Request for Quotation (RFQ)
A Request for Quotation is a document and process used in procurement where an organization asks vendors or suppliers to provide a quote for the supply of specific products or services.
What is a request for quotation (RFQ)?
A Request for Quotation is a document and process used in procurement where an organization asks vendors or suppliers to provide a quote for the supply of specific products or services. An RFQ is usually issued when the requirements, specifications, quantities, and service levels are clearly defined, and the primary focus is on the price.
Key aspects of an RFQ include:
- Defined Requirements: RFQs are used when the buyer has a clear, detailed understanding of their needs, including the quantity and specifications of the goods or services.
- Comparison of Costs: The main purpose of an RFQ is to obtain pricing information. This makes it easier for the buyer to compare suppliers based on cost.
- Quantitative Evaluation: Since the RFQ focuses on the price and meets specific criteria, the evaluation process is often more straightforward and quantitative compared to an RFP (Request for Proposal), which may include qualitative evaluations.
- Procurement of Commodities: RFQs are often used for standard goods or services where the quality is undifferentiated and the price is the main deciding factor.
- Contract Terms: Along with pricing, suppliers are usually asked to provide information about delivery timelines, payment terms, and warranty conditions.
- Selection Process: The selection process is generally faster with an RFQ, as the decision is largely based on the price and the ability to meet specified delivery and terms.
- Legally Binding: Responses to an RFQ can be legally binding, meaning that a supplier's quote can be accepted and form the basis of a contract.