What are RFQ's and why are they important?

What are RFQs and why are they important?

Sometimes, you can't see the quality of a product if it's not right in front of you- which means you have to compare prices and reviews of products that you plan to buy online, right? Well, while it may be less formal, what you do while you're shopping isn't dissimilar to the process that B2B businesses undergo, too! When you're running a business, saving money and finding the best deal for your products or materials can be really important. Thankfully, there is something that helps businesses while they're going through this process, and that is a document called an RFQ

What is an RFQ?

An RFQ (or Request for Quotation) is a document that a business sends to a supplier that details the products for which the business would like to request a quote. As Investopedia puts it: 'When the soliciting company knows the exact number or type of product or services it desires, it customarily uses an RFQ. Typically, companies use an RFQ when products and services are standardized, or off-the-shelf.' In basic terms, an RFQ is designed for businesses who already know exactly what they want to buy and how much they need of it, and only need to know the supplier's selling price.

Why are RFQs useful in business?

One of the main benefits that come with using RFQs is that they are a great way to help you save money. When you want to compare the prices of products from various vendors to find the lowest one possible, RFQ helps you weigh up which is the better option in an organised and logical way. It also helps suppliers understand that while there is competition for your business, you are not biased or unfairly prejudiced in your decision-making if you decide not to choose them.

RFQs, RFPs and RFIs- what's the difference?

Before we go into what to include on an RFQ, it's important to establish the differences between the three similar (and commonly confused) acronyms: RFQs, RFPs and RFIs.

We have already gone into some detail about RFQs, which are simply looking to compare the prices of different suppliers and their products.

On the other hand, RFPs (Requests for Proposals) are business documents designed to announce a project, describe it, and request bids from contractors to complete it. On average, it will be more formal and detailed than the average RFQ because it is based less around pricing and more around job specifications. The owner already knows what needs to be done to complete the project and will include details about the work, as well as what they are looking for in a supplier or contractor.

An RFI (Request for Information) is commonly used in the property industry - its purpose is to request the solution for a property owner's problem. As the property owner is still looking for a solution, they will sometimes not know what work needs to be done. Responses to RFIs will usually offer a way to solve the property owner's problem in detail and include specific details about materials and pricing.

What to include on an RFQ

As you can probably see, Requests for Quotations are clearly different from the average purchase order or delivery note. This begs the question: how am I supposed to write one? To find the answer, let's go over the basics. A well-written RFQ should, at the very least, include the following details. (These can be separated into different sections to make the information more digestible).

The buyer's information

Of course, it is important to include your own details so your supplier can get in touch with you when/if it comes to discussing a sale. These details include your company's name, description, and contact details such as email address or telephone number

It would also be beneficial to include a description of the product(s) you want to buy and what you hope to achieve by purchasing it.

The supplier's information

When it comes to your supplier's information, we're referring to the name and specifications of the products in which you're interested, along with the price of said products, the quantity that you're looking to buy, and the delivery requirements (if there are any)

Supplier evaluation

Since you are still in the stage of choosing a supplier, it would be useful to request that your potential suppliers itemize costs for you so you can compare the price of them versus their competitors. Other details that will help in the evaluation stage include (but are not limited to) a timetable or schedule detailing the products' delivery and a deadline for the suppliers to submit their responses.

What is RFQ software?

RFQ software allows you to quickly create, send and track these requests and their responses, as well as sometimes provide RFQ templates to help speed up the process of creating one. While RFQ software used to be something that was only available to and used by corporations, this technology has more recently become widely available to all at an affordable price due to its usefulness and versatility.

How can we help?

With Zigaflow's RFQ module, you can request a quotation from one or more suppliers without having to type the details out by hand. Create links between records and have a complete audit trail of activity, while keeping the RFQ record linked to the specific quotation or job from which it came, so you can find whatever you need quickly and easily

To find out more about how Zigaflow's RFQ module can help you manage your RFQs and other documents, or if you would like a tour around the system for a look at the bigger picture, feel free to book a demo with us today.