RFI Request for Information, RFP Request for Proposal, RFQ Request for Quatation, RFT Request for Tender; if you work in procurement, you know that there are a lot of acronyms to keep track of. But what do they all mean?
The company prepares the request, sends it to suppliers, and evaluates suppliers’ responses to find the best candidate. These requests bring structure and ease of comparison into vendor and supplier evaluations. And while all four requests have some features in common, each has its own distinct usage.
1- RFI Request for Information
A request for information (RFI) is a common business process whose purpose is to collect written information about the capabilities of various suppliers. Normally it follows a format that can be used for comparative purposes.
A RFI is primarily used to gather information to help make a decision on what steps to take next. RFIs are therefore seldom the final stage and are instead often used in combination with request for proposal (RFP), request for tender (RFT), and request for quotation (RFQ). In addition to gathering basic information, an RFI is often used as a solicitation sent to a broad base of potential suppliers for the purpose of conditioning suppliers' minds, developing strategy, building a database, and preparing for an RFP, RFT, or RFQ.
A RFI may be open, where information is publicly gathered from anyone interested who wants to provide a submission, or closed, where parties are privately approached to provide information.
A RFI is used in the industry when a project's documentation lacks information that is required to proceed with any given scope of work.
A RFI is common and accepted practice for a subcontractor or supplier to state his/her concern related to the omission or misapplication of a product, and seek further clarification of the product owner's intended use or their official acceptance of the specified product.
It is also acceptable for the subcontractor to use an RFI to call attention to an inferior product that may not meet the product owner's needs, and use his/her expertise to recommend the better/correct product.
RFI’s were for some years tracked using spreadsheets, but during the early 21st century many companies started using various product management applications, including document management platforms, to manage RFI processes and help prouction professionals save time, reduce costs, and improve quality.
RFI template should include the following sections:
· Project description, project goals, and background: Your goals and objectives with the Project
· Company information: Background information about your company and where the project fits into your overall goals.
· Supplier requirements: The things you’re looking for in a vendor, such as credentials and skills.
· Submission instructions: How you want the companies to submit their responses.
· Requested information: Your questions about the supplier organization, experience, pricing, and solutions.
2- RFP Request for Proposal
A request for proposal (RFP) is a form of reverse auction that solicits a business proposal by an organisation interested in the procurement of a service or product from potential suppliers. It is usually part of a complex sales process, and made through a bidding process.
Unlike invitations to tender, which award contracts based upon the price and quality of the tender, RFP's allow suppliers more flexibility in proposing an original service or product in alignment with a company's needs.
When an RFP is made after negotiations with prospective contractors, the submitted tender is known as a BAFO (Best and Final Offer).
A RFP requires the bidder to produce an original business proposal based on the buyer's needs. Depending on the RFP document's specification, a bidder may be required to decide upon project expectations, timetable, product design, and vendors. Other requested information may include basic corporate information and history, technical capability, product information.
RFPs provide detailed specifications of what the customer wants to buy and sometimes include directions for preparing the proposal, as well as evaluation criteria the customer will use to evaluate offers. Customers issue RFP's when their needs cannot be met with generally available products or services. RFI's are issued to qualify the vendors who are interested in providing service/products for specific requirements. Based on the response to RFI, detailed RFP is issued to qualified vendors who the organization believes can provide desired services.
RFP template should include the following sections:
· A summary of business needs
· Introduction to you as a buyer and your company background
· Project scope and goals
· Project price and payment terms
· Any relevant attachments
· Minimum vendor requirements
· Timeline
· Sections and questions
· Terms and conditions
3- RFQ Request for Quatation
A request for quotation (RFQ) is a business process in which a company or public entity requests a quote from a supplier for the purchase of specific products or services. RFQ generally means the same thing as Call for bids (CFB) and Invitation for bid.
An RFQ typically involves more than the price per item. Information like payment terms, quality level per item or contract length may be requested during the bidding process.
To receive correct quotes, RFQ's often include the specifications of the items/services to make sure all the suppliers are bidding on the same item/service.
Logically, the more detailed the specifications, the more accurate the quote will be and comparable to the other suppliers.
Another reason for being detailed in sending out an RfQ is that the specifications could be used as legal binding documentation for the suppliers.
The suppliers have to return the bidding by a set date and time to be considered for an award.
Discussions may be held on the bids (often to clarify technical capabilities or to note errors in a proposal). The bid does not have to mean the end of the bidding; multiple rounds can follow.
After the RFQ process, professional procurement organizations have to compare the quotations, and try to get the best price for the job (by negotiations, or by conducting an auction (a reverse auction or a ticker auction).
Aim is to determine the fair market value of the goods or services and thus generate savings for the company.
RFQs are best suited to products and services that are as standardized and as commoditized as possible, as this makes each supplier's quote comparable. In practice, many businesses use an RFQ where an RFT or RFI would be more appropriate.
An RFQ allows different contractors to provide a quotation, among which the best will be selected. It also makes the potential for competitive bidding a lot higher, since the suppliers could be quite certain that they are not the only ones bidding for the products.
RFQ are most commonly used in the business environment but can also be found being applied to domestic markets.
RFQ template should include the following sections:
· Description of the goods or services with specifications
· Pricing information
· Quantities
· Delivery requirements
· Payment terms
· Evaluation criteria (so vendors know what to expect)
· Submission requirements and deadline
4- RFT Request for Tender
A request for tender RFT (Also known as a invitation to tender ITT or a call for bids CFB ) is a formal, structured procedure for generating competing offers from different potential suppliers or contractors looking to obtain an award of business activity in works, supply, or service contracts, often from companies who have been previously assessed for suitability by means of a supplier questionnaire (SQ) or pre-qualification questionnaire (PQQ).
Supplier questionnaires (SQ) or pre-qualification questionnaires (PQQ) ensure that potential suppliers are all asked the same information when assessing their suitability to be invited to tender or to have their tenders evaluated. Some organisations issue a standard pre-qualification questionnaire.
Unlike a request for proposal (RFP), which is used when a company sources for business proposals, RFT' s are used when a government or company does not require the submission of an original business proposal and is looking solely to award a contract based on the best tender submitted.
As a result, whereas RFT's are often decided based on the best price offered, decisions on RFPs may also involve other considerations such as technology and innovation. Both are forms of reverse auction.
At the same time, variants may be requested in an RFT, which allow suppliers to offer proposals which differ in non-essential terms from the supplies or services requested.
Open tenders (also known as open calls for tenders or advertised tenders) are open to all vendors or contractors who can guarantee performance.
Restricted tenders (also known as restricted calls for tenders or invited tenders) are only open to selected pre-qualified vendors or contractors. The tender stage may form part of a two-stage process; the first stage comprises issuing an expression-of-interest (EOI) tender call, resulting in a shortlist of selected suitable vendors. The reasons for using restricted tenders differ in scope and purpose.
Sole source tenders involve only one potential supplier being invited to submit a tender. A sole source tender may be used where there is essentially only one suitable supplier of the services or product.
A RFT should follow a similar structure to a RFP. Include:
· Company background and where the project fits
· Project description
· Your supplier evaluation process
· A response form to make it easier for suppliers to send their response
· Legal documentation, such as terms and conditions, payment terms, contingencies for cancelation
· Contact details
