Tuesday, June 26, 2012

Why are they asking that?

I recently responded to an individual's question about a company that issued an RFI and was looking for the companies to provide them with a list of exceptions or objections. Any time you have an unusual request, and asking for exceptions or objections at an RFI stage is in my opinion unusual, you should always ask yourself “Why are they asking for this and how will the use this information?”

The simple fact is RFI’s are never a binding document. Frequently companies will change things between RFI requirements and what they include in a RFP or IFB, so you want the flexibility to change your position based upon both any changes they made. You also may want to make changes to reflect changes to your business that may have occurred in the interim. If you have business near capacity you may be stricter in what you require versus when you need the work.

My opinion was the company may have been be doing that to screen out potential suppliers based upon the exceptions or objections. Alternatively they may want to be use it as a negotiation tool for when there is a RFP or Bid situation, where they would point out that you didn't object to them in the RFI. The consensus was to keep any exceptions or objections you provide to an absolute minimum if you want to be considered for the work. If I did provide exceptions or objections, I would also make it clear that they a subject to change either way and are based only upon the information that you have seen in the RFI. As such, they may be expanded upon or could be eliminated once you see the full documents for the bid or proposal. That way you are not giving them ammunition to eliminate you from consideration and as there undoubtedly will be changes between the documents, you have reserved the right to change your positions. Another reason why I would avoid providing a list of exceptions or objections at that stage comes from the old saying “you only have one time to make a first impression”. If you set a negative example, not only may you not get to bid on that work, you could also be not considered for other work in the future.

The same advice goes in part when you are bidding work. If the Buyer request prices at different volumes and you know that some of the volumes are far in excess of what they will purchase, beware. Ask the same questions, “why are they asking it and how will the use it?” It’s not uncommon for a buyer to want to buy at a 100,000 unit price, when they are only buying 10,000 units or less. If you must bid those volumes you could propose them as step pricing, where the actual pricing only goes down after the customer has purchased those volumes. Alternatively you could offer that price with a bill-back requirement if they fail to meet those quantities. One of the things you discover is when there is a cost that will be charged back if they fail to purchase those volumes, the volumes get more realistic.

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