CWS 3.0: October 9, 2013

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Plan RFPs Carefully

Imagine you are an HR generalist and one day your manager calls you in to her office and tells you that you have been assigned to manage the contingent labor program at your company. This is an exciting development because the expansion of your company’s flexible labor resources have been identified as a key strategic priority. You are new to the category but after some research and internal evaluation you come to the conclusion that the best course of action is to conduct a sourcing exercise (RFP) for an MSP/VMS solution. You’ve assembled your cross-functional team and are going to begin crafting your sourcing strategy. Here are the steps you would need to keep in mind for this endeavor.

What’s the scope? First, you should begin with identifying and explaining the fundamental problems that you feel need to be addressed. Despite the obvious desire to make every possible value proposition that comes with an effective CW program, you should limit that to the three to five core components that will most resonate with your end users and the provider community. This background information will guide what to include in the RFP. What regions, labor categories and lines of business need to be in the project and what’s going to be important to each?

Be thorough. In compiling the RFP, what information should you provide to the providers? The simple answer is as much as possible. Many CW managers disclose too little, fearing the loss of confidentiality, but the unfortunate consequence of such a decision is that very few competent providers will be willing to give an appropriate quote or even participate in the bid process. Those running the RFP are often taken by surprise when providers refuse to participate in the process. When asking why, one of the most common reasons is the reluctance to commit resources to competing in the RFP if the requirements and the scope of opportunity are not clear.

Many sourcing professionals often forget that each response to an RFP takes significant resources in terms of man hours, travel expenses, collateral creation and marketing support. Participating in an RFP process represents a significant investment on the part of a supplier — anywhere from $40,000 to $100,000 or even more. Recently, a buyer was lamenting to me the poor response to his RFP. Upon examination of the RFP, we identified that the specificity in the questions was not supported by the type of information provided to the participants, and some strong providers were unwilling to commit the resources necessary to put together the response. With this in mind, each proposal becomes a simple question of potential return on investment by participating. By not providing sufficient detail the question becomes that much easier to answer with a “No Bid” decision.

Identify the provider. The next step is to identify a competent provider, and many get this wrong as well. Part of the job of putting together a strong RFP process is the understanding of how a provider is going to be successful in your environment and building an RFP from that standpoint. Many RFPs are written solely from the standpoint of the client company, forgetting that the MSP has to be successful for the program to be successful. Simply putting together a 250-question RFP does not a good project make. What will the eventual implementation be like and does the MSP have experience implementing similar programs? How will your end users be trained and what does the MSP need to do to share their expertise in this area? What types of after-hours support will be required and how has your MSP provided such support for other clients? These are just a few of many considerations, but most important, you need to understand your company’s corporate culture and make sure the MSP has a culture that complements yours. Too often a program fails because the parties just don’t jibe, the company may be focused on solely on cost and efficiency as a culture but ended up selecting a quality- and talent-focused provider, or vice versa.

These are just a few of the many important considerations that you need to address before beginning your RFP process. While managing an RFP is often a long and difficult affair, by remembering a few important concepts you can best set yourself up for long-term success.

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