Request for Quote
Request for Quote (RFQ), is a standard business process to invite suppliers into a bidding process to bid on specific products or services through Invitation for Bid (IFB). A RFQ seeks information like unit price for the product/material, delivery schedule, payment terms, quality level and special instructions like packing type, packing unit and so on during the bidding process.
An RFQ should always contain/request the following information:
- The price requirement that includes the fixed price and slab price in some cases.
- The quantities or volumes required.
- The delivery date or the completion date for the goods or services required.
The confirmation that the supplier can fully comply with the specifications of the items or services.
- The confirmation of compliance with any standards.
- The terms and condition of purchase.
- Terms of payment.
RFQ is a very important document while purchasing goods and services. Hence, it should cover all the necessary items by including all the relevant drawings, specifications, description of services, and so on. Therefore, RFQ for contracts should elaborate all terms and conditions of contract, both commercial and statutory, in an enclosure attached to the tender forms. The bidders sometimes offer alternative solutions to the specifications tendered, hence they should be invited during the process. The suppliers may have alternative solutions, which will meet the requirements at a lower price. The lead-time of RFQ should be high so that the negotiation process has sufficient time run. A minimum of 3 to 4 potential suppliers will receive the RFQ. A predetermined date must be selected for receipt of quotation, which should be specified in the RFQ.
The evaluation process will proceed once the quotations are received. This is followed by a discussion on the technical capabilities or to note errors in the proposal. Multiple rounds of negotiations may follow with an aim to generate the best market price. You should make it a point to respond to all the bidder questions without any delay. RFQ?s are standardised/customised to products and services as far as possible, to facilitate computerisation and automation of transactions. An RFQ provides an opportunity to different contractors to provide a quotation, among which the best will be selected.
Although RFQ for imported material/equipment covers all the parameters listed above, it will have certain unique parameters as it is an overseas transaction.