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.


Sourcing Leverages Spend

Sourcing differs from purchasing. It is a process that reviews company “spend,” then looks for ways that spend can be leveraged for better pricing, rebates, etc. A good example is in the area of corporate cards. Many companies use credit cards for day-to-day purchasing needs (office supplies, travel, and entertainment). Sourcing professionals often seek to combine this spend with that in fleet (particularly fuel, but often maintenance as well). There are even requests to use a purchasing card to pay for vehicle leases.

Sourcing RFPs often highlight a rebate for the spend leveraged. This revenue-sharing sometimes can be extended to fleet. However, what sourcing pros do not generally understand is fleet managers require data credit cards generally do not provide, such as odometer readings, unit price and type of fuel, and driver names and vehicle numbers. Lacking this data, additional rebates a sourcing RFP may provide in leveraging fleet spend with purchasing spend can be quickly used up by lack of control.

What sourcing pros do, however, is seek a product expert (in this case, a fleet manager), who provides detail on the product or service sought. Fleet managers must make clear the overall success of any fleet program depends upon the quality and detail of its generated data.

Requesting More Information

Sometimes, a company issues an RFI (request for information) to potential suppliers prior to issuing the proposal request, primarily because sourcing and purchasing functions are not familiar with the potential suppliers. While this practice may be useful, the fleet industry is small relative to other industries, and the fleet manager likely knows exactly who can provide what is needed. Lessors and fleet service companies are few in number, and the RFI is usually redundant to the fleet manager’s own experience and knowledge.

Breaking Down the RFP

The RFP consists of several sections:

■ Table of contents and introduction. This is a general statement of the RFP purpose and an outline of its contents.
■ Company background and fleet information profile. An RFP for a fuel card program, for example, would include data on past fuel spend in dollars and/or gallons.
■ Boilerplate language. Standard, generalized information is included, particularly if the RFP arises from a purchasing or sourcing document.
■ Deadlines. Time limits for questions and bid submissions are stated.
■ The request itself. The document usually includes questions regarding the candidate’s capabilities vis-a-vis the company’s requirements.
■ Response mechanism. A process to answer bidders’ questions is outlined.

Fleet managers can make a number of adjustments in tailoring an RFP to help choose the best suppliers and make the process go more smoothly. It is often a good idea to separate the boilerplate language from the body of the main RFP, if possible. This makes navigating the requirements much easier for respondents.

As previously mentioned, the pricing page should be geared towards a service program response, specifically a fleet program, if possible. Eliminate “unit” pricing and “extension” price requests. A maintenance management program is usually charged via a per-vehicle, per-month fee; note as much on the pricing page.

Overall, the document should be as simple and straightforward as possible. The real key is first to eliminate the “fluff” that often accompanies any supplier’s proposal. Highlight the elements important to your specific needs: technology, national coverage, face-to-face service, experience, etc. Finally, be honest. If, when all is said and done, the low bidder will get the business, say so. Just ask for a price and dispense with the rest.


Scoring Practices Should Vary

Judging responses depends upon how the RFP was structured and how responses address the important issues presented to potential suppliers.

One common way to find the best supplier through the RFP process is to use a scoring grid. Rank by importance the factors bidders are asked to provide. For example, let’s say the five most important aspects of a program are:

■ Price.
■ Technology.
■ References.
■ Service Levels.
■ Experience.

When responses are reviewed and analyzed, rank them on each criterion. Assume there are three responses: Companies A, B, and C. The lowest price gets 3 points, second 2, last 1. The same goes for the other categories. For example, Company A ranks 2 in price, 1 in technology, 3 in references, 3 in service levels, and 1 in experience. Company A’s total score is 10.

To further establish the standing of respective bidders, consider weighting the five criteria. It might look as follows:

■ Price – 40 percent.
■ Technology – 25 percent.
■ References – 10 percent.
■ Service Levels – 15 percent.
■ Experience – 10 percent.

These weights are applied to the already determined rankings. Company A’s 2-rating in price, multiplied by the 40-percent weight factor (2 x 1.4), results in a total price score of 2.8, and so on. The resulting totals not only provide a clear ranking of the candidates, but also a ranking weighted by each factor’s importance. Let’s review Company A’s complete score calculation:

Price:  2 x 1.4 = 2.8
Technology:  3 x 1.25 = 3.75
References:  1 x 1.1 = 1.1
Service Levels:  1 x 1.15 = 1.15
Experience:  3 x 1.1 = 3.3

Company A’s total weighted score is 12.10.

Scoring bidders in this manner provides a clear picture of how they rank relative to each other and to the criteria set by the fleet manager. Finally, this process weights the ranking by each criterion’s importance to the fleet’s needs. If based only upon written responses scored in this manner, the decision becomes simple. However, the fleet manager should take other steps to ensure a decision results in selecting the best supplier.

Taking the Next Step

The next steps in the RFP process depend on the number of bidders. In an extensive RFP with a large number of bidders, it is common for the issuer to “cull the herd,” narrow the candidates to a final group. These bidders can be given the opportunity for a “best and final” response in which they are permitted to adjust their responses.

Once this response narrowing is done (or when few bidders respond), the remaining candidates should be brought in for a presentation. Expectations of the supplier should be clearly outlined. Most suppliers have a number of presentations they use, from generic versions provided early in the sales process up to firm proposals.

To make certain time is well spent for both bidder and fleet manager, provide candidates an agenda for their presentations with firm time limits. Leave ample time for discussion and Q&A. The presentation agenda should accommodate questions that arose during the response analysis and scoring and allow the bidder to elaborate on aspects of the program of greatest interest to the fleet organization’s company. Agendas for different bidders do not need to be identical. For instance, you may want elaboration from one about ad hoc reporting capabilities and from another about the pricing offer.

Sometimes, asking for “negative” references can be useful. Negative references are customers who have left the supplier. Be fair, however, when incorporating such references into the decision. Every company has difficulties with customers arising from slips in service, pricing issues, etc. One way of going beyond references provided by the bidder (both positive and negative) is by networking, contacting other fleet managers to find out if their experience has been a good one or why they left.

Presentations can also be “scored,” albeit a bit less formally than scoring the RFP responses. Criteria for judging presentations includes:

■ How well-prepared were the presenters? Did they stick closely to the agenda?
■ Did they answer questions knowledgeably? How well do they know their own product or service?
■ Who attended the meeting? If a salesman will pass your account on to an account manager, did both attend?
■ What first impressions did the presenters make? Would you or your staff be comfortable working with them?
■ How much “filler” did the presentation contain? Was it to the point and fact-filled, or merely a dressed-up brochure?
■ Did the representatives express any research or understanding of your company? Do they truly understand your goals?


Learning through Visiting

After presentations have been made and “scored,” the next important step is to make an on-site visit to the candidate’s offices. A fleet manager can learn a number of important things about suppliers during these visits:

■ Is the office neat? Do the employees present themselves well? Do they exhibit enthusiasm about what they do?
■ If the service involves a call center, ask to sit in on a few calls. Listen to how staff takes calls, and how they deal with drivers, merchants, and fleet managers. Also note how they make transfers; “warm” transfers are best.
■ Request to visit the IT department and speak with staff there. Even if the fleet manager isn’t particularly knowledgeable in technology, find out what the candidate is doing to enhance its offerings, how flexible it is to changes or customization.
■ Do the bidder’s senior managers make time to greet you?
■ Ask to see how records are archived and what plans are in place for a disaster (redundant systems, transfer of call center, etc.).
Visiting bidders’ sites can provide not only insight on how they do business, but also an overall sense of the company, the atmosphere, and the tenor of employees at all levels.
The on-site visit is the final step in the entire decision-making process:
■ If the RFP is a standard document, arising from sourcing or purchasing, try to customize it to the needs of a fleet bid.
■ List the five major criteria on which responses will be judged, weighted in order of importance.
■ Score responses using a point system; the best receives the highest number. It is best to limit the scoring to only the top three or four candidates to facilitate a quicker and simpler process.
■ Apply weighting percentages to the score and total the scores for the top replies.
■ Invite the top responses to make a presentation, covering an agenda specific to their response.
■ Visit the top bidders (or the potential winner) before finalizing the award.

Finally, to be fair to all bidders, notify unsuccessful candidates the award has been determined. Thank them for their time and effort, and let them know where they fell short. Using a formal process such as this will go a long way toward ensuring the RFP evaluation leads to the best supplier for the fleet’s needs.