request for quotation Archives - RFQPro: RFP and RFQ Templates for Buyers and Suppliers

The Use of Quotations

Mark Bell — Fri, 10 Jul 2009 05:43:04 +0000

Quotations are requested when the size of the requisition or proposed commitment exceeds a minimum dollar amount stipulated usually by policy in the organization of the bidder: for example, $500.00. This rule may not apply in Governmental purchases as they are required by law to perform and award a RFQ to the lowest responsible bidder. In some Industries, proposals may be requested with the intention of selecting a firm to negotiate or settle final prices with.

Depending on your organization, after a RFQ is solicited and approved by the appropriate representatives, the price quotes are used to generate a purchase order and commitment is then made to the successful vendor. In some instances, the quotes are identified as part of a standing order contract or supply agreement where goods are delivered against this contract at intervals during the contract period or term.

The first step in preparation to issue a quotation is to determine vendors capable of:

supplying the requested item in accordance with the buyer’s specifications (quality)
meeting the stipulated delivery date
being reliable to warrant serious consideration
being competitive
responsible environmentally and stable financially

The number of vendors to include in your RFQ will vary based on the buyer’s experience with the product being procured. Usually three or four are invited to submit bids. When analyzing bid responses, it is important to ensure that the bidders are comparable in every major respect. Typical areas reviewed include: product specification, delivery date, payment terms and price.

Prior to award it is good practice to keep all commercial aspects of the RFQ in confidence. Even after the award is made, it is a better policy not to reveal to unsuccessful bidders the amount by which they failed to meet the successful bid. This is considered a good standard to adopt. Keep in mind, if your bidders are aware their prices are being disclosed to the competition, they may opt to no longer bid on your quotations opening the door for other vendors and removing the competitive aspect of your tenders. This could eventually increase delivery and product costs.

With any RFQ, you will have the opportunity to invite, award and reject bids. It should be acknowledged a supplier is put to some expense and at times, a very considerable one in these exercises so it is important to notify them of the outcome. After all, you wish to ensure they will bid on future requirements.

An example RFQ should include your invitation to bid letter, items for bid and a sample agreement. Let RFQPro.com help, we can supply templates for all the above.

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When to use a RFP versus a RFQ

Mark Bell — Wed, 01 Oct 2008 14:15:45 +0000

This is a good question, and one we hear often. We’ll try our best to provide a simple answer to help you make an informed decision when performing your purchasing duties. This scenario surfaces when you are faced with generating a purchasing document to send to your suppliers.

Documents issued by the Purchasing group may include an RFQ (Request for Quote), RFI (Request for Information), RFP (request for proposal), ITQ (Invitation to Quote), IFB (Invitation for Bid), or other solicitation documents.

An RFQ (Request for Quote) is typically used when the Owner knows the exact type and quantity of goods required. In contrast, an RFP (Request for Proposal) asks bidders to propose a solution to a requirement that may be addressed in multiple ways.

For example, an RFQ would be appropriate if you are purchasing 100 Toshiba laptop computers with defined specifications, such as 2 GB RAM, 100 GB hard drive, DVD burner, and a specific version of Windows. In this case, the requirement is clearly defined, and vendors are quoting against a specific specification.

An RFP, however, may be used if you are uncertain whether to purchase, lease, or rent those same 100 computers, or if hardware and software requirements vary by user. In this situation, vendors are invited to propose a solution that best meets your operational needs.

With this distinction in mind, evaluating an RFQ is generally more straightforward, as responses can be compared primarily on price and compliance with specifications. Evaluating an RFP is more complex, as proposals must be assessed based on not simply cost but methodology, value, risk, and overall suitability.

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What is a RFQ (Request for Quotation)

Mark Bell — Fri, 18 Apr 2008 04:39:31 +0000

RFQ is the acronym for a Request For Quote or Request For Quotation. An RFQ is a request a company tenders when they have a material or service requirement; the RFQ is basically their way of encouraging Vendors to provide a bid for their requirement. The purpose is to provide a fair evaluation for all bidders and to provide the candidates with the evaluation criteria against which they will be judged. A secondary intention, is to encourage competition amongst the bidders which will help the buyer achieve the best possible bid and cost that suits their existing requirements. The company that issues an RFQ then selects one of the bidders to complete the material or service requirement. In today’s business world it is not always about the price, other factors such as quality and delivery often take precedence over cost. Another angle or use for a RFQ is when a business includes a RFQ form on their website. This allows potential customers to contact them to request prices on services or products. An online RFQ form may help to encourage viewers to make a purchase, as it solicits action instead of passive Internet browsing.

Another term frequently used is Request For Proposal, or RFP. Although the terminology can be confusing, an RFP and an RFQ both serve the same purpose: inviting potential suppliers or vendors to submit a bid. While an RFQ is a straightforward concept, it remains a formal business document and is therefore organized into several key sections:

Section One of the RFQ is basically background information on you or the company issuing the RFQ.
Section Two of the RFQ is often called “Required Deliverables.” This section describes the material requirement in detail, the scope or the desired end product if it is a service requirement. The RFQ should detail any special requirements the company is wanting.
Section Three of the RFQ is the Assumptions and Agreements section. This section describes the terms and conditions of the tender, items such as a project budget, a bid limit, safety and regulatory requirements, what types of travel expenses or per diem the company will provide, the process used to approve the product or materials, and so on. By submitting a bid, the contractor is agreeing to abide by the terms and conditions of the tender. An RFQ also provides information for suppliers and vendors to use to submit their bid. This information may include a bid submission deadline, a bid form, bid requirements or information that the bid proposal must include to be considered, and the selection criteria or factors that will determine which bid the company chooses.

There are many free RFQ template examples available online. It is best to find one that is industry specific, as it will include more pertinent terms and conditions related to your field and to your needs.

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