RFPs/RFQs: Perestroika?

During a break at an industry seminar, I sat down next to a saleswoman from a leading P-O-P company. When she said she had to check her Blackberry, I asked if a day out of the office was a hassle client-wise. She said not really, and showed me the 15 e-mails and 11 voice messages from her CPG brand clients that had stacked up during the previous 60 minutes. "That's about average," she said. Are the brand's merchandising people really that helpless without you, I asked? "Not at all," she said. "They know what they're doing. It's just that there are always so many little things going on with every display project." Her Blackberry pretty much epitomized everything I'd learned about the unfairness inherent in the P-O-P version of the "Request for Proposal" or "RFP/RFQ" process. I wondered which section, or question, or fill-in-the-blank item on those standard RFP questionnaires could correctly, and fairly, and honestly quantify the value of a supplier that handles 15 e-mails and 11 voice messages every hour of every business day? I'm not so naive as to believe that this anecdote will somehow switch on a glorious lightbulb of common sense in the heads of corporate procurement officers at CPG brands, or the RFP consultants they hire, or the CEOs who empower them -- although it ought to. But one can hope that a few of them will read the In-Store Marketing Institute's new white paper, "P-O-P and RFPs/RFQs: Best Practices in Sourcing In-Store Marketing Programs," and then draw some logical conclusions: RFPs may work well when buying generic products like paper towels, or bulk commodities like corn starch, or performance-rated components such as industrial fasteners. But they don't work well at all when buying P-O-P, which essentially is a complex bundle of creative and manufacturing services. And then they just might dump the damn things. Sure, that's probably pie-in-the-sky. Even the white paper refers to "best practices," offering ideas that brands could implement to reform the process, such as: Manage RFPs in a spirit of full disclosure with clearly defined objectives; Specify what criteria will be used to award the project; No ringers. Invite only manufacturers you'd be willing to work with. Provide detailed specs, drawings and samples;Figure out a reasonable response period for each RFP; etc. Good ideas, but they may be like Mikhail Gorbachev's program of "Perestroika" in the last days of the U.S.S.R. -- sensible reforms that nonetheless can't repair a profoundly unfair system. So why bother with a white paper at all? Because it's a start. Traditional CPG companies aren't prepared to abandon using RFPs on in-store marketing projects just yet. They're operating in a world of limited growth, so any short-term savings plan, even an illusory one, has to be pursued by their procurement departments. After the Enron-Tyco scandals and the Sarbanes-Oxley Act, they feel compelled to change the way they do business. And unfortunately, the P-O-P business has a reputation -- fairly or not -- of being a "good-old-boy" network. CPG merchandising managers know better. They rely on "go-to" producers -- not good old boys: "RFPs don't reward folks on things like the sales impact of a display, or the clever use of an innovative material that cut its overall cost, or a modular design twist that got us twice as many displays out on the sales floor," says one brand manager. "None of that gets considered in the evaluation."But for the moment, they're victims of the RFP mindset too: "The consultants attack from the top," says a veteran merchandising executive. "They promise upper management a lot of savings in order to sell their program in. We ask them, 'Are you just looking for any old display or are you honestly looking for a merchandising solution?' Because just getting the cheapest display out on the floor is rarely a solution to a marketing problem. But they don't listen." So while procurement gazes inward, merchandising has to face the real world. And what's out there? Retailers. They're the ultimate judges of the value of in-store marketing through their acceptance of -- and compliance with -- individual display program elements. And research shows that when it comes to retailer control of in-store marketing initiatives, quality matters. What's needed are more studies of the factors that drive retailer acceptance of brand-supplied in-store marketing materials.In the meantime, get the conversation started in your company. Order two copies of "P-O-P and RFPs/RFQs" by visiting www.instoremarketer.org. Then route one to your procurement department, and the other to your CEO -- anonymously, if you have to.

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