Evolution of the RFQ

by RFQ - Request for Quotation

Acronyms are a part of everyday purchasing lingo. Here are just a few we are becoming accustomed to: RFQ, RFI, RFP, LOU, LOI, ABC, SPC, TCO. It does seem like every year there is a new term being introduced into the purchasing arena. For the experienced purchasing agent, the most familiar of the above terms would be the RFQ and it is a document which has evolved and become more complex over the years.

Understanding the Acronyms

TCO is Total Cost of Ownership.
SPC is Statistical Process Control, used in manufacturing.
ABC relates to classification of your inventory.
And RFQ is a Request for Quote.

The good old RFQ is something all of us COPs (Crusty Old Purchasers) understand very well, as it was the only document utilized in early purchasing. A request for quote has been around the longest, and in the old days everything went out as a request for quotation or quote. It was sometimes called an invitation to quote or invitation to tender, and both are part of the RFQ family.

When the RFP Entered the Picture

Then came the RFP which is a request for proposal. This is where the vendor is asked to provide what they believe is the best possible solution to my need. Personally, I think some engineering types did not want to spend the time to properly develop a scope or specify requirements so they opted to put the onus on the vendors. Just kidding, many of my business associates and colleagues are Engineers so I enjoy taking a poke at them whenever I get the chance. Okay, maybe not exactly how the RFQ evolved or developed into a RFP but sure seems that way.

When an RFP Actually Makes Sense

If the expertise is not present in your organization or if you are dealing with a specialty area, a RFP does makes sense. You can also opt to hire a consultant to assist you with the scope, evaluation and a recommendation. I personally have used consultants when it came to generating a VoIP RFP and required their expertise to develop the specifications and evaluate the technical component of bid responses. A VoIP is a voice over internet protocol and by its very nature has many technical communication aspects to it. Not my area of expertise and attempting to generate a meaningful RFP was not likely.

Why COPs Still Prefer RFQs

Us COP’s prefer RFQ’s as they are straight forward. This is what I need so price it and send her back! Many of the other procurement forms are not as straight forward and can pose to be a challenge when it comes time to evaluation and award. You really are not comparing apples to apples as the saying goes.

The Expansion of Procurement Documents

Next came the Expression of Interest (EOI), Request for Information (RFI), Request for Qualification and so on.  Each have their own purpose and each document slightly differs as to how they are issued and what type of responses you can expect to receive. A request for qualification might be for an art display in a commercial space and your document might pay the artists a nominal fee for their submissions and if their work is selected for the commercial space they will then be paid the quoted fee. So, in this instance you can see the benefit of a request for qualification versus a request for quotation.

LOU and LOI: Bridging the Gap After Tendering

A Letter of Understanding (LOU) and Letter of Intent (LOI) are used post-tender. These help bridge the gap between the tender and when you get around to the formal contract.

Large organizations with big spend often use an LOI to keep the ball rolling and to inch the process along. Some legal experts reinforce the importance of not saying too much in your letter of intent or understanding, as you might run the risk of exposing yourself to a legal challenge.

There are many forms of documents and creating them all from scratch might not be something you want to spend your work day or weekends on. This is where we can help. We have a number of RFQ, RFI, RFP, EOI, LOI and LOU templates available to help you expedite the process.

Related topics:

Sample Letter of Intent (LOI) or (LOU)

Sample VoIP RFP

Request for Qualifications

Sample EOI Form

RFP truck services

RFP for LTL Freight Services

by RFP - Request for Proposal

RFP truck servicesSelecting a freight broker or transportation service provider is one of the most important decisions you will make for your organization, especially when issuing an RFP for LTL Freight Services or evaluating carriers for time‑sensitive shipments. Why? Because when orders aren’t delivered on time, suppliers risk losing customers, and buyers face production delays that quickly translate into profit loss. Like it or not, LTL freight shipping, carrier performance, and freight management services can make or break your business, and they remain an integral part of a resilient supply chain.

The Bureau of Transportation Statistics in the USA reported that the trucking and transportation market on a typical business day ships approximately 43 million tons of merchandise, valued at about $29 billion, moved almost 12 billion ton-miles on the nation’s interconnected transportation network.  These statistics imply the significance this industry sector has in regards to transporting our goods. In fact, if it is shutdown for any period it can cripple a country and your business.

Designing a request for proposal for Less than Truckload (LTL) services might include some of the following details:

SAMPLE SCOPE OF WORK for your RFP for LTL Freight Services:

The estimated annual LTL tonnage is approximately _______________million pounds (_,000,000) including inbound, outbound interstate and intrastate shipments.

The Following is a historical comparison of volume of freight shipped for the last five years:

2006     – 1,899,820 lbs.
2007     – 2,237,577 lbs.
2008     – 2,243,635 lbs.
2009     – 2,911,596 lbs.
2010     – 2,879,598 lbs.

The stated tonnage in this RFP is not a guarantee of a specific number of shipments or total volume. The Shipper does not guarantee to ship any specific number of LTL shipments, i.e., no minimum annual volume.

The above scope of work provides your bidders a very good indication of expectation.  From this they can determine the equipment, manpower and overhead required to service this contract if they were awarded the business. Providing historical data is an excellent way to estimate your anticipated shipments and as always provide a clear disclaimer about guarantees.

Other areas you might include in your RFP would be tracking capabilities, routing or coverage areas, specific details on their fleets, facilities and equipment. Ask about fleet size and ownership, do they sub-contract work (independents). This may not be a deciding factor but knowing whether an actual employee of the freight company or an independent contractor is transporting your goods is a fact you should be aware of.

When it comes to due diligence items, you might request a copy of their Spill Response Plan, Emergency Response Plan, do they employ a safety coordinator, safety records, insurance and damage claim history are good questions to clarify.  To purchase our RFP for LTL Freight Services – Template #90 is in both our Premium and Mega Packs.

IncoTerms Post helpful for clarifying transportation responsibilities, clearance, insurance and documentation.

Related post – FOB Points go hand in hand when it comes to shipping freight services.

vendor contract

Vendor Contracts

by Contract

 

vendor contractPurchasing managers work with a wide variety of vendor contracts as part of their daily responsibilities, and each one plays a different role in keeping operations running smoothly. These can range from service agreements and consulting contracts to supply contracts, inventory arrangements, blanket orders, equipment or capital purchases, and standing order contracts. While they may look similar at first glance, every contract type has its own purpose, structure, and level of detail. Depending on what you are trying to achieve—whether it’s securing ongoing services, locking in pricing, managing stock levels, or ensuring equipment availability—will help you decide on which type of contract you will ultimately choose.

Service Contract – This vendor agreement might be used for a contract employee providing a specialized service to your organization. The focus of the service agreement would likely be the hours of work, hourly rate and actual service areas this individual would be responsible for. 

Consultant Contract – would imply you are hiring an expert to provide direction on a specific requirement your organization needs direction or support with. Everything from hourly rates to required credentials to the period or term of the arrangement would be identified in this agreement.

Supply Contracts – These are typically used for the supply of bulk consumables or products your business would require on an ongoing basis to ensure continual production. If you are in the resource industry, this might be chemicals, fuels, explosives, lubricants and so on.  In manufacturing, it might be natural gas, coal or whatever powers your facility.

Vendor contracts can be complex and getting a template to help you create something professional can save you many hours of time. Most of the above vendor contracts should address standard clauses like Force Majeure, Termination, Scope, Period, Indemnity, Assignment, Acceptance and so on. Why start from scratch, eliminate frustration and focus your efforts on the specifics.

Some examples we provide include: RFQ9-Chemicals Contract, RFQ51-Lubricants Supply, RFQ53-Reagent Supply, RFQ54-Explosives Supply are just a few of our supply contracts which might be of interest and are available in the Premium and Mega Pack offers.

RFQ4-Service Contract and RFQ21-Engineering Contract will address some of the other Vendor Contracts we have listed above.  For a complete list of contracts in our pack please visit this link.

RFQPro offers a wide range of vendor contracts, each designed to address a specific area of operational responsibility. Any one of these agreements on its own delivers enough value to justify the cost of the entire package.