Creating Requests for Proposals

A request for proposal (RFP) is an event that collects information about suppliers' qualifications and pricing information.

It gathers competitive market and pricing information by specifying what the customer is looking for and describes each evaluation criterion on which a vendor's proposal is assessed.

Although pricing information can be collected, price might not be the most important factor in the selection.

RFPs can be helpful when:

• Obtaining first-round pricing in preparation for an auction and help eliminate noncompetitive suppliers.
• Sourcing nonstandard items. The RFP allows for additional information gathering and facilitates easier comparisons of nonstandard products such as software or cleaning services.
• Comparing various possible options.
  • Project owners can add terms to address all negotiable aspects of a certain deal, for example, contract terms and specifications, and easily compare different proposals.
  • In closed RFPs, suppliers can respond without fear of revealing anything to competitors, since only the project owner and team members see the information.

• Allowing suppliers to differentiate themselves through the bidding process by highlighting the following:

  • Product differences: If the project owner is sourcing a non-standard product or service, suppliers can include information about why their product/service is superior.
  • Services offered/provided: Project owners can request for information about associated services offered by suppliers related to the RFP, where suppliers can upsell or market more services or goods.

Project owners control how much information suppliers can view about other suppliers’ bids, which affects the level of competitiveness of the event.

What is a Closed RFP?

If the rules don’t allow suppliers to see any bid information from other suppliers, the RFP is called a closed RFP. In closed RFPs, suppliers typically submit a single bid, but can change and resubmit their bid if desired.

Common uses for closed RFPs:

• Obtaining first round pricing, or if there aren’t enough suppliers to drive competitive bidding.
• Using as a qualifying round to narrow the supply base in preparation for an auction.
• Gathering competitive market information without revealing feedback to suppliers.

What is a Competitive RFP?

If the rules allow suppliers to see information such as the lead bid or the supplier’s own rank in an event, then the RFP is considered competitive. Therefore, suppliers usually bid multiple times, trying to out-bid their competitors to win the business.

Common uses for competitive RFPs:

• Suppliers see competitive information (rank and/or price) in real time and submit multiple bids to out-bid their competitors.
• Offer an alternative to auctions since the focus isn't just on collecting final pricing.

RFPs can be open for responses for an arbitrary amount of time (several days or weeks), allowing participants to log in and respond at their convenience.

To publish the event, project owners must set the duration, which can then be adjusted by event administrator team members after publishing.

If an RFP contains many questions, you can use the grading and scoring feature to rate the importance of questions and pricing. To create a final score for each participant, you can then grade participants’ answers .

There are two standard request for proposal templates in SAP Ariba Guided Sourcing:

1. Request for Proposal - Guided Sourcing Template
   • A forum for sections, questions, requirements, and can collect line items or lots without complex pricing strategies.
   • This template is light and neutral and doesn’t have many rules delegated that alter the competition or supplier visibility settings. 
2. Request for Proposal with Total Cost - Guided Sourcing Template
   • Suppliers submit a price (per unit), and a total cost is calculated using the price, quantity, and factors added as cost terms. 
   • Cost terms can be added, subtracted, multiplied, or discounted for each unit in a line item or collectively to a line item (not multiplied by the quantity).

Note

We cover pricing and bidding strategies in these templates in more detail later in this unit.