If you're behind schedule and pressed for a quick turn-around time the on-line request for quotation form is very appealing.

But, invariably, this approach will lead to delays in already time constrained initiatives, and lead to inconsistent responses with high pricing 9 out of 10 times.

This is due to each supplier usually following their own internal quotation process that is optimal for their team. You get the price point, but without critical qualifying information to show that the supplier can actually fabricate the product.

With a Request for Proposal (RFP) process you can collect pricing, validate capabilities, confirm certifications, make sure the supplier services clients in your industry, and begin to build the relationship with the knowledge that your IP is protected with an NDA.

Capabilities are a go/no-go when it comes to finding the right supplier. The first step is initial research to verify that the primary manufacturing process you're in search of such as CNC milling or turning is offered by the company along with secondary processes like anodizing, powder coating, or heat treating. The key step is to then start a conversation with a known contact in the company or begin building a relationship and determine the details of those capabilities.

For example, is swiss turning a primary capability, or do they have 1 machine in a back corner that gets used every other month for small jobs. Or, worst yet, do they outsource the operation to a neighboring company and mark-up the price when combined with other operations.

In addition, secondary operation, finishing, testing, packaging, and shipping certainly carry their own costs. A simple supplier-driven RFQ may not include them for all suppliers. When not specified up-front and managed through further conversations, this point always leads to inconsistent price comparisons and higher than expected final pricing.

Certifications are just as critical. If you're in the medical device industry and your products need to be ISO13485 certified, there's nothing quite like attaining a competitive price point, building a great relationship, and investing months in testing first articles to then find out that the supplier doesn't have the certification, or would take 6 months to a year to acquire it. We've seen that both quality assurance and quality control always play a big role when maintaining and tracking the relationship once a product is established. If not addressed to some degree up-front the difficulties may become unsurmountable and lead to further supplier transitions.

While a successful relationship can be established with a capable supplier, a further match in industry focus can serve to expedite the relationship building process and reduce the transition time-line considerably. If the client is in the construction industry, for example, and the supplier has 70% of their business focused on this industry, then all of the processes the client expects are already in place and simply need to be verified. On the other hand, if the supplier has a focus on the automotive industry, but has the capabilities to produce the product for the construction industry the expected processes will have to be clearly stated as expectations and established over time. This can be a significant problem for short lead time parts as the automotive clients will of course get first billing.

Perhaps the most significant consideration when quoting with multiple suppliers is protection of intellectual property rights such as your proprietary designs with a non-disclosure agreement. This point is often glossed over by suppliers, especially in outsourcing or low cost region initiatives, but serves as vital legal protection and should be signed before any drawings can be shared.

In the end, manufacturers have very intuitive and original ideas that can save an established product base 20-40% in some cases, but finding the right combination of savings and risk requires a uniform approach and ample communications well captured by the RFP process.
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Martin Przeworski

Post A Comment:

14 comments so far,Add yours

  1. I was promised RFQ form. I do not see this form. How can I be expected to fill out RFQ form if I cannot see form?

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  2. First fill out RFQ form. Then you will see RFQ form. Next time read RFQ form closer.

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  3. For the favour of the business, can I have please the RFQ templates? We are glorious and respected strategic sourcing company.

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  4. THE FORMS! THEY ARE COMING!

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  5. SriramsrinivasagopalanJune 30, 2016 at 9:33 AM

    Both of u four, don't under-stand the RFQ!!

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  6. Don't talk like that in front of my back.

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  7. Templates lead to complacency, and than confusion

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  8. But the templates help you eat the memories.

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  9. Anonymous is hitting the head of the nail but I dis-not-agree, forms are there for a raisin.

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  10. Well you must fill out the forms rightly and if you do youll likely pass the test with flying carpets.

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  11. I think what Martin is trying to say is that there is more than one way to skim a cat.

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  12. Please share on-line RFQ Form.

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  13. I agree. Throw me a lifeguard here and give us the RFPQ.

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  14. IT'S MY RFQ FORM AND I WANT IT NOW!

    ReplyDelete