RFPs are Broken, Here’s How To Fix Them
Request for Proposals (RFPs) have long been a staple in the Pharma industry and are a tried-and-tested means for procurement to outline the business requirements and to identify and select potential suppliers.
However, despite their intended purpose, RFPs often fall a long way short of achieving their goals.
Why is this?
Suppliers respond to an average of 150 RFPs per year (source) – that’s 3 per week – and typically involve a team of 5+ people to answer all the requirements. (Source: loopio). It’s a lot of pressure and time which often ends in disappointment.
In the latest episode of PharmaSource podcast Jill Robbins explains that the RFP process encourages procurement to have a tactical and transactional relationship with suppliers.
“Too many people in procurement and strategic sourcing get fixated on how much did I save on this event or this RFP? And there is a better metric, and it has to be value.
Procurement should be about more than just savings, and sometimes a supplier may cost more but if they are delivering things faster, and you don’t have disruption in your service or disruption in your supply that is worth its weight in gold.”
In this article, we will explore the limitations of RFPs and propose 7 alternative strategies to foster successful partnerships with suppliers within the pharmaceutical industry.
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The problem with RFPs
RFPs have traditionally played a crucial role in the procurement process, aiming to achieve transparency, competitiveness, and efficiency. They enable pharmaceutical companies to communicate their needs effectively, compare supplier offerings, and ultimately select the most suitable partner. Moreover, RFPs serve as a foundation for negotiation, contractual agreements, and ongoing relationship management.
While RFPs offer certain benefits, it is crucial to acknowledge their limitations and the challenges they pose for both buyers and suppliers.
Some of the key issues with RFPs include:
1. Overemphasis on Price
RFPs often focus excessively on price, undermining the consideration of other vital factors such as quality, innovation, and long-term value.
2. Lengthy and Complex Documentation
Traditional RFPs can be excessively lengthy, filled with technical jargon, and burdensome to navigate. This deters potential suppliers from engaging and diminishes the quality of submitted proposals.Poorly written requirements can cause suppliers to make mistakes on their proposals that can cause significantly higher costs to the business.
3. Lack of Collaboration
RFPs typically follow a one-way communication approach, limiting collaboration and creative problem-solving opportunities between buyers and suppliers.
4. Inflexibility
RFPs tend to prescribe specific solutions without leaving room for supplier expertise and creative alternatives that could potentially provide superior outcomes.
5. Slow and Inefficient Process
The time-consuming nature of RFPs can lead to delayed supplier selection and contract finalisation, hindering the overall efficiency of procurement processes.
7 ways to fix the RFP Process
To address the shortcomings of RFPs and foster meaningful partnerships with suppliers, pharmaceutical procurement teams can adopt the following alternative strategies:
1. Early Supplier Engagement
Involve suppliers in the initial stages of the procurement process, allowing them to contribute their expertise and insights to shape requirements and solutions collaboratively.
2. Outcome-Oriented Approach
Shift the focus from detailed specifications to desired outcomes, enabling suppliers to propose innovative solutions that meet the underlying objectives.
3. Pre-Qualification and Shortlisting
Implement a pre-qualification process to identify potential suppliers based on their capabilities, experience, and alignment with your organisation’s goals. Shortlisting a smaller group of suppliers allows for more focused discussions and reduces the burden on both sides.
4. Simplified Documentation
Streamline the RFP documentation, making it concise, clear, and easily understandable. Use plain language and eliminate unnecessary technicalities to encourage wider supplier participation.
5. Evaluation Criteria Balance
Broaden the evaluation criteria beyond just price and upweight factors that speak to alignment with your corporate goals. such as supplier diversity, quality, reliability, sustainability, and supplier capabilities. This ensures a more comprehensive assessment of supplier proposals to find suppliers that might be a better fit for your organisation’s longer term objectives.
6. Two-Way Communication
Establish open channels of communication with suppliers throughout the process. Encourage feedback, provide clarifications promptly, and promote collaboration to facilitate the development of mutually beneficial solutions.
7. Agile Procurement Methods
Explore agile procurement methodologies such as iterative prototyping or phased implementation, which enable faster decision-making, reduced risks, and increased adaptability to changing market dynamics.
While RFPs have long been a standard procurement practice in the pharmaceutical industry, it is crucial to acknowledge their limitations and embrace alternative strategies that foster successful partnerships with suppliers.
Have you got any advice you can share for better RFPs?
Expert Workshop: Bridging the Gap between Procurement and Sales
Jill Robbins Fractional CPO for Biotechs and has experience in running procurement teams at Eli Lilly and Elanco Animal Health.
This month she is running an exclusive workshop for PharmaSource members, sharing best practices for how to create better, more strategic partnerships with suppliers in the pharmaceutical industry
When: 28th June 2023
Where: Online
Numbers are strictly limited, so reserve your space now to avoid disappointment
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