You have a list of qualified suppliers, have the overview solutions for your project, and you just want to get the optimal pricing possible for your product. What to do now? An RFQ (request for quotation) is a good starter.
An RFQ is usually needed when you know exactly what you want from the suppliers, and just need to compare the bid pricing under the same terms to get the best deal. It plays an important role in deciding which supplier to work with. If you’re interested in knowing more about RFQ, read more on RFQ: All you need to know about it and Successful RFQ process broken down in 4 steps.
So, how to write an RFQ, and what key factors can assure you an effective RFQ?
Keys to writing an effective and successful RFQ
Even though each RFQ serves for a single, unique project, and there will never be two identical projects. There are, however, some general rules that can help you create a better and more effective RFQ.
1) Submission details
Just as the old saying goes, time is money. It’s even more true when it comes to RFQ. You definitely don’t want to spend 4 weeks waiting for a potential supplier to send you back the RFQ, and in the wrong format. So clarify the deadlines, your contact person for further questions, your mailing address, and the submission requirements. The more detailed, the better, but don’t overdo it and be sure to identify a proper response time for the suppliers.
2) Business overview and background
Such information helps your potential suppliers understand your company and the critical requirements for your products. In this way, your prospective suppliers will have more information to decide how to help you achieve your project goals.
3) Selection criteria and weights
This is the most important part of the RFQ, and you can’t be too detail-oriented at this section.
Clarify the product specifications, quantity, critical technical and business requirements, functionality, lead time, payment terms, delivery terms, cost breakdown and more. Here is an RFQ template for your reference.
That said, you should have a clear scope of work for your project when creating the RFQ. Such preparation is definitely worthy of your investment of time and effort.
4) Terms and conditions
The terms and conditions should be listed so the suppliers can make a fair and honest response. Contract length, renewal options, warranties are just some of the things you should mention.
5) Assumptions and constrains
If you don’t want to spend time negotiating and re-negotiating about possible cost fluctuation, delivery terms and other miscellaneous things, you should make sure that the potential suppliers are aware of the possible assumptions and constrains. It’s better for you to bring them up at the very beginning of the supplier relationship. Travel expenses, modification costs are where you can start from.
When the RFQ is ready, make sure you send it to the right suppliers. It’s also important that you provide an open communication window to answer any possible questions from them.
One more thing to note, the RFQ response doesn’t mean the supplier sourcing journey is done, and it’s not a binding contract either. So if you’ve decided on the ideal supplier, draft a contract, set up a meeting, and sign the contract. That’s the closing of the RFQ.
If you have any question regarding RFQ, feel free to contact us, or leave us a comment below. We’ll be in touch as soon as we possibly can.