How to Combat Supplier Cost Increases by Automating Your RFQ Process

How to Combat Supplier Cost Increases

RFQ, ESOURCING, reduce costs
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How to Combat Supplier Cost Increases by Automating Your RFQ Process

As the world recovers from the last few years of high inflation, geo-political instability and supply chain challenges, many organisations are now facing significant price increases from their suppliers. 

By automating your RFQ process not only do you save time, but we are confident you will get a better market price.

This ‘day in the life’ article walks-through a real-life example of running a Request for Quotation (RFQ) through Market Dojo Sourcing to show the tangible benefits of automating the process (as opposed to using spreadsheets and manual processes), how to overcome any issues, and the substantial savings that were achieved. 

The example is for sourcing IT services but is equally applicable to any sourcing category.

Here is how Market Dojo’s CTO, Nic Martin, saved 50% on the previous year’s cost by using Market Dojo Sourcing


Every year, our development team commissions an IT services company to test the security of the Market Dojo platform. This specialised piece of work is known as a ‘Penetration Test’ and represents a significant cost to Market Dojo. To run the event, we used our own sourcing solution, Market Dojo Sourcing, to negotiate more efficiently with our suppliers. The results took us by surprise. 

DAY 1 – CREATING THE RFQ

To begin, I documented all our requirements. 

This document explained the service we wanted delivered; the payment terms; timelines; and everything else needed to ensure all the quotes we received would be comparable. 

Fortunately, we had been through this exercise before so I could refer back to the questions that the suppliers asked last year. 

Next, I created an RFQ event in the Market Dojo Sandpit (our virtual test environment for sourcing events) and added a short questionnaire to collect information from our participants. 

We would be awarding the business to just one company, so I added a single lot to collect prices for the entire service. 

Using the Sandpit meant that I could do a test run of the event to make sure it worked the way I expected, before asking a colleague to review the event.

I am fortunate to work with some of the world’s leading e-sourcing experts, so I got a “Rolls Royce” review! However, anyone with a background in procurement would be able to help at this stage. The review led me to add some more clarification to my document, and a couple more questions to my questionnaire.

While my colleague was reviewing the tender, I decided to find some potential participants. I already had a list from last time, but I decided to include more providers from the industry website crest-approved.org (Gartner Peer Insights and Software Advice, or G2.com are other great sources).

Once we had our list of suppliers and were happy with the tender, I added the first 10 participants to the list and clicked ‘Invite participants and finish’. 

By adding 10 to begin with we were able to identify any gaps in the requirements that we had missed. (As this was new to many suppliers, I decided to send an email to them all from my own email address, to make sure they knew to look out for the invitation but this was one of a few direct emails that I needed to send which saved precious time.)

Over the next few minutes, I was able to see as the tender was delivered and when people had opened them. Seeing people receive my invitation was a really exciting part of the process. 

On Demand Sourcing Software by Market Dojo

DAY 2

11am 

Mid-morning, I received a call from one of the participants who wanted to introduce themselves. 

We had a good call and I was able to make a note of the conversation directly in Market Dojo Sourcing. I also asked the participant to send a relevant link using the platform’s messaging feature, so that I could refer back to it later, without having to wade through all my emails.

6pm

I saw that I had been emailed a quote. I wasn’t surprised, as I knew that the participants would be generating a lot of quotes for similar work, and would probably prefer to use their workflow (i.e. email), than mine. 

I replied asking if they would be prepared to upload the quote to Market Dojo Sourcing and explained how this would help us both. 

This email was saved as a note against the participant I had invited to ensure there was a record of the communication and that the email, if required, could be sent to another supplier (saving me time in the future).

DAY 6

2pm

I had received a few notifications from the platform, so logged in to address them.

There were two full submissions (questionnaire and price), one of which was better than the price we received last year.

Now I was confident that the event included everything people needed to respond, so sent out the tender to my extended list of potential providers. 

Again, I followed this up with an email from my personal account, telling people to watch out for the invite (for subsequent tenders, this would not be necessary). 

In the first five minutes, I received eight responses from people to say they would take part.

DAY 7

I got a number of emails throughout the day with follow up questions. 

Instead of replying via email (and adding to people’s Inbox), it was easy to use the platform’s message board, marking the messages as done as I completed them.

A few suppliers responded to say they were unable to offer the service I wanted, so I thanked them for letting me know and simply declined them from the event.

As I’d invited nearly 20 suppliers, there were a few questions to answer. However, by using Market Dojo Sourcing, the process was much easier to manage, and it helped that the questions were not mixed in with my regular emails.

DAY 8-20

I received emails and phone calls from participants sporadically. Generally, it was very easy to track messages and reply to them.

Initially, some participants sent submissions by email, but when requested, they were happy to re-submit them on the platform.

DAY 21

The day before the RFQ deadline, the software sends an automated message to people that have not finished their submissions. 

This brought in a flurry of last-minute bids and a couple of extra questions.  

DAY 22 – DEADLINE DAY

Again, I got a number of new submissions and questions. 

There were a few people that decided at the last minute not to bid, which at this point wasn’t a problem. This might have been concerning if it had happened at the start of the process, but by this stage, I had already received several good proposals. 

Once the deadline passed I checked the scores and answers for the leading submissions. This was super quick and easy as all responses were in one central location (and more importantly, I didn’t have the tedious task of doing this manually). 

After a quick review with my team, we decided the contract would be awarded to the participant who had provided a good proposal, met our criteria and was 50% cheaper than the supplier we had used last year. Using the platform, I messaged the winning supplier to confirm the details of the bid.

DAY 23 – SELECTION

The selected participant sent final confirmation via the platform and the contract. 

Interestingly, there were a couple of enquiries from other participants asking when I would announce our decision which was a good indication that we had created a competitive event. 

DAY 24 – AWARD

The contract was signed and returned to the selected supplier. I also saved a copy in our contract management software, and set up automated notifications in Market Dojo Sourcing for when it was time to re-run the exercise next year.

Finally, I sent a message to inform the other participants they had not been successful and included feedback on why they had not been selected.

3 KEY LESSONS LEARNED

1. Using Market Dojo Sourcing made it easier to negotiate; it felt like there was more transparency in the process rather than managing through emails; and ultimately, achieved a great result for the company.

2. Having a clearly defined scope made conversations with our suppliers very simple and I was able to clarify exactly what we would be assessing people on (thanks to having a fairly rigid list of questions in my questionnaire). This gave me confidence that all the offers were comparable and made it very easy to select the winning bidder. Also, I love the fact that I can re-run the tender again next year without having to start from scratch.

3. Next time, I will commit to a timeline for the decision process and include it in the requirements document. This will streamline the process even further, preventing a number of the messages and phone calls that I received. 

MORE RESOURCES

Managing tenders through spreadsheets and emails is often the cause of prolonged RFx times and there are numerous benefits in using specialised sourcing software. Watch the short video Combat Supplier Cost Increases by Automating Your RFQ Process

To learn more about how Market Dojo can help you streamline your processes, saving time and money, download our eGuide The Ultimate Sourcing Starter Kit or Book a Demo with our sourcing specialists.

Download the Ultimate Sourcing Starter Kit eGuide

January 25, 2024
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