Preparation and Review of Request for Quote From Simple to Complex Requirements. Every corporate purchase small or large follows essentially the same 20 process steps. CPOs and Vice Presidents of Purchasing have responsibility to put in place the People, Process, Training and Technology that optimizes the RFQ which will result in more value to the organization

1. A Purchasing Fundamental
Preparation and Review of Request for Quote
From Simple to Complex Requirements
HOW 2 RFQ
Bill Kohnen July 2014

2. Overview
Every corporate purchase small or large follows
essentially the same 20 process steps
Difference is how much time and effort is put into
each step
For a simple Purchases the process takes place in
minutes and may not need documentation
For Complex Purchases the RFQ process itself can
take 6 months
There are ways to do work upfront to minimize
time and maximize results.
Bill Kohnen July 2014

3. Steps
Identify what is needed, how much and when
Confirm approval to spend
Identify Terms Desired
Payment Method Pay Terms
Currency Shipping Method
Who Pays for Shipment Where to Ship
Where to Bill Legal terms
Decision Criteria Warranty
Regulatory Compliance Service Level
Quality Requirements Test Requirements
Bill Kohnen July 2014

4. Steps
Identify Potential Suppliers
Capability
Location
Contacts
Prepare Final Requirements
Decide when you want response by
Method of Response
Send Request to Potential Suppliers
Answer Questions from Suppliers
Bill Kohnen July 2014

5. Steps
Receive Response from Suppliers
Review Individual responses
Consolidate still viable response for comparison
Review responses based on your criteria
Determine the best option
Determine whether you still will purchase
Communicate Decision to Selected Supplier
Prepare PO or other method of transaction
Transmit order to supplier
Get confirmation of order acceptance from supplier
Notify other suppliers
Notify Requestor
File Business data for reference for future requirements
Bill Kohnen July 2014

6. Consider Simple v. Complex
Purchase
Laptop for Employee
Business Use
Outsource of Business
Process
Standard Model set
by IT group
Regular suppliers
identified
Standard discount
might have been
negotiated
Other Suppliers ok as
long as same model
First time to outsource
this process
Need to define
existing expected
standards
Unsure of market
pricing
Suppliers have
different capabilities
Bill Kohnen July 2014

7. Examples Simple v. Complex
Differences
Action Simple Complex
Identify what is needed, how much
and when
Straight forward part number
or description
Requirements Document and
Study
Confirm approval to spend Approved request Formal Financial Review
Identify Terms Desired Boilerplate/Standard Terms Cross Functional Development
Identify Potential Suppliers Vendor List, Internet, etc Comprehensive Supplier Audits
and Market Study
Prepare Final Requirements Same as initial request and
standard /boilerplate
Cross Functional
Send Request to Potential Suppliers Email/ Call/Internet Bidders meeting, Formal
Document
Answer Questions from Suppliers Immediately Formal Documented process
Receive Response from Suppliers Immediately or email Formal Process
Review Individual responses Buyer Team
Consolidate still viable response for
comparison
Buyer Team

8. Examples Simple v. Complex
Differences
Action Simple Complex
Review responses based on your
criteria
Can be instant by Buyer Formal review process and
meetings
Determine the best option Buyer Decides Cross Functional team
Determine whether you still will
purchase
Unless price is higher
generally will buy
Formal review to consider initial
plan vs actual
Communicate Decision to Selected
Supplier
On Phone or E mail
Immediately
Formally
Prepare PO or other method of
transaction
Buyer does this per process Cross Functional Group and
Reviews
Transmit order to supplier On Phone or E mail
Immediately
Formal PO or Contract with
Meeting
Get confirmation of order
acceptance from supplier
Just on phone/email or
shipping niotice
Formal written Response
Notify other suppliers Might Happen in process Formal message / meeting
Notify Requestor Delivery Might be Notification Formal Meeting
File Business data for reference for
future requirements
Might just be in the Buyer
head
In Company Data Base/Data
Warehouse

9. A Faster RFQ Process Results in
More Savings/Profit
For Simple Items/Indirect Spend/Travel
Consider Software as a Service tools that are
readily available at a reasonable cost to drive
speed and efficiency.
Utilize Purchasing Cards
Establish Pre negotiated Catalogues of Items
for users to use to buy directly
Establish Solid procedures and standards to
enable Buyers to make fast decisions
Bill Kohnen July 2014

10. A Faster RFQ Process Results in
More Savings/Profit
For Complex Items and Critical Direct
Spending
For Critical Direct Spend have Commodity
Managers in place that know the marketplace
For new complex items utilize a small cross
functional team approach
Establish formats for selection criteria, terms
etc. that can be used a basis for new projects
CPO or VP Purchasing led Procedures,
Process, and Training in RFQ Process
Bill Kohnen July 2014

11. Summary
Bill Kohnen July 2014
The Request for Quote Process remains a core
skill for purchasing professionals
The process itself is essentially the same for
simple to complex purchases
Once Buyers master the basics of the process on
simple purchases it is natural for them to learn on
the job with mentoring on bigger projects
CPOs and Vice Presidents of Purchasing have
responsibility to put in place the People, Process,
training and Technology that optimizes the RFQ
which will result in more value to the organization