RFP: Request for proposal
This is generally released by an intended buyer as a
detailed requirement specification for the potential service providers to
submit their business proposals. Different market players have their different formats
and contents for RFP’s. However it
should not be confused with Request for Tender RFT.
A RFP process is very vital for both the buyer and seller.
In a good RFP where a buyer can put down prudently its requirement and
expectations in detail on the other hand a potential supplier can do a fair
analysis, if it’s offering can meet all the expectations of buyer. Therefore,
RFP favors a client by filtering the vendors and focus on potential and best
vendors, where advantage to vendor comes from the gap analysis.
A well documented and nimble RFP should have below mentioned
features:
- It informs suppliers that an organization is looking to procure and encourages them to make their best effort.
- It allows for wide distribution and response.
- It ensures that suppliers respond factually to the identified requirements.
- It includes specifications of the item, project or service for which a proposal is requested. The more detailed the specifications, the better the chances that the proposal provided will be accurate. Generally RFPs are sent to an approved supplier or vendor list.
- It has all relevant corporate information of the client and expectations in terms of budget, time and delivery quality.
In today’s
competitive environment RFP’s receivable and response is also taken as an
indicator of performance of selling parties. RFP’s are also taken as a source
to improvise among competitors.
There are many incidences of false responses of RFPS’s where
sellers extrapolate and falsify their claims to fulfill the requirements of a buyer
to bag the order. In a nutshell, RFP’s are instrumental in making the optimal match
between a buyer and a seller in a competitive market however, nepotism and un
ethical reporting are two factors that abate the advantages of RFP’s to some
extent.
