Steps to Processing the Request for Quote (RFQ) Document

A request for quote (RFQ) helps make the entire buying and selling process smoother and more efficient. Sellers can give their exact pain points in the form of an RFQ, and sellers reply with their product details that can help solve it.

Let us say you have completed the entire marketing process and have prospects down your sales funnel to a point where they want to connect with you to talk pricing. This means that all your previous hard work has paid off. They are intrigued enough to want to look into buying from you, wherein the significance of RFQ, RFI, and RFP together come into the picture.

In today’s competitive marketplace, products are customized and configured to suit buyers’ needs. But, with these customized products come customized prices. Your website may give an estimate, but if your buyer is serious, they will send you an RFQ to get an exact number.

Now, you may ask: What is an RFQ? Or you may hear the terms RFQ, RFI, and RFP together. Let us better take a close look at what these terms mean:

What is a Request for Information (RFI)?

A Request for Information or RFI is a formal method where potential buyers ask vendors for details about their products and solutions. These act as source codes for preliminary information about the customer.

RFIs have a series of open-ended questions from the customers to vendors. This gives customers a clear idea of their offer’s features, benefits, and capabilities. The best thing about RFIs is that any detail you look for is ingrained in the sales rep’s mind. So, any queries you have will have answers faster.

As a vendor, receiving an RFI from a customer is a good sign; they are interested in knowing about your product. Realistically, the customers collect details from multiple vendors and make informed decisions. RFIs use these details to examine all their options. As a seller, you must base your responses on the required details and research from other prospects.

RFIs are a great way to address your customer’s pain points while highlighting your product’s features.

What is a Request For Quote (RFQ)?

Once an RFI and its response are sent, the customer considers the details and determines if the seller provides the solution they need. So, the next area of contention is the cost. Customers require these details with a quote or a Request For Quote (RFQ).

So, what is an RFQ?

An RFQ is a precise request for a quotation for a highly-specific solution that a seller provides. These include the requirement list that a customer looks for in a product.

During this stage of the purchasing process, the customer knows what they want and where they can get it from. The main purpose of the RFQ is to ensure that the solutions are within their budget. Potential customers send multiple RFQs to multiple vendors.

As buyers, you need to ensure that the RFQ has a detailed list of all features and functionalities you are looking for. Give the vendor a look into your expectations, especially the duration of the solution, the date you want to start using the product, and any payment relevant to the product. All these details are important to get a detailed response.

As sellers, you need to provide the customers with a price quotation detailing everything the way you want. If a customer signs the RFQ, it becomes a legally binding document in the sales process.

What is a Request For Proposal (RFP)?

A request for a proposal or RFP is a methodology customers use to get details from the seller. Buyers looking into a new product will send the RFP with detailed requirements regarding the problems they are facing, hoping the sellers’ product will offer a solution.

So, what is RFP’s purpose?

One of the RFP’s key purposes is to gain insight into the solution specific to the buyer’s concern. People in the seller’s company will have more information about the product and can help plan a solution for the buyer keeping their issue in mind.

When sending the RFP, a seller needs to be as specific as possible. They must provide the buyer with minute details about the investment’s needs, requirements, and goals. This proposal means that you, as a seller, are ready to make a purchase. Rather than a simple inquiry, this is the section for a concrete action plan.

RFPs must include the workflow in the collaboration when a purchase is made. As customers, you can ask for case studies, customer reviews, and references.

What to Prepare before RFQ and Lead the RFQ Process

As a buyer, you will send and receive multiple RFQs in their lifetime. And these documents will never be the same. But, here are six RFQ process steps you need to follow in the business process.

1) Prepare documents

Before sending the RFQ, preparation must be done in the form of documentation. This means you add all your requirements and all conditions that the seller’s product must include. These documents need to have the following:

• Terms of payment
• Quality and quantity of goods
• The total estimate of labor hours
• The total length of the project
• Terms of Contract
• Requirements to submit quotation

This aspect of the RFQ preparation needs time because you will receive the quote based on the details you send.

2) Prepare the supplier list

As a buyer, you must research the companies you want to keep as suppliers. So, start making a list of companies and find out what details they can provide. Gather their contact details and create your list to send out your RFQ smoothly.

3) Send the RFQ

Although this sounds like the easiest step, you must consistently build up to this process. Make sure that before you send out your RFQ, it contains all the instructions you want and the submission date. Also, create an FAQ section ahead of time so that you have all your answers ready in case your sellers have any questions.

4) Analyze the responses

Once you receive all your RFQ responses, it is time to analyze them. Pay attention to each product, its features, the duration required for completion, the price, and any other details or requirements needed to complete the project.

5) Make a decision

Once you have all the RFQs and analyze the data, it is time to decide. You can always choose the easiest option — which offers the most at the least cost. Or you could look at some other details as well.

• How were the seller’s conversations before you sent the RFQ?
• Did the seller have your best interest in mind?
• Is the seller reliable?
• Are they looking for a mutually beneficial relationship?

If a seller ticks all these boxes, then they are the perfect choice for you.

6) Inform the others

Considering that you have connected with multiple sellers, when you make your choice, corporate etiquette dictates that you should inform others about your choice. While you do not need to tell them which company you are going with and your reasons. You need to clarify that you have chosen someone else and would like to thank them for their time and effort. Try to remain courteous as much as possible so you do not burn bridges.

Key Takeaways

The concept of buying or the buying process is called such for a reason. A complete procedure in place that, if you follow, makes it easier to work. As a buyer, your requests, actions, and communication give important signals to the seller. It shows your willingness to buy.

So, in the entire buying process, sending the RFQ may be the last stage. But, this is one of the most important stages in the entire gamut. So, keep your RFQ clear, precise, and conspicuous. Explain what you want, the price point you are looking at, and how this product will help you. This will help sellers to create clear connections with you.

FAQs on RFQ, RFI and RFP

Originally published at https://www.indianic.com on September 19, 2022.