Writing an Effective RFQ


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A request for quote, or RFQ, is a document issued by a company or individual that wishes to request a price for a particular product or service. This document can be public with an aim of soliciting bids from several companies or it may be private and submitted to one or a few companies directly. However, if it is not structured properly or if it lacks critical detail, it can quite easily generate no bids or worse yet, generate bids that are not accurate and end up wasting time.

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Writing an Effective RFQ

  1. 1. in t f Writing an Effective RFQ www.asiatradepro.com Sertus LLC. © 2011
  2. 2. Jay Peirce How to Structure an Effective Request for Quote(305) 215-3414 March 2011jay@sertusllc.comWhat is a Request for Quote?A request for quote, or RFQ, is a document issued try and figure this out before soliciting prices.by a company or individual that wishes to request a Contact a trusted source for help, especially if youprice for a particular product or service. This are unclear about what sort of product criteriadocument can be public with an aim of soliciting (material, finish, functionality, packaging etc.) willbids from several companies or it may be private address a specific consumer need.and submitted to one or a few companies directly.However, if it is not structured properly or if it Communicate Needs and Wantslacks critical detail, it can quite easily generate nobids or worse yet, generate bids that are not Once you have identified the specific needs, it isaccurate and end up wasting time. important to communicate these as clearly as possible. It is better to provide more information than notCommunicating your company’s needs is often enough. Some things can be noted as a set of specifications, either technical or functional. And somedifficult. What follows are some important tips on services can be quantified. However, other things arestructuring an effective RFQ, managing an very difficult to quantify and that makes themefficient quoting process and getting the best value especially difficult to describe. When words are notfor the goods and/or services sought. It is by no effective, use pictures or images. Often a picture ismeans exhaustive, but is designed to give you really worth a thousand words when requesting bids!some suggestions and information to help you withrunning this process. If it is too difficult to specify what you want or require performed or delivered, then try to describe the outcome. What ultimately matters is whether theDo Your Homework suppliers you have identified can provide you a priceBefore you put pen to paper, spend some time based on what you have written or offered. Not to worry if you don’t get everything right the first time – itunderstanding what it is you really need. This may may take several exchanges and some research.entail understanding first the product positioningstatement – who is the customer, what is the Make sure, if requesting a quote for a product, toproblem your product/service addresses, what are communicate not only the product specifications, butthe key benefits of this product, and what makes it also delivery terms (e.g. CIF, DDP, FOB, etc.), leaddifferent from the competition. times, product liability insurance requirements, local standards and certifications, customs requirements,Differentiate between needs and wants – like-to- packout (inner boxes - quantities per inner andhaves and must-haves. Needs should be dimensions; master carton specifications – doublecommunicated with words like “will,” “shall,” corrugated; PDQ boxes; pallets), special markings or“must” – these are the “requirements.” Wants are branding, and any other relevant piece of information to make the quote as accurate as possible.described with words like “may,” “can,” or“optional.” Scale Impacts PriceYou should also be realistic, and this requires an The greater the quantity you will order, whether itunderstanding of what is possible. It is okay if you be in product or services, the better the price youare not entirely clear on everything that is needed. can expect. It is very important to give clearMost people aren’t. But to ensure you are not guidelines to your suppliers of the quantities youoverpaying for features, materials, and other spec intend to order and that these guidelines cover notthat are not entirely necessary, you really need to
  3. 3. Jay Peirce How to Structure an Effective Request for Quote(305) 215-3414 March 2011jay@sertusllc.comonly your initial order but provide an estimate of quality concerns that you have faced? Or are thereorder quantities over an extended period of time. any other limits that could impact what the supplier needs to do to meet your needs? Are there things you definitely want included, or things that youPrice Impacts Spec definitely want excluded? All of these questions are important considerations when solicitingEqually important is to provide your supplier with quotes. And remember, inconsistent informationa target price. When an accurate target price is or miscommunication of priorities will result inoffered, suppliers can quickly determine whether your vendor having difficulty supplying what youthere are problems with the noted specifications actually need and will likely result in higher costsand possibly identify more appropriate solutions to as pricing is padded to reflect the uncertainty.meet the buyer’s needs. There have been manyinstances where buyers have misunderstood“required” product spec and solicited bids on items For more information, please contactthat are quoted well above where the buyer feels info@sertusllc.com or visit www.asiatradepro.comthe target price should be, only to find out that alower spec could satisfy the same consumer needor that the spec was simply not what it was thoughtto be!Yet many buyers are reluctant to share a targetprice with suppliers for fear of compromising thebenefits of a competitive quoting process. Tothese buyers, it is important to convey thedistinction between “relationships” and“transactions.” If the only relevant criterion inselection is price, then hold the target close to thechest and solicit competitive bids to select thepreferred supplier. But if relationship is important– where products or services will be purchased onan ongoing basis – then there are probably othercriteria that are as important, if not more so, thancost. Starting a relationship with open, sincerecommunication, where needs are clearly specifiedand price considerations and targets are stated upfront not only builds trust, but is also the mostefficient way to obtain accurate bids on products orservices that will meet real needs and solve realproblems.Articulate PrioritiesIt has been said that a buyer can have low cost,speed, or high quality – pick two. Make sure tocommunicate what your priority is to your vendors.Many times, it is more important to ask yourvendors to help you reach a specific goal orobjective than to merely get a quote for a productor service. Do you have a limited budget? Do youneed to hit a delivery deadline? Are there specific