Understanding Your Business: The Key To Buying Smart RFP Part III: Are You Willing To Invest?

From the Aug. 2009 Issue

It wasn’t unusual for Sonny Riceman to get a morning call from Bob Jones, one of the major suppliers for his chain of Far Eastern Foods Stores. What was odd this time was the question: “You up for a round of golf this afternoon?” asked Jones, who was known more for long work hours than leisure afternoons. Riceman wasn’t amused.

His Far Eastern Foods company bought a lot of rice and cooking oils from Jones, a local distributor of international foods. Recently, he upped his orders for noodles and flavored teas, and they sold well. But he wasn’t happy about unsold cases of cookies that were expiring quickly.

“We had the same problem,” said Jones. “Then I discovered too many cooks spoil the broth. Now I’ve fixed the problem, and that’s why this golf game is on me. You interested?”

Riceman commented, “I have no time to take off work. Would this have something to do with that company you paid to follow your people around?”
Jones was quick to reply, “It does. So let’s plan for a twilight round after work. See you at 6:30 on the first tee.”

It was three months ago when Jones mentioned that company as he reviewed responses to his RFP (Request for Proposal) for replacing his old accounting software (as we covered in this column in the June and July issues). Jones figured the RFP was the way to go when he read that the City of Birmingham saved millions on a street paving project when a hungry contractor bid half of what was expected. Even the Air Force used the RFP to replace their aging fleet of refueling tankers.

Jones tasked his assistant operations manager, Bret, with developing the RFP. Bret talked to accounting and purchasing, sales and the warehouse to identify the “features and functionalities” they wanted. Being technical, the RFP also included questions about systems and remote access.

Four companies responded, including one that quoted $10,000 below any other and a company that asked Jones to pay $2,500 for a “Feasibility Evaluation.” That suggestion landed them on the bottom of the pile. But, after two of the others did “generic demos,” Jones was feeling like the Air Force generals who ordered “a cooling off period” after the winning bid was announced when some in Congress questioned if the specs effectively represented all the military’s needs.

The RFP had narrowed the field of who met the specs to take Jones’ 28-year-old distribution company to the next level, but he was skeptical that any of them understood enough about his pricing needs and date-sensitive inventory to deliver the right solution. He accepted that most choices could handle 80 to 90 percent of his routine business needs “out of the box,” but agreed to the “Feasibility Evaluation” after acknowledging it would be beneficial if the consultant saw first-hand how his team dealt with the 10 to 20 percent that was unique and vitally important.

THEY CAME. THEY SAW. THEY ENLIGHTENED.

There was still an hour of sunshine left when Jones and Riceman met at the first tee.

“OK, you paid $2,500 for this company’s consultant to watch your business from the inside. What did you find out?” asked Riceman.

“That our mutual friend Bo, my sales rep who handles your account, charged my credit card for an overnight shipment from L.A. of the herbal teas you ordered for delivery in September. It seems that the teas in inventory had expired so we couldn’t ship them. That was my first eye opener,” said Jones, relating what the consultant shared as they reviewed the results of the Feasibility Evaluation. “On top of that, it was not the first time something like this had happened.”

Riceman’s first hit went right down the fairway. He smiled, at both the shot and how Jones had taken care of him when he didn’t even know it.