RFQ

RFQ stands for Request for Quotation. It is a procurement document used to invite suppliers to submit price quotations for defined goods or services. An RFQ is typically used when requirements are well defined, specifications are standardized, and price is the primary factor in choosing a supplier. It is distinct from an RFP (request for proposal), which solicits proposals including approach, methodology, and value-add, and from an RFI (request for information), which gathers information about supplier capabilities.

Process: The buyer drafts the RFQ with clear scope, quantities, technical specs, delivery terms, and evaluation criteria. The RFQ is issued to selected suppliers. Responding suppliers submit quotes that include unit prices, total cost, delivery lead times, warranty and payment terms. The buyer evaluates quotes for compliance with requirements, total cost of ownership, and supplier capability. Negotiations may follow before award. The contract is awarded to the preferred supplier, often the one offering the best value rather than the lowest price.

Contents: The RFQ typically includes scope of work or bill of materials, technical specifications, quantities, quality and acceptance criteria, delivery schedule, terms and conditions, required certifications or licenses, pricing structure, quote validity period, submission deadline and method, and contact information. Confidentiality and compliance requirements may be included to ensure fair competition.

Advantages and limitations: RFQs are efficient for commoditized or standardized purchases, promote price transparency, and speed up procurement. They simplify comparison across bids. Limitations include a focus on price over value or quality, potential insufficient evaluation of non-price factors, and less suitability for complex services, customization, or ongoing supplier relationship development.