Request for...Procurement Processes (RFT RFQ RFP RFI)

by Suki Mhay & Calum Coburn

Detailed explanation to RFT, RFP, RFQ, RFI. Training advice to buyers and sellers on how to get the most from these procurement and purchasing processes.

Clients and newsletter readers have asked that we demystify the meaning behind each of the following procurement terms: RFI, RFQ, RFT and RFP. These processes have steadily grown in popularity in procurement and purchasing, especially amongst larger buying organisations. Sadly proper training is often not given on which process to use and in how to effectively use each process. As a result, in practice you will find these phrases used interchangeably, as many organisations don’t understand the differences sufficiently, resulting in the buyers missing negotiation advantages. We hear procurement or purchasing clients talk about how their departments use these purchasing processes on our purchasing training for buyers to ‘write the rules’ of the buying game, to successfully side-step negotiation. There is a great deal that suppliers can do to improve their position. As a starting point, we suggest that sales professionals understand the differences between these processes. We would be glad to offer further advice to both suppliers and buyers wishing to get the best deal from these processes.

RFI – Request for Information
An open enquiry that spans the market seeking broad data and understanding.

RFQ – Request for Quotation
An opportunity for potential suppliers to competitively cost the final chosen solution(s).

RFT – Request for Tender
An opportunity for potential suppliers to submit an offer to supply goods or services against a detailed tender.

RFP – Request for Proposal
Sometimes based on a prior RFI; a business requirements-based request for specific solutions to the sourcing problem.

Request for Information (RFI)

As the name suggests, procurement uses RFI’s to gather information to help decide what step to take next before embarking on negotiations. RFI’s are therefore seldom the final stage, but instead are often used in conjunction with the other 3 requests detailed in this article.

An RFI is a solicitation sent to a broad base of potential suppliers for the purpose of conditioning, gathering information, preparing for an RFP or RFQ, developing strategy, or building a database which will all be useful in later supplier negotiations about:

  • The suppliers, including: facilities, finances, attitudes, and motivations
  • The state of the supply market
  • Supply market dynamics
  • Trends and factors driving change
  • Alternative pricing strategies
  • Supplier competition
  • Breadth and width of product/service offerings, by supplier
  • Supplier strategic focus, business, and product plans

Procurement may use RFIs to include a detailed list of products/services for which pricing is requested. The pricing should be used for comparative purposes for later negotiation, not as the basis of negotiators buying decisions. Through analysis of RFI responses, strategic options, lower cost alternatives, and cost reduction opportunities may be identified.

Request for Quotation (RFQ)

RFQ’s are best suited to products and services that are as standardised and as commoditised as possible. Why? Procurement want to make the suppliers’ quotes comparable before negotiations begin.

An RFQ is a solicitation sent to potential suppliers containing in exacting detail a list or description of all relevant parameters of the intended purchase, such as:

  • Personnel skills, training level or competencies
  • Part descriptions/specifications or numbers
  • Quantities/Volumes
  • Description or drawings
  • Quality levels
  • Delivery requirements
  • Term of contract
  • Terms and conditions
  • Other value added requirements or terms
  • Draft contract

Price per item or per unit of service is the bottom-line with RFQ's, with other dimensions of the negotiation deal impacting the analysis process as determined by the buyer. Supplier decisions are typically made by the procurement department following a comparison and analysis of the RFQ responses for negotiation benchmarking advantage.

RFQs are typically used as supporting documentation for sealed bids (either single-round or multi-round) and may be a logical pre-cursor to an electronic reverse auction.

Request for Tender (RFT)

An RFT is a procurement open invitation for suppliers to respond to a defined need as opposed to a request being sent to potential suppliers. The RFT usually requests information required from a RFI. This will usually cover not only product and service offerings, but will also include information about the suitability of the business.

It is not unusual for a buyer to put out unclear or vague business requirements for an RFT. This lack of clarity on behalf of the procurement department can make it challenging for the supplier to propose a solution. This is not the best use of a RFT. RFT’s should only be used when the buyer is clear on their requirements, and is also clear on the range of possible solutions that might fit the buyer's needs, giving the buyer a negotiation advantage.

A RFT is often not a very time or cost efficient method for procurement to source supply due to its lack of defined business requirements and open invitation for suppliers to respond. Without proper procurement training however, too many buyers issue RFQ's that are in reality RFT's.

Request for Proposal (RFP)

An RFP is procurement's solicitation sent to potential suppliers with whom a creative relationship or partnership is being considered. Typically, the RFP leaves all or part of the precise structure and format of the response to the discretion of the suppliers. In fact, the creativity and innovation that suppliers choose to build into their proposals may be used to distinguish one from another. Later negotiations tend to take more time and be more wide reaching in their impact on the buyer's business.

Effective RFPs typically reflect the strategy and short/long-term business objectives, providing detailed insight upon which suppliers will be able to offer a perspective. If there are specific problems to be addressed in the RFP response, those are described along with whatever root cause assessment is available.

With good procurement training your RFP and RFT should seek specific data, offerings and quotations, and also seek specific questions about the following to assist your later negotiations:

  • The specific items on which the suppliers are proposing
  • Business requirements
  • Performance measures
  • Information
  • Ideas
  • Instructions on how to reply
  • Due date
  • Technical and other training
  • How will we evaluate how feedback will work
  • Describe the process for selection
  • Request for cost breakdown (sometimes)
  • Communication: cover letter (sets the stage), calls in advance
  • Who to contact with questions
  • Addressee - chosen carefully

Advice

Buyers: to correctly implement these processes requires a level of negotiation skills and having an organisational infrastructure to support it together with some procurement negotiation training. Else they’ll be used as a token exercise to keep your department happy, and will be circumnavigated in practice. While The Negotiation Experts does offer clients advice in this area, our focus is in sales, procurement negotiation training, and other negotiation courses.

Sellers: how and 'if' you participate in these processes is the first question you need to address. If you have a company policy, be sure to examine your and the buyer's competitive style, position and power before participating. Not doing this can end up costing you the business, or worse: you could win unprofitable business.

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10 of 16 people found the following comment useful:

THANKS TQPI - 2012 Nov 28
Commentator: Jojo - JAL (Philippines - Davao City)

"Very good... I am satisfied... Without this may be not good business"

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8 of 13 people found the following comment useful:

nycvc - 2012 Aug 1
Commentator: Chuck (United States - Ohio)

"Excellent info. Glad I found your website."

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Excels - 2012 May 23
Commentator: Durgesh Joshi (India - Maharashtra)

"A very good and crispy description"

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13 of 16 people found the following comment useful:

RFQ etc - 2012 Apr 5
Commentator: Dilip Dasgupta (India)

"EXCELLENT, DETAILED EXPLANATION PROVIDED. VERY USEFUL"

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8 of 10 people found the following comment useful:

Very Handy - 2012 Feb 21
Commentator: Chris Enyan (Ghana)

"It helps one to sharpen his/ procurement skills"

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Glad - 2012 Feb 8
Commentator: Gladson Rakesh (Oman)

"Excellent Explanation...thanks"

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Thanks - 2011 Dec 6
Commentator: rcp (Philippines)

"Very helpful"

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14 of 18 people found the following comment useful:

Very good - 2011 Apr 16
Commentator: Mohd. Ehtesham Parve (India)

"Very good specially for persons new to job"

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20 of 24 people found the following comment useful:

Excellent!!! - 2011 Mar 30
Commentator: Arturo Chang (Venezuela - Distrito Federal)

"This is an excellent explanation of terms that are frequently confused."

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14 of 17 people found the following comment useful:

Good - 2011 Jan 12
Commentator: Ketan (India - Maharashtra)

"very good info"

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11 of 15 people found the following comment useful:

necessary procurement document - 2010 Dec 21
Commentator: sumit (India - Delhi)

"its really very helpful. keep it up"

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8 of 14 people found the following comment useful:

Where to submit our RFPs? - 2010 Nov 30
Commentator: Chris (United States - Utah)

"Great post. For those of us looking to submit RFPs, RFQs, etc. Where are the best places to look? (i.e. on the web or in the U.S.)"

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17 of 19 people found the following comment useful:

RFI - 2010 Nov 4
Commentator: Shafiq Khan (United States - California)

"Useful explaination, woud also help if a general template is provided"

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13 of 15 people found the following comment useful:

RFT RFQ RFP RFI - 2010 Oct 22
Commentator: kranti (India - Andhra Pradesh)

"Very good Explanation"

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12 of 15 people found the following comment useful:

"Extremely helpfull for the freshers in the field". - 2010 Aug 14
Commentator: Kiran Sharma (India)

""Extremely helpfull for the freshers in the field"."

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thanks - 2010 Aug 10
Commentator: Sharif Uddin Ahmed (Bangladesh)

"yea its really helpfull.... Thanks"

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14 of 18 people found the following comment useful:

Helpful and Easy to Understand for Bigners.thanx - 2010 Mar 19
Commentator: Rakesh Sharma from R (India - Maharashtra)

"Pubish New commercial issue on the same site, really it would be better for the all users."

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Thanks - 2010 Feb 11
Commentator: WendyAng (Malaysia - Melaka)

"Thanks..very helpful!!"

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Peter T. - 2010 Feb 3
Commentator: Peter (Bolivia)

"This content is very helpful!! Thanks!!"

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8 of 16 people found the following comment useful:

Ok but... - 2009 Oct 20
Commentator: HealthcarePM (United States - New York)

"The content of this article was helpful, although the misspellings caused me to question it."

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10 of 16 people found the following comment useful:

Thanks, very good. - 2009 Jul 19
Commentator: E.D Bhudi (Indonesia - Jawa Barat)

"clearly helpful and useful"

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9 of 15 people found the following comment useful:

Thank you - 2009 Jul 10
Commentator: Linda (United States - Missouri)

"Very Helpful and Easy to Understand"

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Very Helpful - 2009 May 14
Commentator: Rebecca (United States - New York)

"VERY HELPFUL "

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7 of 17 people found the following comment useful:

Well Explained - 2009 Apr 21
Commentator: Rajesh Jakka (India - Karnataka)

"Very well explained ..Thanks Much"

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9 of 16 people found the following comment useful:

Excellent Explanation - 2009 Mar 15
Commentator: Raja S Mohankumar (India - Tamil Nadu)

"Excellent "

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9 of 15 people found the following comment useful:

Hebat - 2009 Mar 3
Commentator: SC (United States - Kentucky)

"Good explanation!"

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15 of 22 people found the following comment useful:

Learning the system - 2008 Dec 12
Commentator: Gina Giles (United States - Virginia)

"Excellent comparison for a new person!"

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9 of 15 people found the following comment useful:

:-) Thanks - 2008 Dec 7
Commentator: BB (United Kingdom - West Midlands)

"Found this extremely useful"

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51 of 55 people found the following comment useful:

Bravo - 2008 Jul 15
Commentator: Bridget Naidoo (Canada - Ontario)

"It's about time someone who knows their Procurement stuff clarified the differences between these most popular procurement processes. As someone who's worked in the profession for 12 years, and a savvy web user, I've been surprised to come up empty handed when searching for articles explaining when to use each procurement process. Now I simply send this url to new recruits and internal clients who want to know more. I expect this to save me a ton of time over the course of a year, and make the questions that come back that much more interesting to answer."

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47 of 59 people found the following comment useful:

Very good - 2008 Jun 27
Commentator: Sibichan (United States - California)

"Very clear, liked the layman language used to explain the differences."

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