Vendor Selection &

Development

Lecture 7-8

Prepared by Asher Ramish

Synopsis

 RFI’s, RFQ’s, RFP’s

 Essentials of RFQ’s or RFP’s
 Negotiating skills
 Focus throughout the process of negotiating

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RFI’s

 It is usually issued to acquire information on

what is available, from whom and what
approximate cost before writing an RFP that
is based on real information rather than
wishful thinking.
 Should be brief

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RFP’s or RFQ’s
 Requests for Proposals or Requests for Quotation are
more formal than RFI’s in that they request formal
proposals and cost information from vendors.
 Evaluation to be based on Greatest value & not
Minimum cost
 Normally used where discussions aren't required with
bidders (specifications are already known and cost is the
only issue to be evaluated).
 The Request for Quotation (RFQ) is an invitation for
suppliers, through a tender process, to bid on a specific
product or service.

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 Essential Contents of
RFP’s/RFQ’s
 An introduction about your company
 The most important sections include
– RFP objectives.
– Mandatory / Desirable requirements.
– Terms and conditions (if necessary now)
– Cost information (must deal)
– Vendor response format. (ease in evaluation)
– References.
– Others like corporate info., history, financial
info., technical capability can be added
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Negotiation

 Negotiation is a process or means by which we gain

what we need or want or desire from the other
party, preferably by fulfilling the same to the other
party to make it a win-win
 It’s a give and take process
 Dependant on skills (negotiating) extremely
 Because we may expose our weaknesses (e.g. losing
our temper) or we may be successful in elaborating
strengths.

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Why negotiate?

 To maximize the benefits of both parties

 To balance the wants and desires of both
parties
 To fulfill the priorities
 Must end up with no bad feelings
 To let vendor also clearly know about your
wants and desires

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Before negotiations start

 Choose the venue and the participants

 Decide upon a leader from your team, who knows
the best and have the best negotiating skills
 Know who you will be negotiating with.
 Is this a new market for the company?
 Prepare a list of issues to be covered.
 Make a list of what is must required and what is that
on which you can compromise
 Know whether you are asking too much or too little

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When the negotiations start …

 Have to adopt rational approach rather than an

emotional one
 Ask the vendor to justify their position.
 Use short, simple words and sentences to describe
the points of greatest importance to you.
 Know when to compromise. Make notes on
concessions won and given.

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Focus based on -----

 Enhancing competitive advantage rather

than reducing costs
 Taking costs out of supply chain, not the
vendors
– Cost reduction are taken as margin erosion by
vendors

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And after negotiation ends …

 Send a letter or e-mail as quickly as possible

summarising your understanding of the agreement
reached.
 Solve any problems of misunderstanding before the
lawyers start drawing up a contract.
 Sign a legal contract

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 “Why your supplier’s relationships
fail to deliver their true value” –
article discussion

 Survey result – “13% satisfied companies

in terms of contract realization”

1. Negotiation skills are lacked by managers; and

therefore should be properly learnt
The path to negotiation skills learning will help
managers to build their awareness of the business
and economic impact of their actions apart from
negotiating ability

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