Request for Information (RFI) - for Beginners

on Tuesday, August 3, 2010

A useful tool for the Buyer, not utilized as often as it might be, is the Request for Information. When there is a multitude of potential bidders, an effective way of determining the most suitable participants in the RFQ / RFP process might be to issue an RFI.

Wikipedia defines an RFI as “a standard business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes. An RFI is primarily used to gather information to help make a decision on what steps to take next. RFIs are therefore seldom the final stage and are instead often used in combination with the following: request for proposal (RFP), request for tender (RFT), and request for quotation (RFQ).”

The first issue is to differentiate between an RFI, RFQ and an RFP. As we stated above, an RFI is a merely a request for information and should be primarily utilized to determine the suitability of a company to move to the next step, namely participation in the RFQ / RFP process. An RFI should not be used to request prices. An RFQ on the other hand, is a straight forward request for pricing for a clearly defined part, product or service. An RFP is a more sophisticated request for pricing and will often include a requirement for a detailed statement on how a prospective supplier will meet a technical specification, the quality requirements of a project and the schedule.

Examples of information that might be requested in an RFI are:
  • Supplier facilities, including manufacturing capacity and capabilities,
  • Certifications, such as ISO 9000 / 9002,
  • Current order book / major projects under contract,
  • Financial statement(s),
  • Engineering resources,
  • Company Quality Plan,
  • Company culture,
  • Profiles of Senior Management,
  • Company goals over the next 5 or 10 years,
  • A complete list of products and / or services that the potential supplier might offer.
So what are the benefits of issuing an RFI? Sourcing4oem.com believes them to be:
  • To enable information to be gathered in a formal, structured and comparable way.
  • Suppliers understand that there is a competition going on.
  • You show that you try to act without a prejudice or with a preferred supplier.
  • You get a formal reply from the suppliers
The RFI can be a very useful tool, not utilized to its’ fullest extent by many companies. Buyers are often focused on issuing an RFP / RFQ due to time constraints. Many companies do not involve the Buyer in a project from the outset and therefore leave insufficient time to allow Purchasing to conduct the full market survey that an RFI will allow.

2 comments:

Anonymous said...

The sample information you listed would be used to prequalify a supplier and is therefore appropriate in a request for qualification or expression of interest.

RFIs are used to gather market information. You state your intent and find out from potential providers what some of the options are and maybe a budgetary cost. It is not best practice to use an RFI to short list suppliers (especially in a public posting)

Markus

Anonymous said...

The sample questions you listed would be more appropriate for a request for qualification or expression of interest. It is not best practice to use RFI data to shortlist (especially in the public forum).

RFI is used to gather market information; you intend to solve a problem and want to know the options potential suppliers can provide including a high level cost estimate for budgetary purposes.

ML

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