Procurement & Request for Solution

In my last post, I mentioned the need to select your outsourced supplier through a structured procurement process. There are many approaches to go-to-market. None are exclusive and you can decide to negotiate with the incumbent, then revert to an RFP and finish by an e-auction. All approaches are fine as long as it is a conscious decision and you have a clear idea of what you want to achieve (and not end up choosing the easiest path by default!).

In this article, I want to cover an approach that I used several?times for more complex cases, particularly?outsourcing. This process is particularly?effective when you have multiple options and no firm predetermined solution in mind: Request for Solution.

What is a "Request for Solution"?

A request for solution (RFS, sometimes known as a request for suggested solution) is a document that defines a technological or organizational condition and requests a solution from potential suppliers. Normally, this document is produced by the company that will benefit from the solution. The procurement organization maintains contact with potential suppliers to jointly find the optimal option.?

The difference between an RFS and a request for proposal (RFP) is that the RFS is significantly more open and allows for greater room for innovation. RFP and RFS both contain criteria, but RFS's are broader.??In an RFS, the customer provided general directions for the solution while imposing fewer constraints on specific technologies/approaches

In contrast to a comprehensive, buyer-led RFP, the RFS is a collaborative, open-ended approach. The customer explains its environment, goals, concerns, and risk tolerance, and potential suppliers respond with solutions that match those broad criteria.?The RFS can be used as the initial stage in a procurement process. Once a solution has been chosen, the process can go further by releasing a more precise and thorough RFP, for example.

To describe the difference between the traditional RFP process and RFS, I like the travel analogy. In?a traditional RFP process, you will ask a travel agent to find the most?adequate package for a family to fly from Stockholm to Paris and find a hotel?within walking distance from the Louvre museum (as you are a great fan of art & history) for a week in early July. Taking the RFS approach, you would say you want to take your family on a week trip, spend €3000 or less, and have a passion for History & Art. You will then select from the variety of options the travel agent provides that meets those criteria. So, you might not visit the Louvre but Saint Pierre in Roma instead. You will still have great holidays which fulfill your original needs.

?Why is it an important "tool"?

Like with everything, it is not the solution for all cases as it will take more time and energy. But, it is an important one to master to?achieve significant results. RFS will create an environment to:

• Force you to be honest and transparent with the current situation and articulate what you are trying to solve. It will help your organization to adjust resources, structure, and plans based on the findings. In one of the RFS we ran, I witnessed some significant evolution of the internal resourcing plans & locations based on the initial analysis of the situation we were planning to share with the suppliers.
• Foster innovation: The RFP process tends to “normalize” the proposals of various suppliers and create apples-to-apples comparisons. It virtually locks out any attempts to bring something creative to the table. The more detailed the buyer gets in the RFP, the less room there is for innovation or flexibility. On the contrary, RFS will reveal different options and approaches allowing to build a more innovative solution
• Increase focus on solution development vs. off shelves standard answer. It is very effective when a large transformation is thought off.?
• Achieve the best commercial output if well managed.?

RFS is not a solution for every case and in the next section, I'll try to highlight the approach and some of the challenges I have seen arising.?

How do you do it?

Like in most cases you want to put your plan on paper and adopt a structured approach while remaining flexible during the process if needed. The approach will be somehow similar to pulling together an RFP. However, there are a couple of major differences.

1. Assemble the team, agree on the approach and get the right sponsorship. No secret, it all starts with people as always. When you pull the team together ensure that everybody understands that the RFS will be time-consuming, will require transparent and regular communication with suppliers to achieve the best outcomes.

2. Agree on what you are trying to solve. Baseline is a critical element. You want to make sure that you describe clearly the scope and the problem you are trying to solve. However, stay away from solutions. It should come at a later stage and you don't want to be prescriptive.?

3. Pull together all information needed for the suppliers to understand your current challenge. Depending on the scope, it can form a significant pack. Be sure that your information has no specific jargon as it is intended to be shared with several external parties. You don't want to spend your time explaining acronyms.

4. Pre-select suppliers. You will have guessed by now that you need suppliers who are ready to spend the time and effort to collaborate through this process with no assurance of success. So, you need to be careful to pre-select those who will show the right mindset, understand your company, and are ready to invest resources. In one of the recent ones, we chose to involve only 2 suppliers who already had a significant footprint with us. We knew that the case was complex, would require a deep understanding of our infrastructure, and needed a fair involvement from their side. We had a challenger who was interested but decided to pass as we feared (knew) that they were underestimating the contribution needed from their side.

5. Review the approach to include the right level of collaboration. It is potentially the most important and time-consuming?activity in this process. In an RFS, we ran a few years ago, we successively had:?

• a guidance pack pulled together with all data,?
• a discovery workshop with key stakeholders and the preselected suppliers, followed by,
• collaborative solution design meetings, before,
• initial design & pricing submitted by suppliers. We then held,
• collaborative clarification/design review workshops,??
• before getting to a final design/pricing proposal submitted by suppliers

6. After completing the different reviews, you should be able to compile the best solution based on the work collected. It is then for you to decide how you take it forward. You can decide to finalize the solution with one supplier, pull everything together, and release an RFP to all suppliers involved in the workshops. I guess that there is no one size fits all. Having said that, as the successive?phases are generally time and resource-intensive, at this stage, you tend to negotiate one-on-one with the suppliers having the best offer at the RFS stage. But again, remain flexible.

Some critical elements need to be considered for a successful RFS:

Collaboration and teamwork, don't mean banning healthy competition. Competition motivates people to achieve more, to push past their limits. The competition also inspires innovation and improves quality.?

Be honest, prompt, and thorough. You want to ensure that in all meetings & workshops people are transparent. Nobody should feel unsafe about?raising challenges, asking questions, and answering them transparently. Likewise, ensure you follow up promptly on any open items.

Draw value from the process, Not just the result.?When you set up the initial framework, you want to be clear with everybody that you will build the final solutions from all collective works and give all suppliers participating a fair chance to refine the solution throughout the process giving them?feedback. Yes, the result matters but a lot of value-creating during the process needs to be captured.

Preselect the right suppliers and the right internal team. I know I wrote it already above but can't stress enough how important it is for success!

As said, RFS is one tool of the toolbox. It won't solve everything. It is a heavy process and requires a significant commitment from all. However, I think that it is important to consider it when you look for support in IT & technology?transformation, outsourcing, and more generally for complex problems without obvious solutions!