TrainRocket.com helps you document every process and policy in your business so you can onboard, train, and scale faster.
Get started with TrainRocket.com for FREE!
What is a request for a quotation document?
Companies would utilize RFQ templates when they’d like to obtain off-the-shelf services or products. By using an RFQ, companies could much more easily compare different bids from a wide range of suppliers.
When a company wants to buy a large amount of a certain product, it will send requests for quote to many companies that sell that product. For example, a company wants to purchase 300 computers with specific processing speeds and hard drive sizes.
The company would then have to create a request for quote (RFQ) and send it to different suppliers. As they need a specific type of product, it’s easier for them to compare the quotes that they receive from the bidders.
A request for quote (RFQ) template contains four sections. It includes the terms of payment, the factors which will influence the selection of the bid, a deadline for the submission of the bid, and other relevant information needed for the bid consideration.
Request For Quote Templates
When to use a request for quote?
Request for quote forms make sending and receiving RFP data easier and more efficient. This is because the clients and vendors only need to send and receive a few responses that include the quotes or estimates.
The fewer quotes you have to consider, the less time it would take for you to make a decision. You can focus on the bids from qualified bidders instead of from a pool both of unqualified and qualified bidders.
All quotes that you receive in response to a request for quote aren’t considered binding. This means that the document only contains the information which you can use to make a choice regarding which bidder to go with for your needs.
What is the RFQ process?
The RFQ process is a very common supply and purchasing operation. Although it’s not uncommon, it’s also not universally standardized. That means there are different ways to run it. Whether you choose to do it yourself or hire someone, there are four steps involved:
The first step of the RFQ process is the most significant and should never be rushed, because your success will depend on how you approach it. And remember: take your time and focus on the end goal.
There are different types of RFQs such as invited, open, reverse auction or sealed bid. Most companies run their RFQs by inviting only the suppliers which they have prequalified.
Once you’ve selected the type of RFQ, prepare the required documentation. These are the documents you will send to bid participants. There are different types of documents, but the most common ones include:
- You need to include a description of your company, the projects you need help with, and information about your business in general.
- Be sure to clearly state whether the bidders can negotiate the terms or not.
- We’ll provide the bidders with a pricing template they must follow. Give them guidance on how to divide their prices into cost elements.
- A questionnaire that should be completed and returned before your bidders can quote. You need to know the qualifications of each bidder so you can evaluate their proposals and select the right one for your job.
- If you want to award the contract to the best bidder, include clear criteria which shows how each firm will be assessed.
- After putting together the entire request for quote, you can now send all of it to the potential participants.
When you’re asking for quotes, it’s important to treat all of the participants equally. This includes sharing all of the same information with everyone and asking everyone the same questions.
While there are some e-procurement systems that offer “sealed bid” functionality, it may be wise to actually change your system just in case a malicious competitor makes a funny comment about a quote you gave.
In a lot of cases, it will be cheaper to have a second round where you only take a small number of participants. However, people may not bother bidding if they know exactly what your lowest price target is.
Once you have all of the bids, this is where things get interesting. You want to compare the bids with one another so that you can pick the company that quoted you the most reasonable price.
When you need to make a decision, it’s best to involve a group of people rather than deciding on your own. For instance, you can invite some of your internal stakeholders and allow them to use predefined criteria to vote on the issue.
Please provide us with information regarding the bids you received, how many of those were qualified, your reasons for disqualifying any of the bids, the awarding criteria, how each of the members of the committee voted, and the final decision.
You’ve got a quote from several suppliers, and now you’d like to schedule a visit from each of them. During this meeting, you can finalize the details, close the deal, and sign the written contract. If you provided all of the necessary documents, the negotiation phase shouldn’t be too complicated. If not, you might have to undergo some negotiations before you reach an agreement.
After you’ve chosen your winner, be sure to inform all of the participants about your decision. Do not make this information public until after the closing stage, when you’ve already signed your contract with the winning bidder. Requesting for quotes allows you to keep your options open until you’ve reached an agreement that’s beneficial for you and the bidder.
The downsides of a request for quote
Request for quote templates provide you with a detailed process of gathering information on multiple providers. However, they also have some cons. If the requesting company chooses the bidders, this will result in unbalanced competition, which can cause some irregularities.
Soliciting only the highest-cost companies might harm you. For instance, if you sell the same products as other companies but at up to 50% below their price, the highest-cost companies might not even contact you for a quote.
A response to an RFQ doesn’t become a binding contract. When you’re dealing with a bidder, make sure to come up with a contract or a purchase order that both of you will sign. Just because the bidder you want to choose has responded to your RFQ, that doesn’t mean you have a done deal.