Forms used by Procurement

Typical Forms most used by Procurement Professionals

In order to manage the need to purchase supplies and services, purchasing professionals turn to certain forms or documents to obtain the internally requested products or services.

Some standard forms you might be familiar with would be: Request for Quotation; Request for Proposal; Invitation to Bid; and there are many others.

While most of these procurement forms are relatively straightforward, the Request for Proposal is a form that has continued to evolve since its first started to appear in the early ’80’s. Since then, RFP’s have become more prevalent, more refined and in some cases are all some companies issue (not what we recommend). Regardless, companies that purchase goods and services need procurement forms to help them manage their business. These forms are a necessary evil and will help you ultimately complete the task of getting to an award.

Role players in an RFP / RFQ

Before we can detail the forms most used by purchasing department today, we think some color on the process is needed. Typically there are 3 or 4 role players when it comes to the RFP or RFQ process. There is a Tenderer aka Bidder / Offeror / Vendor; then there is the Owner which is the parent company issuing the document — then the user or internal department making the request or the group needing the material or service — and last the procurement officer who is the person managing the RFP / RFQ. They often generate the documents, issue, analyze the offers, make a recommendation and manage the award. There are others like the accounting department which will pay the vendor and so on.

Supplier/Vendor: A seller of materials and/or supplies who submit a proposal or quotation against your requirements.

Now back to the most popular forms used today:

  1. RFP – (Request for Proposal). Without question, this form is considered the go to form for procurement professionals, on larger dollar spend and when your selection criteria might use additional factors other than price, like service capabilities or technical.
  2. RFQ – (Request for Quote). To some this is up for debate, but depending on the organization, sometimes the Buyer is simply looking for price and delivery on a simple material request.  We need 6 widgets and here is the part # so in this instance a RFP is way overkill and is not worth the cost or effort.
  3. EOI or RFI – (Expression of Interest) or (Request for Information).  An Expression of Interest (EOI) or (RFI) is used to gauge interest from potential suppliers for a potential upcoming project on the drawing board or hope to officially tender in the near future. An EOI, gives you the opportunity to pre-qualify vendors to ensure they are capable of completing the work under the restrictions or specifications outlined in your document.
  4. LOI or LOU – (Letter of Intent) or (Letter of Understanding). Often the next document to be used by the purchasing department if the spend warrants (vs going right to a PO).  It captures the summary terms negotiated by both parties during the award process and these details will eventually make their way into the formal contract. Simply, the Buyer is looking for a document they can use to bridge them over until a formal contract document can be executed.

There are many other documents a Buyer will use in today’s purchasing and if you, like many of us, find the RFP Process overwhelming or too time consuming hang tough as Our Step by Step RFP Guide will be released soon. It will simplify the RFP Process by providing a step by step guide c/w with sample forms typically used when issuing a RFP — from start to finish. All forms will be provided in edit friendly Microsoft Word format. This comprehensive guide and template pack will be provided at a discount to all our subscribers and with returning customers receiving additional discounts over and above discounts offered to our subscriber base.

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…]

How To Succeed With Tenders

Tender Response How To:

Tendering skills are a critical component of the professional buyer’s job description however, responding to a tender or RFQ is vital to the success of any business. If you fail to succeed on receiving the award on your tender responses it is  likely you will not be in  business very long. What is the key to increasing your chances at winning more tenders?

Preparation is the key element if corporations and individuals are to expect success from the tendering process.

While some of this preparation we are referring to can be expensive if your representative is to perform a site visit or take part in additional training but not all preparation is costly. [Read more…]

The Use of Quotations

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 [Read more…]

RFP – What is it?

Request for Proposal – RFP:

What is a RFP and how and when should a procurement professional utilize it. A Request for Proposal (RFP) is an invitation to Vendors to submit a written offer to supply services or a solution to a requirement.

So, you have an internal need or requirement and there is nobody qualified in the organization to manage the requirement or possibly resolve it. You need to outsource the job and now might be when your employer requests you issue a RFP.

The RFP is then written to illicit positive feedback, therefore, needs to be designed professionally and must clearly identify the actual work you are hoping to farm out and the expectations.

More specifically, it is written to ensure suppliers don’t assume the entire risk. In manufacturing, this might mean the buffering of raw materials and finished goods to meet the final demand for goods. In a services type RFP, it should ensure the consultant has a clear indication of the amount of time and or resources he or she is expected to put into the project.

A RFP is different than a Request for Quote (RFQ). With a RFQ the Vendor can be certain as to the supply risk. For example, like having enough capacity to ensure supplies and goods at the right quantity, quality, time, and cost. We need 12 pairs of leather gloves and here is the part number. This RFQ is straight forward and comparing costs are for the most part simple. A RFP is not necessarily so cut and dry and quite often asks the Vendor to propose a solution.

Okay let us get back to writing the RFP. The Buyer will need the Vendor to define the specific monetary and/or service obligations which make up the offer. It is the Purchasing departments job to make the RFP available to several suppliers to respond with a competitive proposal or a solution to your request.

What to include – the Request for Proposal should include a short but detailed description or specification of the products or services which are required. This can also be identified as scope. As with many business writing efforts, an effective request for proposal will begin by declaring the purpose for the document. Even the most casual of formats for a RFP will incorporate details of this nature. In comparison, a highly structured format informs the applicant precisely how to arrange data in a manner that is certain to have significance to the issuing business. So, it is vital to be clear on the scope of work and try not to cloud the document with legal terminology. In other words, leave all the legal terms to the end of the document as this might deter recipients or quality vendors from offering. The higher the risk the more terms and conditions might be required but again not all RFP’s warrant forty pages of legal requirements. [Read more…]