Welcome to the ultimate guide on RFI sourcing and procurement. This guide will show you the best practices about sourcing RFIs, including information on how to write and send out an RFI. RFI’s are similar to RFP, RFQ’s and RFT’s however, they differ by what the requester wants as a response. Depending on the project’s demands, you may need to send out a different RFI request.
RFI Meaning and Overview
RFI stands for ‘Request For Information,’ and it is the most basic method of procuring information from a supplier before formally buying their products or services. Requests For Information (RFIs) are used to procure information from potential suppliers for buyers who are on the fence – due to having many potential suppliers.
Using this structured process, you can narrow down a list of viable suppliers by sending RFI sourcing requests and getting the information you need to make the decision. This guide will show you what an RFI should look like and how to write an excellent RFI.
RFI’s Must Include:
- Table of contents.
- Introduction to your business.
- Reason for writing the RFI.
- The scope of the product volume necessary.
- Response instructions/guidelines and templates
- a Potential follow-up such as RFP or RFQ
RFI vs. RFQ differences
RFQ’s, or Request for Quotes, are ubiquitous and a great way to solicit quotes for specific items. However, there are cases where you are earlier in the procurement process and would prefer to learn more about a factory or the manufacturing process. That’s where RFI’s come in handy. RFI’s allow buyers and sourcing managers to get a broad industry overview. RFQs are for when your end goal is to get actionable quotes, and RFI’s are for when you want to get information.
IF you would like more information, we wrote a full guide on RFI vs. RFP vs. RFQ vs. RFT here: Procurement Terms // RFQ, RFP, RFI, and RFT Defined.
Benefits Of RFI Sourcing in Procurement
The following are the main benefits of RFI sourcing for your business:
✔ Vet Suppliers
If you wish to learn more about potential suppliers and their abilities (+ narrow down a list of potential suppliers), you can do this by sending out an RFI. You will learn the details of your future supplier’s business, and this will allow you to pick one based on what you need.
✔ Investigate the Competition
If you want to get better details from suppliers, you should let them know that they compete, and you’re requesting information from multiple suppliers. This way, you’re stimulating fair game and advising potential suppliers that you’re looking for the best deal possible.
✔ Make Decisions
The RFI will let you know everything you need to make the next move, such as to request additional information from the supplier or place your first order if you’re satisfied with their terms.
In essence, the RFI request is a formal request to obtain information from potential suppliers, including comparing multiple offers from different suppliers regarding their products and services. The RFI has to be comprehensive and cover all relevant information in regards to your business’s specific request, to help you make an informed decision.
RFIs: What You Can Learn
The RFI sourcing process allows you to gain critical information about the state of the supplier market. If you send out multiple RFI requests, you’ll be able to gather a database of important information regarding suppliers and use that to follow-up by preparing an RFP or RFQ or working with the supplier directly.
Pro Tip: RFI’s are not used to make a buying decision. The prices given out by suppliers should only be used for comparative purposes at this stage, and you shouldn’t rush to make your decision. Once you’ve analyzed dozens of potential RFI responses, you may be able to find more cost-effective solutions and low-cost alternatives to the process. You may be able to lower your total costs by finding out different ways to source products.
What can you learn from an RFI?
The following are things you can learn by obtaining RFIs:
- The production capacity, ability, and facilities of the supplier
- A supplier’s work methods, motivations, and attitudes
- Supplier’s financial standing.
- The current state of the supply market and dynamics
- New trends in the supply market
- What your pricing options are.
- Competition in the supplier market.
- The supplier’s vision, business, finances, and future product plans
Top 5 Things An RFI Must Include
If you’re about to send out an RFI, chances are you have a particular objective to achieve. For instance, you may need to reach your production quota for a product line. To state this clearly, consider implementing the following things in your RFI:
1 //Proper RFI Format
If your RFI is well crafted, it will include details as to how the supplier should respond. Specifically, you will consist of an exact template with specifics that the supplier has to fill out in response.
2 //Response Guidelines
The RFI should optimally guide the supplier to respond by encouraging a clear reply with details. For instance, you could include information about their deadline for response/submission, how to contact you for further information, and any other non-essential information.
3 // General Information
Many buyers request detailed information at the RFI stage, which is not necessary. Remember that RFIs are only used to obtain broad, general information about a supplier. Keep the RFI simple because you will not be making a final purchase decision at this stage.
4 // Simple Instructions
The supplier is going to spend hours analyzing your RFI and drafting a different response. Due to how long your supplier will spend on the RFI, it is why you should make their job easier by requesting simple information that is essential to your business. The simplicity of your RFI will generate a higher quality response.
5 //Consult At Right Time
If you’re using emails to communicate, research indicates that the best time to email suppliers is between the morning and afternoon on weekdays and that the best response/follow-up time is immediately after the first email. Properly timing your RFI will guarantee a prompt exchange of emails.
How To Create An RFI Template // 4 Steps
Most RFI’s follow a similar structure, and you may only need to write an RFI once before you send it out to multiple suppliers. You may only need to make changes when you have different product requests. Here’s how to write an effective RFI in 4 steps:
Step_01 // Introduction
In the introduction, you want to explain what you’re looking for in basic terms. Start by introducing yourself and your business. The introduction part should not be longer than a few paragraphs. The suppliers must have a basic idea of who you are and what your needs are.
Step_02 // Request Details
With an RFI, you can Request supplier details by explaining what you’re seeking in specific. While you should keep this simple, you may want to dive deeper into details such as pricing, delivery deadlines, production requirements, etc. The supplier has to have an idea of what you need to meet your requirements. You should provide the necessary information to help them write out a detailed response.
Step_03 // Response Guidelines
In this part, you want to specify how the supplier should respond to your request. You either have to tell the supplier how to respond accurately or attach a premade template that they can fill out. To top it off, give them a deadline on the response.
Step_04 // Final Details
At the final/conclusion stage, you can include additional information about your request. For instance, you can include information about things you don’t want in your business, type of personnel you want, request for past experiences in your field, how you evaluate suppliers, and more.
Final Thoughts on Request for Information
Requests for information are a great way to get information during the procurement process. By following these steps, you can get information about the manufacturing landscape in a country or multiple countries, learn more about your competition, learn how a product is made, and find out more about target factories. It’s also important to know what you want out of a project to determine if RFI is the best choice for or if you should use RFQ, RFP, or an RFT. RFI sourcing is a great way to start a project and some of the largest corporations use RFI sourcing as part of their procurement process.
We hope you enjoyed this guide and feel free to let us know if you have any questions or comments.