Evolution of the RFQ
By : Mark Bell -
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 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.
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.
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.
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.
A Letter of Understanding (LOU) and Letter of Intent (LOI) are used post tender. These will help you bridge the gap between the tender and when you get around to the formal contract. Large organizations with big spend often use a 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.
Request for Qualifications