RFP Design

Three box suppliers quote a Thai curry maker THB 11.13, 11.20 and 11.43 per export carton. The buyer takes the cheapest. Six months later, the winner writes that paper and freight are up and asks for 9% more. Nobody can check it, because the quote was a single number.

That problem was created the day the RFP went out. RFP design is the step where you decide what suppliers must tell you, in what format, and how you'll judge it. Get it right, and every price arrives in the same pieces as your should-cost model. Get it wrong, and you're left comparing totals.

In Part 1 of this series we built the should-cost model. This post covers the next step in the sourcing process: designing the RFP around it. We'll follow Rim Nam Foods, a made-up curry maker outside Bangkok that buys about 2.4 million 5-ply export cartons a year.

RFP design: one carton price split into board, conversion, set-up, freight, overhead and margin, with the index clause formula

What Is RFP Design?

A request for proposal asks suppliers to make an offer against your requirement. Designing it covers everything in the pack before it's issued. CIPS guidance on tendering lists what an invitation to tender can include, from the specification and a price and delivery schedule to a detailed breakdown of production costs, such as margin and overheads. For a tender where cost matters, I'd focus on four decisions:

1. The specification. What exactly you're buying, stated so every supplier prices the same carton.
2. The price schedule. Which cost lines suppliers fill in, and in what units.
3. The evaluation rules. Criteria and weights, agreed before issue. CIPS recommends fixing selection criteria before tenders are invited, so the pack asks for what you'll actually score.
4. The pricing mechanism. How the price will move once the contract is signed.

Most buyers spend their effort on the first and third. The second and fourth are where the money is.

Why Does a Single Price Tell You So Little?

The pieces inside a price move independently, and even the industry doesn't agree on how big they are. One US guide puts containerboard at roughly 45 to 55% of a finished box's cost. Indian box makers put kraft paper at around three quarters of their product cost. ResourceWise notes that energy, freight, maintenance and labour can together cost more than the paper for some box types. You won't guess your own supplier's split from the outside.

A total price also hides the negotiating cushion. CIPS lists, among the known weaknesses of tendering, that submitted prices are often padded to leave room for negotiation. A cost breakdown shows you where the cushion sits.

The timing makes this more pressing for food makers in Thailand. Thai industry bodies forecast 2026 food exports at USD 40.3 billion, down 7.3%, and the National Food Institute notes that price competition is limiting producers' ability to pass on higher costs. Paper is moving at the same time: Indian box makers report kraft paper up about 25% in a few weeks, and in North America PCA's USD 140 per ton containerboard increase was described as unprecedented. With a shrinking margin and volatile inputs, you need to know which line moved.

Step 1: Build the Price Schedule From Your Should-Cost Model

Asking for a cost breakdown is established practice. US federal contracting goes further than most and requires the bidder to split every priced line into its cost elements when certified cost data applies. For a corrugated carton, I'd ask for these lines, per carton and per SKU:

1. Board specification: flute, grammage of each layer, and finished board weight per carton.
2. Paper price per kg, and which mill or published index it follows.
3. Conversion: corrugating, printing, die-cutting and gluing or stitching. One line is fine; split it if the supplier will.
4. Set-up and tooling, priced separately. Run length changes per-box set-up cost dramatically; one guide estimates about USD 5 per box on a 500-box order against USD 0.05 on 50,000.
5. Freight to your plant, plus pallets and wrapping.
6. Overhead and margin.
7. The payment terms the price assumes, and the price on different terms.
8. Any price adjustment formula the supplier proposes.

Add one optional section for an alternative specification the supplier would recommend, priced the same way. Box makers often know a lighter board that still passes your stacking test.

The lines have to match your model. If your should-cost calculates board cost as weight times paper price, ask for weight and paper price, not "material cost". Otherwise you're back to comparing totals.

Step 2: Set the Rules Before You Issue

Not every supplier will fill in every line, and that's fine; a blank tells you something too. In my experience three things lift the response rate.

Tell suppliers why you want the breakdown: it will be the basis for a price adjustment mechanism, which protects them when paper rises as much as it protects you when it falls. Keep the sheet to one page per SKU, because a 40-tab workbook gets a total price and an apology. And treat their numbers as confidential. CIPS considers it poor practice to reveal one bidder's offer to another without everyone's prior agreement. Say so in the RFP, then stick to it. I am a stickler when it comes to Ethics in procurement and it shows when suppliers understand and trust you.

Answer supplier questions in writing and copy every answer to all bidders, so everyone prices against the same information.

Step 3: Evaluate the Bids Line by Line

When the bids come back, line them up against your model. Here are Rim Nam's three quotes broken out (illustrative figures, THB per carton):

Line	Supplier A	Supplier B	Supplier C
Board weight (kg per carton)	0.60	0.66	0.58
Paper price (THB per kg)	11.00	10.20	11.60
Board cost	6.60	6.73	6.73
Conversion	2.10	1.70	2.40
Set-up and tooling	0.15	0.40	0.10
Freight	0.55	0.35	0.60
Overhead and margin	1.80	1.95	1.60
Total	11.20	11.13	11.43

The totals sit within 3% of each other. The pieces tell a different story. Supplier B buys paper cheapest but puts 10% more board into the same carton, so either it reads the spec differently or it's over-building. B also charges more than twice A's set-up rate. Supplier C converts expensively but runs the lightest board. Each of those is a question for the clarification meeting, and each comes with a number.

No supplier wins every line, and you don't need one to. You need to know which line to push with whom. When you take the lowest in each section you get to the least cost you can pay, as an indication of where to look for cost improvements later on.

Step 4: Write the Index Clause Into the Contract

Once the paper line is visible, the contract can say how it moves. Fastmarkets shows how buyers can track box cost against both containerboard price indices and indices of the cost to make containerboard, and ResourceWise has launched a cost-based box index for contract price adjustments, noting that the parties still agree pass-through, thresholds and timing themselves. In Southeast Asia, a published regional series such as IMARC's paper board price tracker can serve as the reference. Pick one source, write it into the contract, and don't switch when it suits one side.

The arithmetic is simple. Supplier B won at 11.13, and its board cost is 6.73 of that. If the agreed paper index rises 10%, board cost rises by 0.67 and the carton goes to 11.80. That's about 6%. When the 9% letter arrives, you don't argue about whether costs went up. You ask what the other three points are for.

Back to the 9% letter. The buyer who designed the RFP around one total price negotiates it down to 6% and calls it a win. The buyer who designed it around the cost lines applies the formula, pays 6% without a fight, and spends the meeting asking Supplier B why its carton carries 60 grams more board than Supplier A's.

I'm not good with Graphic Design, all the images are AI generated.