Understanding RFPs, RFIs and RFQs

There is something about acronyms that make people quickly lose interest, but they typically represent an important piece of information and are worth taking the time to understand. Every industry has its own terms and jargon and procurement is no different. These three acronyms in particular hold great significance when it comes to outsourcing: RFP (request for proposal), RFI (request for information) and RFQ (request for quote).

These terms are not incredibly difficult to understand, but each is important and they must work in concert for a business to successfully procure goods and services.

“All three have been used globally for decades to obtain relevant information from potential suppliers and are meant to create and establish a fair and equally weighted process where all vendors, incumbent and potential, have a chance to become a ‘preferred’ supplier for a corporation,” writes Kevin Iwamoto, a former entrepreneur who now works as a consultant. “They have been instrumental in enterprise risk mitigation, process standardization, cost savings and cost avoidance.”

ProcurePort provides a comprehensive solution suite consisting of RFP Software, RFI Software and RFQ Software to assist companies of all sizes in automating these procurement processes.

So what do each of these acronyms really mean?

Spelling Out RFP, RFI, and RFQ

A Request for Information (RFI) is designed to collect information from a supplier or vendor with no commitment to engage in a particular project. Usually, RFIs include little or no project information and can be issued to potential suppliers using online RFI Software. They are simply a way for a business to get information from vendors about the types of solutions and products available in the marketplace. This allows the company to pre-select service providers who have the appropriate abilities for submitting a proposal or provide them with information that could shape the final bid. RFIs are especially valuable in industries like technology, where there are consistent innovations and solutions frequently become updated with new features and innovations that could provide more value.

A Request for Proposal (RFP) is a detailed list of specified goods and services to be rendered by the service provider. Suppliers respond to RFPs with their best offer to provide what is being asked. RFPs can be created using the information collected in an RFI as they relate to the specifications of the project and can be easily circulated using RFP Software. A successful RFP should include specific requirements (business, technical, operational, security, etc.), service level agreements, change management procedures, acceptance criteria, and evaluation criteria among others. As the two parties will create a contract following the acceptance of an RFP proposal, it is important that the RFP includes as much information as possible.

A Request for Quote (RFQ) is based strictly on price. The RFQ focuses on a quote that has a certain validity period. An RFQ is primarily used when the primary terms of the deal are focused on financial metrics, and other elements of performance are not as significant. An RFQ, though, can help businesses understand what certain goods and services may cost before an RFP is issued, allowing them to have a deeper understanding of what total costs they may face, especially when procuring goods and services in a new category. Using Cloud Hosted RFQ Software can make this process easy and efficient.

Working in Harmony

RFIs, RFPs, and RFQs each provide value, but it is when they come together that businesses truly gain value overall. Businesses can submit RFIs and RFQs to vendors in order to understand the different capabilities and services available to them and at what cost. They can take these data points and incorporate them into their larger procurement goals.

For example, an RFI may reveal a new innovation or feature that the business did not previously consider. An RFQ could also show that the price of a service will be higher than expected, so the business may need to delay procurement or change budgetary outlays to accommodate the different prices.

Both RFIs and RFQs come together to provide the information used in an RFP. The RFP is an incredibly important part of the procurement process. It is where the business specifically outlines what they need, and how and when they need it. An RFP without the correct information will lead to an incomplete contract and prevent the business from getting exactly what it needs.

Modern software procurement systems such as ProcurePort e-Sourcing Solution make issuing each of these requests easy. The software can organize the information that is submitted, guide procurement officials in including the proper information required in each, and manage the overall procurement process with vendors.

These three solutions should not be seen as daunting or intimidating and can be easy. Instead, they are tools that businesses can use to improve their procurement operations. Businesses outsource so many different needs in today’s business world that it can be difficult to ensure they are getting the best deal on what they want. RFIs, RFPs, and RFQs can provide businesses with the necessary information and procurement processes to ensure they not only get a good deal but also meet all of their needs.

You may also be interested in: 6 Results You Can Expect From Effective e-Sourcing Technology

To have an immediate impact on your procurement process, you need the right software platform. Procurement is complex, and your software solution should be able to account for its nuances. That’s where ProcurePort can help. Visit our website to learn more about ProcurePort’s e-sourcing software and how we’re helping companies like yours achieve their eProcurement objectives.