Evaluating your Spend

Every business needs to be constantly evaluating spend regardless of how big your company is. What does it mean to be evaluating your spend? If you asked your accounting department to provide a list of the top 20% vendors in relation to how much money you spend with them annually this would be the start of how to evaluate spend. This list of suppliers should represent close to 80% of your operating budget spend.

Prudent business owners will dedicate a large portion of their time or their purchasing department’s time analyzing this 80%. These are the target vendors you need to be keying in on. Requesting price concessions for your guaranteed or long term business, requesting they partner with you to provide productivity improvements and so on.

There are multiple ways to approach this:
1. Gather specific details on this spend. How many widgets am I buying of a specific product in a 12 month period? This is known as your annual usage. What is our cost to procure these items? Is there a better quality product which will perform the same function and reduce operating costs? Are there other vendors that can provide a similar material or service?

2. Approach your existing vendor directly or by way of a RFQ and request firm pricing for a 12 month period. In exchange for this commitment, you are asking for preferred pricing. This does two things, stabilizes your costs for the next 12 months; reduces ordering costs as items can be covered under a standing order contract.

3. Competition is the best way to achieve fair market pricing for goods and services. To achieve this you would need to issue a Request for Quotation (RFQ) for the above item(s). If your spend warrants, you should do your homework and pre-qualify vendors for these items. Ensure they are of similar quality by asking for samples and get a sense whether these suppliers can meet price and delivery timelines based on your existing requirements. No use getting something for 10% less than what you are presently paying if the new vendor cannot deliver.

4. It gives the vendor comfort knowing they have your business for the next 12 months in exchange for better pricing. By granting them a contract for the next year, the expectation is the vendor would guarantee they carry relevant inventory in their local branch which would then allow you to reduce on-hand inventory. In this instance you are reducing carrying cost, cash outlay for inventory and achieving preferred or reduced item unit costs. Savings all the way around!

Issuing a RFQ (Request for Quote) to determine present market pricing is always the preferred way of doing business. It is ethical, transparent and begins to condition your suppliers of your intention on watching your spend. It sends the message that your company is focused on ensuring you are receiving the best possible product at the best possible price.

If creating a RFQ to help manage costs is now on your radar, there are many sample RFQ templates available on-line or the team at RFQPro would love to help you get the ball rolling.

See a list of our templates and forms by visiting our In the Pack Page

Here is to your success — Mark.

RFQ Sample for Telecommunications

RFQ for Telecommunications:

RFQPro template #24 is a 13 page sample request for quote for Telecommunications. When issuing a RFQ of this nature it is going to be much more technical than the average proposal you would issue. In fact, it is all about the specifications so having a third party expert to consult or provide the technical component should be strongly considered. After meeting with all the parties in your organization they would be able to provide a solution which will meet with all the departments and overall companies needs. Keeping this in mind, this template will provide you with a strong sense of what is needed to issue a quotation for a new telecommunications system.

It provides details on Evaluation Criteria, Bid Instructions, RFQ Addenda details, Warranty verbiage, General Terms and Conditions as well as many other standard terms you would typically use.

For the Technical component there is a sample specification which covers installation, system specifications, system requirements, physical characteristics, cabling, VoIP, performance specifications, basic phone features, call processing, warranty and maintenance so much can be gleaned by using this template to help you kick start the process.

Not all organizations would have in-house expertise available to assist in crafting a RFQ of this nature so stick to your strengths and ask for direction where needed.

Let RFQPro.com help – this RFQ Sample for Telecommunications is included in our Premium Pack (90 plus templates) and in the Mega Pack.

Evolution of the RFQ

Evolution of the RFQ:

Acronyms are becoming a part of everyday purchasing lingo. Here are just a few we are becoming accustomed to: TCO, RFQ, RFI, RFP, LOU, LOI, ABC, SPC. 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.

Well TCO is Total Cost of Ownership, SPC is Statistical Process Control and it is used in manufacturing, ABC relates to classification of your inventory and RFQ is a Request for Quote.   The good old RFQ which all of us COP’s – 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 or was issued as a request for quotation or quote. It was sometimes called an invitation to quote or invitation to tender and these both are part of the RFQ family.

Then came the RFP which is a request for proposal. This is where the vendor [Read more…]

RFQ Cover Letter

RFQ Cover Letter:

RFQ Cover LetterA RFQ cover letter or request for quote cover letter can take on many appearances. It can be anything from a simple hand written fax cover page to a formal business letter style template.  A RFQ cover letter is also known as an invitation to quote letter and like the RFQ cover letter, it is used to connect the buyer and supplier. It usually requests price and delivery for a product or service requirement. For a sample Request for Qualification cover letter go to bottom of this post.

Your cover letter should include an issue date, buyers complete business address, subject – RFQ for ____, your offer (quote on supplying, etc), an acknowledge by date,  reference to an instructions page, possibly a reference number, may include some background details, where, when and to whom the response must be addressed to and finally, close it with your signature and title.  The following is [Read more…]

RFQ Sample – Public Purchasing

Public Purchasing:

If you are looking for a detailed RFQ – Request for Quote for the purchase of a piece of mobile equipment and you are in the public purchasing field, this sample RFQ template will expedite the tendering process. This one specifically addresses the acquisition of mobile equipment (Road Grader) but can be used for any major piece of equipment by adding your own equipment specifications, sometimes you can download these specification online directly from the manufacturer.

RFQ67 – Mobile Equipment template is 24 pages and includes a layout you can use to add detailed equipment specifications. Here is a quick look at a few pages of this template.

RFQ67_MobileEquiptRFQ67Bid

RFQ67 template is available in our premium pack offer.