According to Wikipedia, “a request for quotation (RFQ) is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services. An RFQ typically involves more than the price per item. Information like payment terms, quality level per item or contract length is possible to be requested during the bidding process.”

An RFQ should always request the following information:
  • Price requirements (fixed price, firm price with an escalation formula, cost plus).
  • Quantities / volumes required.
  • Delivery date / completion date for the goods / services required.
  • Confirmation that the supplier can fully comply with the specification(s) / drawing(s) of the items/services.
  • Confirmation of compliance with any quality requirements included.
  • Terms and conditions of purchase / draft subcontract.
The RFQ should always be as accurate as possible. The items to be quoted should be clearly specified by including all relevant drawing, specifications, description of services etc. Always invite bidders to offer alternative solutions to the specifications tendered. The Supplier will probably have alternative solutions which will still meet the requirements at a lower cost. Always ensure the RFQ allows as much lead time as possible to ensure the negotiation process has sufficient time run its’ full course.

An RFQ will normally be issued to 3 or 4 potential suppliers as a minimum. The bidders must issue their quotation by a fixed date, which will be specified in the RFQ.

Once the quotations have been received, an evaluation process will take place. Discussions may be held on the bids (often to clarify technical capabilities or to note errors in a proposal). The bid does not have to mean the end of the bidding. Multiple rounds of negotiation may follow, normally concluding with a down-selection process and the solicitation of a best and final offer. Be sure to respond to all bidder questions promptly.

RFQ's are best suited to products and services that are as standardized as possible. My next blog will address alternative methods of soliciting bids.

In the meanwhile, take a look as some of these other related posts:
Don't Spam with an RFP
Don't let your suppliers write the RFP for you
Bypassing the RFP Process
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