May 2009, Fleet Financials - Feature
Evaluating RFPs: Choosing the Best Supplier
Effective use of a formal request for proposal (RFP) can help fleet managers ensure they’ll select the best supplier. The process begins before the RFP is even sent out.
By Staff
It has become the standard method of choosing suppliers: the formal request for proposal (RFP). Gone are the days when the veteran fleet manager simply called known suppliers and asked them to “send me a proposal.” Today, strategic sourcing is more commonplace, and fleet is viewed not as merely a function, but also as “spend” — expense that can be leveraged into better pricing and savings for the company.
Fleet managers, unfortunately, sometimes feel left out of the process. Sourcing and purchasing professionals have their own way of doing things, and in many cases, it isn’t the way with which fleet managers are familiar. How can a fleet manager ensure the process works for all? How do fleet managers make certain they don’t get “stuck” with programs and suppliers that don’t fit their needs? The following ways can help avoid the sourcing/purchasing trap and make RFPs work for fleet.
Using a More Formal Process
In the early days of fleet management, fleet managers both suffered and benefited from a relatively low profile in the company. The fleet manager was the “car guy,” sometimes viewed as little more than a mechanic wearing a suit. As the profession matured, fleet managers became more vocal in seeking recognition for their contributions to the company and with that came greater scrutiny (not entirely a bad thing).
At that time, the formal RFP was the exception rather than the rule when choosing fleet suppliers. Fleet managers were visited regularly by representatives of all manner of suppliers. When the time came for a change, it was merely a matter of picking up the phone and asking for a proposal. Not any more. Companies have become far more serious in managing suppliers and negotiating the best deals possible by including fleet “spend” with a number of other expenses.
The result? While fleet management has always been every bit as serious an undertaking and every bit as professional, the process of sourcing was admittedly more casual. Not so with purchasing and its latter-day offshoot, strategic sourcing. Buying shop supplies or choosing a vendor for quarter-inch metal screws is a formal process, involving formal requests for proposal from potential suppliers and a formal review and analysis process initially alien to fleet managers.
Understanding Purchasing RFPs
The purchasing function is self-definitive; purchasing is, well, purchasing. The purchasing department’s job is to find a supplier for a commodity, service, or piece of equipment, generally at the lowest price (although other factors, such as ordering process, shipping times, etc., are considered).
Purchasing RFPs is usually geared toward the purchase of things, rather than services, and if purchasing requires a fleet manager to use a particular RFP format, some adjustments are usually useful:
■ Pricing. Commodity and product pricing is often expressed in “units” and “price per unit.” If the RFP can be altered to ask for pricing as usually expressed in the fleet industry (fee per vehicle per month or transaction fees for services, for example), or in a generic “price” request, confusion with bidders can be eliminated or eased.
■ Language. Delete language regarding “shipping” or “packaging.”
■ Warranty/Guarantee. Adjust warranty or guarantee language to fit the fleet service sought.
A purchasing RFP can be edited to be more “service-friendly.” If nothing else, this step helps reduce the number of questions bidders ask in the pre-bid process.