A Purchasing Fundamental
Preparation and Review of Request for Quote
From Simple to Complex Requirements
HOW 2 RFQ
Bill Ko...
Overview
Every corporate purchase small or large follows
essentially the same 20 process steps
Difference is how much time...
Steps
Identify what is needed, how much and when
Confirm approval to spend
Identify Terms Desired
Payment Method Pay Terms...
Steps
Identify Potential Suppliers
Capability
Location
Contacts
Prepare Final Requirements
Decide when you want response b...
Steps
Receive Response from Suppliers
Review Individual responses
Consolidate still viable response for comparison
Review ...
Consider Simple v. Complex
Purchase
Laptop for Employee
Business Use
Outsource of Business
Process
Standard Model set
by I...
Examples Simple v. Complex
Differences
Action Simple Complex
Identify what is needed, how much
and when
Straight forward p...
Examples Simple v. Complex
Differences
Action Simple Complex
Review responses based on your
criteria
Can be instant by Buy...
A Faster RFQ Process Results in
More Savings/Profit
For Simple Items/Indirect Spend/Travel
Consider Software as a Service ...
A Faster RFQ Process Results in
More Savings/Profit
For Complex Items and Critical Direct
Spending
For Critical Direct Spe...
Summary
Bill Kohnen July 2014
The Request for Quote Process remains a core
skill for purchasing professionals
The process ...
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How 2 RFQ - Managing the Request for Quote Process is Fundamental Skill of Purchasing Processionals

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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


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How 2 RFQ - Managing the Request for Quote Process is Fundamental Skill of Purchasing Processionals

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

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