Marc My Words: Evaluating Vendor Proposals

Written By

Marc Rosenberg

November 15, 2016

When picking a product or vendor to do work for us, there are lots of factors to consider. Let’s assume that you did your homework. You surveyed the marketplace, selected a small group of vendors that might meet your needs, and sent them a solidly written RFP. Now that the proposals are in, you have to pick who you are going to do business with.

Before we get into the main criteria, two key points: First, don’t do it alone. Form a committee of your key stakeholders, even your clients, to weigh in on the decision. Involving them from the start will help them take more ownership of the decision. And second, pick finalists, not the winner. If possible, try to select two to three vendors that meet all your criteria; any one of them would be acceptable. Then picking a winner can be based on some amount of gut feeling and emotion—which one you feel best about working with. And, if your first choice is not available, you won’t have to go through a major rework of your plan to pick an alternate.

Vendor evaluation criteria

Price, of course, looms large in any vendor or product section process. But selecting only on price, i.e., picking the low-cost bidder, can be fraught with obvious risks. Even if you are required to select on price alone, you can mitigate the consequences if you used a sound, well-developed RFP. That would enable you to reject low-cost providers if their proposals reveal that their deliverables, processes, time frames, etc., do not meet your needs.

So, in addition to price, here are 10 other important vendor selection criteria you should consider:

  1. Ability, expertise, capacity, and skill. You want a vendor that has the demonstrated smarts, resources, and people to do the job you are asking them to do at the level of quality (performance standards) you demand.
  2. Vendor’s understanding of your business and needs. Look at how much the vendor knows about your problem and your business or industry. If they are only repeating back to you what you put in the RFP, that’s a cause for concern. But if they’ve truly taken the time to put themselves in your shoes, that’s great.
  3. Vendor character. It is fair game to look at the vendor’s integrity, reputation, judgment, experience, ethics, and efficiency. You may not get this from the proposal, but you should look for it during pre-RFP meetings and conversations with vendors, and from comments by past customers.
  4. Vendor history. Look for how the vendor has performed on prior contracts, especially contracts inside your organization. Ask about how it was to work with them.
  5. Commitment. Examine the vendors’ commitment to the project in terms of the resources, staff, and time they will devote to you.
  6. Access. Determine whether you will have reasonable access to vendor senior managers and subject matter experts, and whether or not the team that’s assigned to you is qualified and “in it” for the duration of the project.
  7. Vendor’s financial stability. It’s wise to investigate how long the vendor has been in business and what the health of their business is. Do a Dun & Bradstreet, Better Business Bureau, or similar analysis if the project is big enough.
  8. Vendor’s ability to conduct business electronically. Sometimes, you will want the vendor at your site, but you also want the vendor to work more efficiently, and at less cost, through electronic means (besides, you have other work to do). Assess their capabilities from communications, production, and project management standpoints.
  9. Vendor products and demos. Whether or not products and demos were a part of your RFP process, it’s important to look at the vendor’s prior work and their technology. If you need to get your IT people involved in an “under the hood” evaluation, do so.
  10. Vendor’s willingness and ability to transfer knowledge and expertise. It’s likely that you don’t want to be dependent on the vendor forever, so evaluate whether and how the vendor will teach you and your people to do the work. You will have to get off the training wheels sooner or later.

Use this as a checklist with your team and, of course, add and modify the criteria as you see fit. You may want to use your original RFP as an input to your evaluation. Sometimes, the best vendors for you will be obvious; other times, not so much. Although the process of vendor evaluation can pretty much be standardized, each instance has its own unique challenges and opportunities. Watch out for them.

Learn more

This is my fourth column on selecting vendors. If you want to learn more, here are links to the other three:

More Executive

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