6 Essential Steps to a Successful RFP (12-11-23)

The request for proposal is your company’s chance to audition potential logistics partners. If you want to find the right match, you must ask the right questions.

What is an RFP (Request for Proposal) and how does it differ from an RFQ (Request for Quotation)? The two common terms are easily confused but can make a world of difference when it comes to finding a transportation logistics partner for your company.

Simply put, an RFP details a company’s need for items or services. The RFP is then distributed among suppliers to discover who can offer the best overall deal. Suppliers respond with a description of their pricing, conditions, and overall business model.

An RFQ, on the other hand, is a request for a price quote to fulfill the goods or services you need at a service level you define. Bidders will respond not just with pricing, but with their qualifications and ability to fulfill your specific service-level requests. RFQs are sometimes called “request for qualifications,” and they are often used to narrow the field of potential vendors for an upcoming RFP process.

RFPs are the more specific of the two documents since they require potential partners to be more in-depth about what they will deliver and how they’ll get things done. A lot can depend on how well these first interactions go, so it pays for companies to know the foundations of a solid RFP.

Here are six things you must be ready to do before starting an RFP process.

1. Know your needs

Precision is the first step in any good RFP. Properly gathering and analyzing your company data will reveal exactly the kind of help that’s needed. An RFP that only presents a general outline of what your company is and what it requires may get only vague, financially inaccurate responses.

Don’t be afraid of adding too much detail about your business operations into the RFP. The better you define your operations, the greater the chance of finding a logistics partner who’ll be the fit you’re looking for. Add any questions you deem important — a clear picture of your situation coupled with service and cost transparency from suppliers helps start an RFP with confidence.

2. Research potential candidates thoroughly

Any potential partner worthy of your time will wear customer reviews on their sleeves. A website without testimonials may be all the proof you need that nobody has anything good to say.

Vet suppliers by checking their online presence on the website, social media, and consumer review sites. That kind of public press is something money can’t buy. If they’re recommended by previous clients, they deserve the consideration you’re about to give them.

3. What is the growth capacity and experience of your potential candidates?

It’s a given that all potential suppliers will need to meet your current requirements, but what about your future ones? Your goal in business is to grow, so be sure to ask candidates how well (and how quickly) they can scale up their services should you need this in the future. Any supplier with a limitation on their services may end up limiting you.

Every RFP should ask how much experience the candidates have with your business model. Your sector may demand that certain transportation rules are adhered to or a special set of regulations be met. Can the candidates comply? Remember: you’re not “just another business.” You’re a unique enterprise, and potential partners should view you as such.

4. Detail contract length and location, then weigh the risks

The old real estate adage “location, location, location” also applies to transportation logistics. Your customer base will be in certain regions, and potential partners must be able to successfully serve them.

Clearly stating where you plan to ship and how long your company wishes the logistics partnership to last is a crucial step in two ways. First, it helps your business budget effectively if there’s a contract end date in sight. Second, candidates can give you a more accurate (and possibly cheaper) price quote. It may be cheaper the longer you’re willing to sign up since a lengthier contract mitigates some of the supplier’s risk.

On the other hand, your business may view avoiding long-term risk as a priority over saving money and prefer a shorter contract. Shorter arrangements give your business more freedom to quickly end the supplier relationship if things aren’t satisfactory.

Speaking of timelines, your RFP should have a clear expiry time when it reaches your candidates. Let them know there’s a cutoff date to respond to your questions and make a proposal. It’s a simple step but a great way to root out companies who don’t care about your deadlines.

5. Appoint a communications representative

Calling your RFP draft complete is essentially the beginning of the process since one of two things will happen once you distribute it: Companies will contact your business to offer services or submit an RFI, which is a request for more information. Here are a few examples of the kind of return questions you may receive from a candidate.

Either way, your business should have a pre-selected party — preferably a single person or agency — ready to answer questions or make a deal. The right person is typically a shipping or logistics specialist who’ll have the necessary insight to respond to queries and the authority to create a contract.

It’s also important not to discount a possible logistics partnership if the candidate’s pricing or terms are less than perfect. If there’s more that’s good than bad in their offer, talking things out could ensure your RFP efforts weren’t in vain.

6. Get ready to negotiate

Negotiation is a diplomatic art that takes a perfect blend of industry experience, professionalism, and an appreciation of both sides’ points of view. Many companies might skip negotiations and pass on a potentially valuable logistics partner, losing the opportunity for a mutually beneficial relationship. Other companies may get too aggressive at the negotiating table and end up causing the same result.

Negotiating a great RFP deal from the beginning is just one of the things Resource Logistics Group can do for you. Let us assist your business every step of the way with RFPs, RFQs, and much more. We keep the power in your hands while taking the logistical weight off your shoulders, helping your business to grow into the future.

Resource Logistics Group provides transportation and logistics advice combined with professional services and state-of-the-art technology. From contract negotiations to easing back-office burdens, we’re your ally in excellence. Contact us for a free benchmarking analysis.