RFPs: Pitfalls, Performance, and Platitudes

RFPs can be friend or foe in obtaining low cost, high service levels
By Robert T. Yokl, Chief Value Strategist, Strategic Value Analysis® in Healthcare

One of the most overlooked power tools in a supply chain manager’s toolbox are his or her “Requests for Proposals (RFP)”. Yes, these multipage documents can be your best friend or your worst enemy in obtaining the lowest cost, highest service levels and the right product or service at the right time. Most importantly, these official papers are a window for competitive intelligence into the marketplace. If you decide not to use RFPs as a competitive weapon (and negotiate instead), then you are really flying blind in an unforgiving marketplace!

One of the unintended consequences of GPOs is that healthcare organizations don’t employ RFPs as frequently as they previously did to acquire their products, services and technologies. Hospitals, systems and IDNs have literally outsourced this function to their GPOs, thereby, losing the opportunity to keep their fingers on the pulse of the healthcare supply chain marketplace. This trend has changed somewhat, over the last few years, with physician preference items that are now routinely bid by healthcare organizations with stellar results. There again supporting my theory that RFPs are still one of the most powerful supply chain tactics in a supply chain manager’s toolbox.

Unfortunately, too often the outcomes of RFPs can be confusing, costly and deficient if not prepared carefully, methodically, and accurately by supply chain managers. I can make this statement with some confidence since I have been on both sides of the table in these transactions and I have seen the good, the bad and the ugly from every point of view.

For instance, if you confuse suppliers with your RFP platitudes (a lot of words, but no background, specificity or deliverables) your respondees to your RFPs can only guess at what you are thinking and usually make the wrong assumptions. I personally try to have a meeting or conference call with my contacts to clear up any confusing language, but every supplier doesn’t have this policy which can make matters worse, leading to some suppliers having the right information, while others are bidding on inaccurate facts and figures. The end result is that everyone is bidding on different parameters, specifications and deliverables and no one gets it right. Don’t make these same mistakes with your RFPs, if you want to have crisp, clear and definitive conclusions with all of the RFPs that you propose.

To sum up, writing and evaluating RFPs is actually an art and science as well as a learned skill that shouldn’t be acquired on-the-job. There is nothing worse than acquiring the bad habits and accepting poor advice as gospel from your peers to perpetuate mediocrity. To this end, there are dozens of excellent books, seminars and workshops on this topic that I would encourage you to avail yourself of, so you too can become proficient in employing this powerful supply chain tool that can give you an edge in the healthcare marketplace.

About the Author

Robert T. Yokl
Robert T. Yokl is president and chief value strategist of Strategic Value Analysis® In Healthcare, which is the acknowledged healthcare authority in value analysis and utilization management. Yokl has nearly 38 years of experience as a healthcare materials manager and supply chain consultant, and also is the co-creator of the new Utilizer® Dashboard that moves beyond price for even deeper and broader utilization savings. For more information, visit www.strategicva.com. For questions or comments, e-mail Yokl at bobpres@strategicva.com.