The Difference Between RFI, RFP and RFQ

By: CovestAdmin
February 3, 2015
Many times it is hard to distinguish the difference between request for information, request for proposal and request for quotation. This can be extra concerning when you’re not sure when in the procurement process to use each. CoVest is here to clarify the difference and get you started on the road to supplier selection. 


 

RFI, RFP and RFQ: Getting to the point

  • Request for Information (RFI) – Can supliers meet our needs?
  • Request for Proposal (RFP) – Suppliers, show me your cards!
  • Request for Quotation (RFQ) – Suppliers, give me a firm quote for final selection

RFI

8b23c9ba-d26d-4604-9704-dae3f941c183.gifRFI are used in the initial process of procurement in order to decide which steps to take next in the sourcing process. A request for information is exactly as the name suggest. It is an inquisition sent to a wide range of potential suppliers in order to gather information / build a database so that you can develop a strategy that will make a foundation for your RFQ and RFP. It also serves to qualify suppliers for participation in the sourcing process. 

Request for information can include a detailed list of products or services that you’d like to receive pricing for. Pricing is not typically sought in the RFI, but rather qualitative information on the suppliers capability to meet your supply needs. Through analysis of RFI responses, you can determine the extent to which a supplier’s facilities, products, finances, engineering capabilities and technology, etc. can meet your criteria. Often these criteria are “scored” to create a ranking of the suppliers capabilities and selection of suppliers to move forward to an RFP. 

RFP

Similar to an RFI, RFPs are sent to potential suppliers describing in detail the specification of your intended purchase. The RFP typically leaves most, and in some cases all, of the precise structure / format of the response to the discretion of the suppliers. It is through the innovative ways the different suppliers choose to build into their proposals that you will be able to distinguish one from the other. A RFP should successfully detail your strategy and short/long-term business objectives. 

The most significant aspect of the request for proposal is the price per item (or service). While there are other dimensions that impact the analysis process, the goal is to negotiate the best-in-class savings with suppliers that meet all other qualitative criteria. Typically, the procurement department will not come up with a decision on a supplier based on the RFP until they have thoroughly compared and analyzed the RFP responses. It is used to short list suppliers for further rounds of quotation or face to face negotiations. 


Data CTA


RFQ

An RFQ is an alternative to an RFP. It is most often used in government or government like organizations, like utilities, where legal requirements dictate a ridged process. Through a RFQ, you make the specifications available to a group of suppliers, so they can all submit firm competitive bids for the products or services. Items that can be included in an RFQ are parts and specifications, volume, term of contracts or term of conditions. 

When your organization has decided on a product or service and has finally narrowed down your potential suppliers into a small group that fit your company’s needs best, you can then send out your request for quotation. RFQ work best with products and services that have been commoditized because it makes it that much easier to compare suppliers’ quotes. Often the quotes are used as the basis of supplier selection, but you can also short list suppliers for a final round of negotiation. 

 

CoVest Sourcing Network

Utilizing someone like CoVest Sourcing Network helps ensure you are getting the most out of your RFI, RFP, and RFQs. Through our category management process we collect data, audit, do core list rewrites, annual price change analysis, savings analysis and reporting. We do all this to ensure that our members are optimizing their spend. 

Find out more at www.covest.com or call (216) 325-5115

Image provided by Flickr user: NguyenHungVu 


 
If the above information was helpful, check out our whitepaper on Conducting a RFP! 

{{cta(‘3384a7a2-2669-4a5f-9c21-425188f3e769’)}}

Click above image to download!