Supply Market Scanning Process
The initial process of systematically analysing the supply markets to gather relevant information into potential suppliers, market trends and available offerings. The process involves:
- Conducting market research
- Identification of suppliers
- Preparation and distribution of an RFI
- Evaluation of RFI responses
- Shortlisting suppliers relevant for the Supply Market Sourcing Process
Supply Market Sourcing Process
The subsequent and more detailed process of evaluating and assessing the suppliers identified in the scanning process to detect the most suitable supplier for your organization based on your requirements. The process involves:
- Preparation and distribution of an RFP
- Evaluation of RFP responses
- Negotiation and selection of supplier(s)
- Establishment of contractual agreement(s)
Request For Information document (RFI)
A formal document outlining the buyers’ specific needs, expectations and required information from the suppliers. The RFI document contains questions about the suppliers’ capabilities, capacity, quality control, experience, pricing models etc. In this document high-level sustainability-related questions are relevant to include to understand the supplier’s overall sustainability goals and commitments.
Request For Proposal document (RFP)
After shortlisting potential suppliers based on the RFI evaluation, an RFP document can be distributed to the most relevant suppliers. The RFP document is a more detailed document containing specific requirements and contractual terms, seeking formal proposals from the shortlisted suppliers before the final supplier is selected, and contractual agreements are signed.
Sustainability in Supplier contracting
Preferred/non-preferred supplier status: a preferred supplier is one that is favored in the procurement process. Procurement teams also benefit by efficiently sourcing from trusted partners.
Long-term purchase agreements (offtake agreements) are arrangements between a purchaser (off-taker) and a supplier to purchase portions of the supplier’s future goods.
Secondments are when one employee is temporarily placed in another position to meet changing needs.
Financing Support to Suppliers
Suppliers can receive financing support, such as improved loan conditions in terms of duration and/or interest rates, to mitigate green premiums and level the playing field for green alternatives.
Green premiums are the differences in cost between a conventional product and a more environmentally friendly, low-carbon alternative. For example, a gallon of biofuel costs more than conventional fuel, and the difference in cost is the green premium.
In focus: Request For Information document (RFI)
Sustainability related questions for RFIs: Questions based on your organization’s specific sustainability requirements aiming at uncovering a supplier’s overall approach to sustainability. The questions will vary according to your internal sustainability requirements and the suppliers value-chain position. Relevant questions are shown to the right.
RFI analysis and evaluation: The examination of RFI responses and alignment with your organization, with the aim of narrowing down a short-list of suppliers which you wish to proceed with to the RFP process.
In focus: Request For Proposal document (RFP)
After shortlisting potential suppliers based on the RFI evaluation, an RFP document can be distributed to the most relevant suppliers. The RFP document is a more detailed document containing specific requirements and contractual terms, seeking formal proposals from the shortlisted suppliers before the final supplier is selected, and contractual agreements are signed.
Sustainability related questions for RFPs: Questions aimed at achieving an in-depth, detailed and evidence-based understanding of potential suppliers’ sustainability ambitions and initiatives. The questions included should be more project / supplier specific than for the RFI-document. Relevant questions to include are shown on the right.