What is the Cost of Paper RFP Process
The concept of ‘the paperless office’ is not a new one. In the last 3 decades or so, offices have continuously transformed to bring key processes online, dramatically reducing their reliance on paper files and gaining greater efficiency and insight. However, in procurement, boxes of paper and overstuffed filing cabinets continue to be the norm, with many teams still relying on paper-based processes for their sourcing.
Procurement teams have multiple reasons for keeping paper around even while other areas of the organization modernize, whether it’s lagging laws that require paper copies, a lack of funding for digital tools, or simply comfort with the ‘way things have always been.’ However, it’s becoming increasingly apparent to procurement leaders that the status quo is no longer sustainable.
Below are areas where paper processes cost your organization.
An average RFP submission is 120 pages in length. Considering that the average project receives eight submissions, with copies for an average of four to five evaluators, a single RFP project requires a total of 4,800 pages of paper.
There’s also the shipping cost of sending submissions to the buyer.
After the RFP, the expenses continue to pile up. Storing a year’s worth of RFP documents requires: filing cabinets, 7 year retention period and secure shredding.
While the paper and postage costs of RFP submission come out of vendors’ pockets, savvy procurement teams can expect to have some or all of that expense overlaid on the costs presented to them in each bid. More so, the bigger concern for procurement’s bottom line is the limiting effect that an inconvenient, resource intensive paper process has on the vendor pool. The paper, manual exercise and postage expense can be a deterrent to vendor participation.
Running the RFP process through paper is a labour-intensive process: at each step, manual administrative actions monopolize buyers’ time.
These processes include manual time stamping, checking bids for completeness, data entry of bid details, distributing and collecting score cards, aggregating and tabulating scores, creating award notice e.t.c.
Time savings in the administration of your RFP process means that your deadlines are met and your team’s efforts go further— whether taking on increased project volumes, investigating more sophisticated pricing techniques, or undertaking strategic initiatives—which translates to cash savings for your organization.
Unrealized Cost Savings
In a paper process, buyers are consumed by administering the RFP and juggling a variety of moving pieces to keep the project on track. Once the burden of paper is removed, buyers are free to focus more of their time and attention on the decision itself, investing in better requirements gathering, deeper bid evaluation, and comprehensive price optimization—all of which drive cost savings.
When running an offline paper process, buyers are limited in their evaluation to the functionality that a spreadsheet can offer. eSourcing platforms, on the other hand, equip buyers with powerful, purpose-built evaluation tools.
Streamlining online means that procurement teams instantly gain visibility and insights into all RFP projects across the organization giving a macro view of their sourcing activities, so they can identify and quickly act on cost-saving opportunities.
Low talent Retention
About 50% of the workforce is currently made up of millennials (the generation born between the 1980s and early 2000s). This demographic has grown up integrating technology into their lives seamlessly, and as a result they bring adaptability and technological skill to the workplace.
They are accustomed to making data-driven decisions an asset as data analytics become more central to the procurement function.
The time consuming, often tedious labour associated with manual processes offers little personal satisfaction for buyers who have deep skill sets in negotiation, analysis, and policy.
Moving away from paper processes enables procurement teams to level up their contribution for greater personal satisfaction, more flexibility in their work, and improved morale.
Risk of Error
Procurement professionals are experts at risk reduction when it comes to the decisions they make for their organization. But what about the risks in the decision-making process itself?
Lost or misplaced documents, Excel formula errors, incomplete score justifications, gaps in the audit trail: the paper process is fraught with potential errors which can put your decisions at risk and open your organization up to bid protests or even legal action.
eSourcing platforms automate many of the error-prone steps in the RFP process, automatically distributing the right documents to the right people, and automatically aggregating and tabulating scores. Many platforms go further, giving procurement teams the ability to enforce controls to ensure compliance.
Cloud storage offers greater security than paper options which are susceptible to tampering, theft, and fire. But more significantly, cloud platforms offer scalability, flexibility, and further optimization options that go far beyond what a filing cabinet can offer.
Paper processes come at a cost to your competitive vendor pool, to your team, and ultimately to your organization’s bottom line. It’s clear that status quo paper processes can no longer be relied upon to help procurement deliver on an increasingly demanding mandate.
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