Request for Quotation (RFQ)

Short description:  An RFQ is a formal document that invites vendors to submit price bids for standardized products or services, typically used for high-volume/low-value items.

Learn more: This procedure entails outlining the buyer’s needs for a specific product or service and inviting suppliers to provide their pricing information and payment conditions. The main objective of a Request for Quotation (RFQ) is to streamline the procurement process, enabling buyers to assess and compare vendor proposals uniformly.

An RFQ can be sent alone or in tandem with a request for proposal (RFP).

A business generally sends an RFQ when the quantity for a standard product is known and needs are ongoing. RFQs do not generate unsolicited bids and quotes as businesses target specific vendors and contractors.

The RFQ process typically consists of the following logical steps:

1. Preparation Phase:  

An RFQ document is generated, which represents a structured template for bidders. It should contain essential details such as product specifications, delivery requirements, quantities, payment terms, evaluation methods, timelines, contract conditions, and submission guidelines.

2. Processing Phase:  

A pre-selection process may be conducted to identify suitable candidates while assessing financial and operational risks. The RFQ is sent out with explicit instructions and a submission deadline. It’s vital that potential bidders receive the same information, including the buyer’s terms and conditions, and a method for submitting questions, to ensure a fair process.

3. Awarding Phase:  

All submissions are reviewed promptly and confidentially. This stage focuses on evaluating the proposals to identify the best fit based on the outlined criteria.

4. Closing Phase:  

The selection of a supplier is made based on the lowest price that meets the specified requirements.