can determine which features are essential and which move much down the priority list
- Implementation: How quickly can a solution be implemented, what are the risks, etc?
- Customer Service: How will the vendor support the service?
- Price: Is the lowest comparable price the most important thing, or is it worth investing more in order to gain the desired outcomes over the long term?
- Innovative or proven solution: Is there a requirement to become market leaders and use innovative products, or is it more important for the business to rely on tried and tested methods?
2. Determine the importance of each evaluation criteria
Next, assign each category a set of questions. Then, assign weightings and score range for each question/set of questions.
3. Scoring proposals
Let’s say a question has up to 10 points. The way a buyer typically scores it is as follows:
- Up to 5 points: understood the question and answered it fully
- 5-8 points: understood the question and answered it fully and, provided strong evidence to support their answer
- 8-10 points: understood the question and answered it fully, provided strong evidence to support their answer, and, provided additional insights/ideas that we hadn’t considered that will be valuable to our business
The Vendor Perspective
You’ve now understood how procurement creates these RFP scoring systems. Now, you need to decide if you should bid, and, how to maximise your win rate.
What is a Vendor RFP scorecard?
It’s a way of you deciding whether you should bid, no bid, or ask for more clarification. Responding to an RFP is an expensive business. It can take up weeks of people’s time and end in frustration if you don’t win.
The Vendor RFP Scorecard enables you to objectively score an RFP to see what you should do next.
How do you build an RFP scorecard?
You need to build a set of questions into a spreadsheet and allocate a score and weighting to each question. You then answer all the questions for this specific RFP and depending on the score you get, you bid, no bid or seek clarification.
Example questions to put into your RFP Scorecard include:
- Are we already on the Preferred Suppliers’ List?
- Can we meet the Economic buyer and/or Procurement for a meaningful discussion before submission?
- Do we know why they are tendering and do we have a compelling story that addresses their needs?
There are a lot more questions, typically 9-12 in total, that you should be asking yourself in order to qualify for any RFP.
Rather than build your own, you can simply use Piscari’s RFP Scorecard that we’ve put online for you, it’s free to use.
How do you maximise your win rate if you decide to bid?
There are some simple things you can do, which, if applied consistently, can have a big impact on your win rate:
- Use the RFP open window for written questions wisely
- Always answer the exam question fully and provide evidence
- You’ve got to provide additional value and insights to get full marks
- Know your competition and how they pitch
- Propose alternative commercial models in addition to the one they’ve asked you to complete.
- Big bids always have multiple stakeholders with different perspectives and unique needs, e.g. Marketing, Procurement, Technology, HR, etc. Ensure your bid response covers these different perspectives.
- Get someone independent to score your draft response
As a vendor, before you rush into bidding for an RFP, stop and think about the following:
- Has it been well thought through by the buyer? Is the spec clear, are the objectives clear, are the scoring criteria clear?
- Is this more focused on Cost than Capability, and if so, is that a route you want to go down?
- Have you scored the RFP, should you bid, no-bid or ask for more clarification?
Regardless of where you are on your sales journey, understanding how “purchasing” works is always an important foundation skill. There’s … Continue reading What Is The Difference Between Procurement, Purchasing And Sourcing?READ MORE