What is a RFQ?
A RFQ, or Request for Quotation, is a formal process used by companies to invite suppliers or vendors to submit a bid to supply specific goods or services.The main objective of the RFQ is to obtain competitive quotations from several suppliers in order to select the most suitable offer in terms of price, cost, quality, and other relevant factors. RFQs are often used when the purchasing requirements are clear and well defined, allowing suppliers to provide precise and comparable quotes. and the buyer needs detailed pricing information for the products or services requested.
How is the RFQ process?
The RFQ status cycle is the process that an RFQ follows from creation to completion.
As shown in the image below, the RFQ event can go through different statuses:
- Draft: Refers to the preliminary version of a RFQ. It means that a buyer user has started the process of creating an event and has been saved at any step of the creation process. The RFQ event is still editable and can be editable as many times buyer user wants. The draft is reviewed and potentially revised based on feedback from relevant stakeholders within the company. This draft can be deleted.
- Published: Refers to a RFQ document that has been fullfilled following the 5 steps (we will see them in more detail in the next section). This marks the formal commencement of the RFQ process. Buyers and suppliers can see it published in Scheduled Events and suppliers receive their email invitations. Buyer users can cancel the published event and will remain published in the scheduled events section, but in status cancelled. Invited suppliers receive email notifications to notice the event has been cancelled. The event can be public (open to all the suppliers registered) or private (only suppliers can participate by invitations).
- Live: Refers to a RFQ that has been issued and is currently active, meaning that it is open for responses from potential suppliers. During this phase, suppliers are in the process of preparing and submitting their quotations based on the requirements outlined in the RFQ. Buyers and suppliers can monitor the event in the Live Console and perform certain actions. Buyers can change the price limit of lots and invite more suppliers. Suppliers can create quotes and edit their own quote in the fields: price, delivery range, and delivery option.
- Evaluation: Refers to the stage where the submitted quotations from suppliers are reviewed and assessed by the buyer, in the “compare and award” section in the live console. If the event ends with no responses, all responses are discarded or no quote is awarded, passes to a void status.
- Awarded: Refers to the final stage in the RFQ process, where the contract or purchase agreement is granted to the selected supplier(s). This status indicates that the evaluation of the submitted quotations has been completed, and a decision has been made regarding which supplier(s) will fulfill the RFQ.
Where can RFQ be found and managed?
To manage RFQ user should go to backoffice menu
Sourcing —> Events Management —> Create Sourcing Event —> RFQ
Who can manage an RFQ?
In an RFQ event we will have, for example, buyers and suppliers, which implies different kinds of roles, permissions, actions and console views. All of this permissions, and name roles can be configured.
As an illustrative example, user that has a “RFQ Buyer” or “Buyer” role is able to create and manage every aspect of an RFQ event.
On the other hand, a user who has a “Supplier” role can participate in RFQ events by submitting quotes and managing every aspect of its supplier role.
Creating a RFQ Event:
When creating an event, buyer user first will have to go to backoffice Menu to Sourcing —> Events Management —> Create sourcing event —> RFQ
Here buyer user must fill the information for:
Step 1: Event details
- Event details —> RFQ
- Event name —> user should type a name that best resumes the event and will be visible to suppliers and serves as a unique identifier for the event.
- Event description —> user should type a description of the event, which best resumes the information about this kind of event.
It is important to notice that all the information (event name and event description) should be entered in the different languages configured (for example EN - English, ES- Spanish) and that none of the fields should be left blank.
To do this there is an icon in the lower right part “Translate”. When clicking you can find all the languages configured that need information.
Step 2: Terms
Specific event conditions, including timing, currency, and other essential terms:
Timing:
- Event start time: buyer user should specify the exact date and time when your event is expected to begin.
- Supplier response window: this refers to the timeframe the supplier have to submit their quote. It is a numeric value, buyer should enter a number, that can be days or hours. The minimum unit is 1 day / 1hour.
- Quote expiration date: Once suppliers submit their quotation, within the previously defined supplier response window, there is a deadline for evaluating and awarding a quotation. This would be the expiration date of the quotation. That is, once the quotations are submitted within the deadline, they remain valid and must be evaluated and awarded before the expiration date of a quotation. If no one is awarded and the date expires, the event goes to an invalid “void” status.
Visualization: Buyer user should select a yes/no option to enable the supplier to compare their quote performance through an anonymous chart or not.
Currency: Buyer user will have to select the currency in which the quotes are going to be received. By default mode, there are six currency types: EUR, GBP, JPY, MXN, PEN, USD.
Terms and documentation: This section is to upload documents or files that could be necessary or interesting to support the RFQ event (terms, conditions, specific characteristics of buyers, etc).
Step 3: Sourcing lots
In this step, the buyer user should define sourcing lots for the RFQ event.
A lot refers to a specific quantity or batch of goods or services that are grouped together for the purpose of the RFQ. This grouping can be based on similar characteristics, intended use, or procurement needs. The concept of lots is used to organize and simplify the bidding and procurement process, allowing suppliers to provide pricing and other details for defined portions of the overall requirement. A lot can contain one or multiple lot items.
Each lot item refers to a specific individual product, service, or unit of measurement within a given lot. Essentially, a lot is a collection or batch of items grouped together based on certain criteria, and the individual lot items are the distinct components that make up that lot.
In the backoffice when you add an item inside a lot, the user will be asked to select a product, the request amount, and the measurement unit.
Then user should fill “lot conditions” info, where you can establish the price limit, which is the maximum price the supplier can offer for a given lot, and then you can choose if this price is for a unit or the whole lot.
For example, imagine lot item for Lot 1 is 33kg of Premium Avocado, the user can establish a price limit for 1kg of premium avocado (unit) or the 33kg (lot). If a lot has two or more lot items it is not possible to select the price by unit option.
Then user should select the expected delivery date, which is a range of dates.
Buyer user can add a delivery option, which is a set of combinations of terms and location information that are optionally provided for each lot. The provider can decide which option to adhere to.
Users can add Incoterms (International Commercial Terms) which are a set of standardized trade terms published by the International Chamber of Commerce (ICC) that define the responsibilities of buyers and sellers in international transactions. They specify who is responsible for various aspects of the trade, including the cost of transportation, insurance, and customs clearance, as well as where the risk transfers from the seller to the buyer.
The most recent version, Incoterms 2020, includes 11 terms, each designated by a three-letter abbreviation, such as EXW (Ex Works), FOB (Free On Board), and CIF (Cost, Insurance, and Freight). These terms are grouped into two main categories based on the mode of transport: terms applicable to any mode of transport and terms specific to sea and inland waterway transport.
After you select an incoterm option, the user should agree delivery option country and will find a scroll down with all countries to select, the trade and transport locations refer to ports, cities, and transport locations.
After this, the user should select a final destination, which is the facility or place where the goods will be finally stored.
The final destination is one of the addresses stored in the buyer company address collection.
Finally user should fill buyer’s associated costs, which refers to expenses to transport goods from the agreed delivery point to the final destination according to the selected incoterm.
This cost is applicable per unit of lot item or complete lot as per the price type setting in the lot.
Delivery options can be created, edited, removed in draft and published event status.
Step 4: Suppliers
This step is for inviting supplier companies to participate in your RFQ event.
An RFQ invitation is a formal request sent by a buyer to potential suppliers, inviting them to submit a quotation for supplying goods or services.
To invite supplier companies to participate in your RFQ event, in the backoffice user should select the desired event privacy (public or private) and initiate the invitation process.
In backoffice, by default, the event is selected as private.
If it is private only the invited supplier can access it. If it is a public event allows all registered suppliers to participate but there is also the possibility to send invitations to desired companies.
When the event is published, invitations will be sent by email and invited supplier will receive their digital invitations.
Step 5: Review
In this section, you can see a review of all the previous options you had selected and check everything is order. If you wish to change or edit something you can go back to the former steps and change it before it is published. All the information/options selected is saved as a draft, so is still editable. Users can enter as many time as it wants and edit and introduce changes.If everything is okay, the buyer user can publish the event. Once the event is published buyer and supplier users have access to the live console to preview the event and perform certain actions. When the event is published, the invitations are sent to suppliers.
After you review and everything is in order, you can click on publish, and your event will be published!
