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How to Run a Vendor Selection Process

Updated: Nov 24, 2023


Vendor Selection Process

Selecting a vendor is a critical step in the procurement process. It can be one of the most time-consuming parts of the process, so it's important to do it right. A vendor selection process requires careful planning and execution if you want to avoid wasting time and money on bad vendors - but it's also critical to get the job done quickly.


In this guide, we'll walk through how to run an effective vendor selection process for your business goals. We'll cover everything from understanding your needs to communicating with vendors during the process. Also, we'll give you tips on setting up a shortlist from which your team can choose their preferred vendor all while keeping costs down and making sure everyone gets what they need out of the deal.


Understand your business goals.

Before you start your vendor selection process, it's important to understand your business goals and the project vision. This will help you set a clear direction for the project and ensure that all participants are working towards the same end goal. At Viewpoint Analysis, we like to talk about a 'problem statement' - something that clearly articulates the issue that the business is facing and that you would like help solving.


Once you've defined your project objectives and the overall problem statement, you can begin exploring potential solutions. The first step in this process is understanding why a particular problem exists in the first place; only then can we formulate an effective solution for fixing it.


Identify your vendors.

The first step in vendor selection is to identify the vendors who are qualified and interested in providing you with what you need. We are looking to establish what we call a 'longlist' of vendor options before starting to whittle this down as we go through the vendor selection process. If you are not sure of the options, there are a few places that you can start to look to form an opinion and build that longlist:

* Gartner or Forrester reports.

* Recommendations from your team or peers.

* Advice from vendor selection experts (take a look our Longlist Reports)


Communicate the upcoming process to your vendors

A sure-fire way to ensure you don't receive responses is by dropping the proposed process on the desks of your chosen partners without giving them an initial heads-up. It's therefore important to:

  • Tell them when the process will begin. Be sure to let them know when they can expect an email from you or another team member asking for their proposal. This way, they'll know how much time they have before the deadline arrives, which makes for a better experience all around!

  • Tell them what they need to do in order for their proposals to be considered by your team (e.g., send over a copy of their product catalog). Providing this information up front helps ensure that all submissions have been received by the right people at each stage of review--and reduces confusion later on down the line if something goes wrong during submission time due either directly or indirectly related factors such as technical difficulties with email servers etcetera...

Run a Rapid RFI Process to find a shortlist

An RFI process is the standard approach to find out what's available in the market. However, they can be very long, detailed - and vendors do not like responding to them. Instead, try to look at an alternative approach. For example:


* A Technology Matchmaker - where we produce a vendor briefing document and have the vendors come and present their vision and options.

* A Rapid RFI - where we keep the RFI really simple and use a problem statement to generate a super-quick process.


The RFI is designed to take you from a list of options (e.g. perhaps a list of 10 to 12 different vendors) to a shortlist where you might want to spend more time with them and get more detailed proposals.


Run a Rapid RFP Process to find a preferred vendor

Once the RFI or Technology Matchmaker process is complete, we'll have a list of maybe 4 to 6 vendors that really could offer you a credible solution. At this point, we want to issue an RFP. Like with the RFI, it's important to remember that this is NOT a project, it's just a means to get to the project - so timescales are important. We like running what we call a 'Rapid RFP'


The Rapid RFP (RRFP) is designed to drive from a shortlist to a preferred vendor in some really quick steps. If an RRFP is no the way you want to go, a standard RFP is fine, but again, the vendors do not like them.


Compare the vendors against the selection criteria

The next step is to compare the vendors against your selection criteria. You can find out more about software evaluation criteria or build your own. It might include:

  • Product fit: How close does their solution fit the need?

  • Experience/expertise: Consider whether the vendor has a good understanding of your business and what you need from them. Does their team have industry experience or technical know-how? Do they understand your industry, products and markets well enough so they can provide effective solutions for your needs?

  • Pricing: In addition to price being an important factor in any decision-making process, consider how transparently each potential supplier presents their pricing structure--are there hidden costs or extras that could come back to bite you later down the line (e.g., "upfront" fees)?

We run a little process called the Vendor Head to Head - which compares and contrasts the vendors against one another across more than 20 points. This is a really helpful way to clearly show the difference between the shortlisted participants.


Announce the preferred vendor

Once you've made your decision, it's important to communicate the decision to both the vendors and relevant stakeholders. Although it's an easy option to rush and let the preferred vendor know the good news, it's really important to be professional and let those that put the hard work in but failed, know why that is.


Conclusion

There are a million and one different ways to run a Vendor Selection Service. This is just one approach but you can pick and choose as appropriate - maybe some elements will be more useful to you than others.

Check out Viewpoint Analysis for more information about how we help our customers to quickly find and select enterprise technology.

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