One of the most challenging parts of running a successful request for proposal (RFP) is the vendor selection process, however, it might be the most important. Afterall, picking the best supplier is the whole purpose of issuing an RFP. Not to mention, by the time you’re ready to evaluate proposals, you’ve already invested an enormous amount of time and effort on the project. And the future success of the project depends on your selection. So there’s a lot of pressure to get it right.
In this blog post, we’ll explore the vendor selection process. I’ll offer a guide to the vendor selection steps, advice for creating the criteria and scorecard, as well as best practices. With this information, you’ll be well-equipped to confidently select the perfect partner.
Vendor selection steps
The vendor selection process is one of the final steps in strategic sourcing. Admittedly, it takes time, but selecting the right supplier is worth it. As The Balance Small Business blog puts it,
“The main objective of the proposal evaluation and vendor selection phase is to minimize human emotion and political positioning in order to arrive at a decision that is in the best interest of the company.”
In order to create a successful supplier selection process, you must reduce the possibility of bias or a misunderstanding skewing the results. These vendor selection steps will help create a clearer, more data-driven approach.
1. Gather your guiding documents
Before you build your scorecard or provide instruction for stakeholder scoring, reviewing some initial project documentation will help bring clarity to the evaluation process. Ideally, much of the necessary groundwork for vendor selection happened in earlier stages of the RFP process. Gather documentation about the original goals and purpose of the RFP.
When it’s time to evaluate the proposals received, you’ll want to refer back to information from the requirements discovery step. Especially when working with multiple scorers, it can be crucial to keep everyone on the same page when it comes to goals, scope and budget.
The requirements discovery documentation should define the challenge to be solved, goals and proposed project information. The document should be a compilation of all the stakeholders’ needs and priorities. Having this information handy will remind the evaluation team of the original scope of the project — keeping them focused on needs instead of wants.
RFI results and vendor profiles
If you issued a request for information (RFI) or used vendor profiles to create a shortlist prior to issuing the RFP you’ll want to have the responses available for reference. It can be helpful to compare the RFI results with the formal proposals you received. In addition, the RFI or vendor profile may provide additional context or information if you have two vendors who score very closely and you need a tie breaker.
Vendor selection criteria
Hopefully the RFP included your vendor selection criteria. If so, you’re already halfway to having your scoresheet ready. As you start to prepare your vendor selection scorecard, follow the established criteria as closely as possible. Remember that vendors or suppliers generally spend more time preparing thoughtful solutions and answers to the sections that you indicate are most important. Subsequently, they should be weighted accordingly.
2. Create your proposal evaluation team
When it comes to picking the right supplier or vendor for a procurement project, it’s wise to welcome outside input. Stakeholders and executives who are most directly affected by the project’s outcome can provide a valuable perspective. For example, they can identify gaps in a solution’s offerings, see potential roadblocks and offer additional context around complicated RFP responses.
Bringing in additional reviewers to score the proposals also offers transparency to the selection process. This approach can speed adoption, create solution champions and help get detractors on board with change.
When selecting the evaluation participants, define how each will be involved from the beginning. Will they be responsible for scoring, consulting or simply observing the process? It may be tempting to skip this step and assume everyone understands expectations, but we urge you not to. Often when the supplier selection process stalls, it’s because the roles and responsibilities weren’t clearly defined, so it’s not clear who will make the final decision. You may find a RACI matrix helpful for organizing the scoring team and keeping everyone on track.
3. Build your vendor selection scorecard
To make scoring easy for your evaluation team, create a vendor selection scorecard based on your vendor selection criteria. After you’ve created the scorecard that reflects the RFP questions, set the weights for each section. We highly recommend weighted scoring as a way to prioritize the sections of the proposal that are most important to your business.
Most procurement teams use complicated Excel spreadsheets to manage vendor scoring. You can use a vendor selection scorecard template to manually manage weighted scoring. The process works, but has some drawbacks. Vendor selection scoresheets managed in Excel often run into version control issues and make compiling the results difficult.
On the other hand, RFP software offers an automated approach to the vendor selection scorecard. The platform allows you to centralize scoring, assign stakeholder scorers and review the results in helpful data visualizations.
Explore all the benefits and value that RFP management software delivers [ebook].
Much weighted scoring is done with complicated formulas in an Excel spreadsheet, but if you have RFP software, you’ll be able to do this step more collaboratively and you may even be able to automate some of the functionality. This is where RFP software really shines. When you’re looking for an apples-to-apples view of your options, RFP software makes it easy.
4. Score the proposals
Before you begin scoring, consider the best way to involve all the necessary parties. Will you have stakeholders score the entire proposal, or just the sections relevant to them? Or, will your stakeholders form departmental teams and score collectively?
In addition, will you be scoring blind or will evaluators know which company submitted which proposal? We recommend blind scoring if possible to avoid any unintentional personal bias of the scorers.
No matter which tool or process you use to score your proposals remember to provide clear guidance on how to score. This is especially important when you have more than two scorers. Everyone should understand what constitutes a good score. Use your requirements discovery to help create your score guidance.
5. Make your final supplier selection
You made it to the end of the process. Hopefully, if all went well, you’ll have a clear winner. However, the process isn’t always cut and dry. You may need to advance the top two or three vendors to a finalists list for further review or clarification.
If you need to continue the process, consider asking these supplier questions. And remember to follow up with vendors and provide progress updates. If you’re moving into a finalists process, update the vendors that didn’t make the cut. If it’s possible to provide feedback, don’t hesitate to offer insights about your decision.
We know that when it comes to vendor selection best practices, there’s no one better to ask our friends at Lockton’s HR Technology and Outsourcing Practice. Led by Brad Mandacina, they created a list of dos and don’ts for the vendor selection process. These tips will make it easier to choose the right vendor and reduce some of the stress surrounding the process.
The dos and don’ts of the supplier selection process
An even easier vendor selection process
The vendor selection process requires an extensive amount of resources, time and personnel — for good reason. Selecting the right vendor the first time can create a significant savings for your business. Following vendor selection best practices and steps will improve your chances of making the right choice. If you want to see how much easier it is in RFP360, schedule a demo.