What Retailers Should Consider When Evaluating RFP Responses

What Retailers Should Consider When Evaluating RFP Responses

For most retailers, an RFP has a straightforward objective: create competition, identify the best supplier and ultimately reduce costs.

But what if the proposals you’re comparing aren’t actually offering the same solution?

In retail supply programs, it’s easy to focus on the price of an individual item—the cost of a bag, a piece of packaging, a store supply or another product. Yet the price of the product is only one part of the equation. The resources required to source, manage, forecast, store, distribute and replenish those products can have an equally significant impact on the overall cost of the program.

As Jordan Sallusti, Vice President of Business Development & Marketing at Bunzl Retail Services, puts it:

“People get so dialed in on what’s the cost of the widget, but it’s important to also consider what’s your cost to manage that widget?”

That distinction is at the heart of evaluating a retail supply RFP.

The right question isn’t simply, “What does this product cost?”

It’s also: “What will it cost our organization to manage this product and the supply chain around it?”

Not Every RFP Response Includes the Same Scope

Two suppliers can submit proposals that appear competitive on paper while offering fundamentally different levels of service.

One supplier may primarily provide products and fulfillment. Another may provide sourcing, product design, demand planning, inventory management, warehousing, distribution, technology, reporting, account management and project support as part of a broader program.

If those differences aren’t clearly identified during the RFP process, procurement teams may unintentionally compare different solutions as though they were the same.

“I don’t think they’re always necessarily comparing us apples to apples,” Sallusti says.

That can happen when one proposal includes services that another supplier treats as additional fees—or when responsibilities that appear to be handled by the supplier ultimately remain with the retailer.

Before comparing pricing, retailers should make sure every bidder is responding to the same scope of work.

That includes asking:

• What category management support is included?
• Who is responsible for sourcing and supplier management?
• Who manages forecasting and inventory planning?
• What level of account management is provided?
• What customer service resources are available?
• What technology and reporting capabilities are included?
• What happens when a special project or operational need arises?

The distinction matters because a supplier that handles more of the supply chain can potentially reduce the amount of work required internally.

Bunzl Retail Services, for example, positions its retail offering around a broader set of services that includes sourcing, procurement, demand planning, replenishment, warehousing, distribution and account management, along with consolidation, kitting and other value-added services.

The Hidden Cost of Managing the “Widget”

A common RFP mistake is evaluating the cost of the product without evaluating the cost of managing the product.

Consider a retailer purchasing a commodity at a slightly lower unit price. On the surface, that may look like a clear win. But what happens next?

It still takes personnel to forecast demand, manage suppliers, place orders, coordinate transportation, monitor inventory, resolve shortages, manage data and make sure the product reaches the right locations at the right time.

There may also be minimum order requirements, holding costs, freight charges, storage expenses or other fees that aren’t immediately visible in the initial price comparison.

The result is that a lower product cost can sometimes translate into a higher overall program cost.

Sallusti describes the difference this way:

“When you source with BRS, you’re not just buying a product. You’re gaining a partner that manages the entire supply chain from sourcing through delivery to your retail stores. With just a few conversations about your products and forecasted demand, we can help ensure the right inventory is available at the right place and the right time.”

That shift in responsibility can be significant.

When the supplier is managing more of the supply chain, the retailer isn’t simply purchasing a product. It is outsourcing part of the work required to keep that product flowing through the organization.

Total Cost of Ownership Goes Beyond the Price Tag

A meaningful RFP comparison should account for the full cost of operating the program.

That can include:

• Product costs
• Freight and transportation
• Warehousing and fulfillment
• Inventory carrying costs
• Holding or storage fees
• Minimum order requirements
• Rush shipments
• Supplier management
• Internal labor
• Forecasting and inventory planning
• Program management
• Technology and reporting

These costs don’t always appear together on a supplier’s proposal. Some may be embedded in the supplier’s model, while others become the retailer’s responsibility after the contract is awarded.

That’s why transparency matters.

Retailers should ask each supplier to clearly identify what is included in the proposed program, what is excluded and what assumptions were used to develop pricing.

“Different structures in the models are really where it comes to light,” Sallusti explains.

A proposal should make it possible to understand not only what the retailer is buying, but also what the supplier is managing.

Inventory Can Become a Capital and Labor Issue

Inventory is another area where the supplier’s operating model can dramatically affect total cost.

A retailer may purchase large quantities of customized products to secure a favorable unit price. But purchasing inventory upfront can tie up capital long before those products are actually needed in stores.

The retailer may also have to coordinate forecasting, supplier relationships, transportation and storage.

In some supply models, the supplier takes on more of that responsibility and uses its own infrastructure and capital to support the program.

The difference isn’t necessarily visible when comparing unit prices.

One supplier might quote a lower price for the product but require the retailer to purchase and manage significant inventory. Another might offer a slightly different unit cost while providing a model designed around demand, replenishment and usage.

That is why retailers should ask:

When do we pay for the product—and who carries the inventory until we need it?

And just as importantly:

Who is responsible for managing that inventory?

Technology Should Reduce Complexity—Not Add to It

Technology is another area where seemingly similar proposals can differ significantly.

An ordering portal isn’t simply a place to place an order. For a large retail organization, it can influence how thousands of store associates interact with the supply program.

Retailers should evaluate whether the technology provides:

• Integration with procurement platforms
• Punchout capabilities
• Customized catalogs
• Approval workflows
• Budget controls
• Order history
• Reporting and analytics
• Inventory visibility
• Mobile accessibility
• Self-service customer support

Bunzl Retail Services says its ordering platform integrates with major procurement platforms and provides customized ordering experiences through our ordering portal, including order history, reporting and

That control can help retailers manage what store associates are actually able to purchase.

A broader, less controlled catalog may appear convenient, but it can also create opportunities for spending outside the retailer’s preferred assortment.

As Sallusti explains, products that aren’t part of a customized catalog can potentially increase overall spending because stores have access to items the corporate team didn’t intend them to purchase.

Technology, therefore, isn’t just about convenience.

It’s about control, visibility and reducing the work required to manage the program.

Forecasting Is More Than an Inventory Function

Forecasting can have a direct impact on both cost and service levels.

Poor forecasting can result in stockouts, emergency shipments, excess inventory or unnecessary capital tied up in products that aren’t moving.

A strong supply partner should work collaboratively with the retailer to understand demand, anticipate requirements and maintain appropriate inventory levels.

That means the supplier’s demand planning and inventory management capabilities should be evaluated as part of the RFP—not treated as an afterthought.

Sallusti describes the BRS approach as a team effort between the customer, account management, demand planning, inventory management and sourcing resources.

The objective is straightforward:

“Our goal is always to try to control the costs and ensure in-stock rates.”

Retailers should ask:

Who is responsible for helping us keep the right products in the right place at the right time?

The answer can reveal a significant difference between a product supplier and a true supply chain partner.

Look at the Full Lifecycle of the Supply Chain

One of the biggest differentiators between suppliers may be how much of the product lifecycle they can manage.

For some programs, that lifecycle can begin with identifying a need and sourcing the product. It may continue through product design, supplier management, procurement, inventory planning, warehousing and distribution before ultimately reaching the store.

That broader capability can eliminate handoffs between multiple providers.

That full-lifecycle perspective is important when evaluating RFP responses.

Instead of one partner designing the product, another sourcing it, another storing it and another distributing it, a retailer may be able to consolidate more of those functions within a single program.

That can reduce complexity—and potentially reduce the internal resources required to manage it.

For retailers, the question isn’t simply:

“Who has the lowest price?”

It may be:

“Who can manage the greatest portion of this supply chain efficiently and transparently?”

Don’t Overlook Value-Added Services

Some of the most valuable supplier capabilities may not appear in a standard product-price comparison at all.

Retailers should ask potential partners about services such as:

• Product and packaging design
• Custom sourcing
• Kitting and assembly
• Repacking
• Vendor consolidation
• New-store kits
• Remodel support
• Rollout programs
• Omnichannel packaging solutions
• Sustainability initiatives
• Special project management

These capabilities can become particularly valuable when a retailer has a large operational initiative or an unexpected requirement.

For example, a retailer may need to consolidate products from multiple vendors, create kits for hundreds or thousands of locations or develop a consistent process for distributing materials across its store network.

Sallusti shares this as an opportunity for the supplier to become an extension of the retailer’s operations team:

“We’re able to jump in and ask, “How can we help?”

That flexibility can be difficult to capture in an RFP spreadsheet, but it can have meaningful operational value.

The Internal Cost of Managing the Program

There is one final cost that is easy to overlook: the retailer’s own people.

Every supplier relationship requires some level of internal management. Someone has to monitor inventory, coordinate orders, request data, manage suppliers, resolve issues and track performance.

Those activities consume time.

When a supply partner assumes more responsibility for sourcing, inventory planning, supplier coordination, reporting and fulfillment, the retailer may be able to redirect internal resources toward higher-value priorities.

Sallusti has seen this firsthand:

“Typically, when customers partner with Bunzl, there’s a reduction in the amount of people they actually need to manage the program.”

That doesn’t necessarily mean eliminating roles. It means allowing people to spend less time managing transactional supply activities and more time focused on strategic initiatives, store operations and the customer experience.

In other words, the value of a supply partner isn’t measured solely by what it charges.

It can also be measured by what it allows the retailer’s team to stop doing.

What Happens After the RFP?

Implementation is where many of the assumptions made during the procurement process become reality.

Retailers should evaluate the supplier’s transition plan, including:

• Dedicated onboarding resources
• Project management
• System setup and integration
• Inventory transition
• Supplier coordination
• Employee training
• Communication plans
• Service continuity

A supplier that offers an attractive price but creates significant disruption during implementation may ultimately deliver less value than a partner with a more comprehensive transition plan.

The goal should be a seamless move from the existing program to the new one—with minimal disruption to stores and internal teams.

Can the Supplier Support Your Future State?

Today’s requirements aren’t necessarily tomorrow’s requirements.

Retailers grow, open new locations, remodel existing stores, expand into additional markets, introduce new brands and develop new fulfillment models.

A supply partner should be evaluated against that future state.

Consider:

• Global sourcing capabilities
• International logistics
• New-store opening support
• Remodel programs
• Multi-brand management
• Omnichannel requirements
• Scalable warehousing and distribution
• Support for large-scale projects

A supplier may be able to meet today’s requirements. The more important question is whether it can continue to support the retailer as those requirements evolve.

Questions to Ask Before Awarding the Business

Before selecting a supplier, procurement and operations teams should consider:

• Are all bidders responding to the same scope?
• What services are included in the quoted price?
• What services or fees are excluded?
• What assumptions were made in the pricing?
• Who owns forecasting and inventory planning?
• Who manages supplier relationships?
• What are the freight, storage and holding costs?
• When does the retailer pay for inventory?
• What technology and integrations are included?
• How much control does the retailer have over the ordering experience?
• What reporting and analytics are available?
• What KPIs and SLAs will be measured?
• What resources will be dedicated to the account?
• How will the supplier support new stores, remodels and other growth initiatives?
• What value-added services are available?
• How much internal labor will the program require?

Most importantly, ask every bidder to clearly define what they will manage versus what the retailer will still have to manage.

That distinction can fundamentally change the economics of the proposal.

The Best RFP Outcome Isn’t Always the Lowest Bid

A successful RFP should identify more than the supplier offering the lowest product price.

It should identify the partner that delivers the strongest combination of cost, service, technology, operational efficiency, scalability and long-term value.

For retailers, that means looking beyond the widget.

Look at the supply chain surrounding it. Look at the internal resources required to manage it. Look at the technology supporting it. Look at the inventory model, the implementation plan and the services available when the business needs something beyond the day-to-day.

Bunzl Retail Services encourages prospective customers to challenge every bidder to clearly define what is included in their proposal. Does it combine sourcing, distribution, supply chain management and value-added services?

As Sallusti summarizes the challenge:

“The most important thing to consider is total cost of ownership of their products and their programs.”

That’s the difference between comparing prices and comparing solutions.

The most successful retail supply programs aren’t built on a line-item comparison. They’re built on a complete solution.

Look Beyond the Price Tag: Evaluate the True Value of Your Retail Supply Partner