Do you want to know what the definitions of RFQ, RFP, RFT, and RFI are? These terms come up often when you are beginning sourcing for suppliers, each of these terms, which we will collectively refer to as requests or RF(x), defines what you are seeking from a supplier at the very early stages of the sourcing or procurement process.
These processes are industry standards among experienced sourcing managers and procurement professionals. To be honest, most small and first-time buyers such as that sourcing for FBA, really only need to know Request for Quotes (RFQ) and maybe on occasion use Request for Information (RFI) if you are just curious and want to dip your toes in the water. If you want to know more about the different RF(x) and how to initiate a project with a potential supplier then keep reading. We wrote this at a moderate level so those with some experience will find this guide most useful.
What is the Meaning of RFQ, RFP, RFT, and RFI?
We provide a short definition below and full details of each further in this article.
RFQ Meaning – Request for Quote
A process where a buyer sends out an invitation to multiple factories or suppliers to get bids or a cost of a project
RFP meaning – Request for Proposal
An RFP allows for flexibility form the suppliers on how to implement a given goal, as well as provide quotes on the total price.
RFT meaning – Request for Tender
RFT is not that different for RFP, however, you will need an exact set of defined objectives and you tend to seek out something that you already know a supplier makes.
RFI Meaning – Request for Information
When you reach out to a supplier with an RFI, you are meanly soliciting them to provide you with production capabilities and other information that you think is vital for a project. This is more early on the process, often done before one of the other three requests.
RFQ vs RFP vs RFT vs RFI
What does RFI, RFQ, RFT, and RFP mean? Each one of these is a different way to approach the sourcing and procurement process. WIth each RF(x), the objectives are slightly different and the end result is what the last word is. IN the RFQ the objective is to get quotes, for potential purchase.
With a tender, you tend to list your offer price first and let potential sellers bid, and you tend to make a purchase as soon as a seller makes an offer. With the Proposal, the client or buyer is looking for not only a bid on price from the supplier but also a proposal on a solution to achieving the objective. RFI’s you are looking for information that will inform a decision later and usually precedes the other three.
For almost all projects, the team at Cosmo Sourcing and Sourcinghub.io use RFQ for clients when we are requesting quotes on our client’s behalf. However, we do often use RFI for our internal database just to get info, contact details and production capability from potential factories.
RFI // Request for Information
RFI’s are not always used, but when they are used it is at the beginning of the procurement or sourcing process. RFI is mainly used to get information that you need or think will be helpful in letter steps. Your goal isn’t to get a quote or bid but to just learn more about a supplier, a market, or even a manufacturing method. In most cases, an RFI will be followed up with either an RFQ, RFP or RFT later if the sellers provide s info that shows that they can meet your needs.
For most buyers, there are a few main pieces of information that you want to get out of a potential supplier or manufacturer.
- Type of facilities and factory
- Number of employees
- List of products that have or can make
- Where these products have been sold or shipped to.
- Number of production lines
- Number of units they are capable of producing
- Contact person
This information is usually compiled in a large list that will be used later to determine which potential suppliers will receive a Request for the product later on. For the most part, this is to set the foundation for the next steps of the procurement process.
Another benefit of an RFI is that you may discover cheaper or alternative sources for a product or project or develop new strategies to bring your product to market.
RFQ // Request for Quotation
Request for quotations, RFQ. ar the most common request, and they live up to the name. Requests for quotes is simply put when you reach out to a seller or manufacturer and request a quote for a manufacturer to make your product.
You, the buyer, need to make sure that you have a very detailed set of specifications for the product. This often takes the form or a product spec sheet. IF you have not completed a product spec sheet then please see the guide here: https://www.cosmosourcing.com/blog/how-to-create-a-great-product-specification-sheet
An RFQ is a request and thus is it kind of like an invitation for a seller to give you a price for what you are asking.
Request for Quotes need to contain a few key details
- Exact details of the product your ordering
- Bill of materials
- The quantity you expect to order
- Terms and conditions
- Incoterm https://www.sourcinghub.io/incoterms-2020-guide/
- Delivery terms
- Expected lead time
- Quality levels
- Other value-added services
- Draft Contract
Once you submit the RFQ to the potential supplier and they respond then you need to review in careful detail the quotes, in order to determine which one you go with.
RFT // Request for Tender
A Tender is usually a very specific defined need instead of a vague request. Tender is fairly common for subcontractors and other projects where the exact specifications are extremely well defined, and you are reaching out to make a purchase of a service or product that already exists. Since the needs are more well defined and the products are often already produced, the time from an RFT to completion is probably the quickest method. If the needs are not exact or you are expecting some customizations then an RFP or RFQ would be more suitable.
RFP // Request for Proposal
The RFP is most similar to RFQ’s however RFPs have an added purpose of soliciting a supplier’s input in the design or engineer process of a product. RFP’s tend to be the vaguest of the request, as they allow supplier flexibility to come up with a solution that they think is best suited for a buyer. Often time an RFP will have a stated objective, rather than a specification. YOu often need to state your long term business goals and what type of relationship you expect to have with the suppliers. The end result should be a proposal for the products along with a quote from the supplier
When you seek out a request make sure that you do so in a polite and professional manner. It’s important that you build a good first impression with any future suppliers and partners. No matter what you are doing you need to make sure you have well-defined goals and objectives and enter each of the requests prepared with what you want out of it.
When you do the RF(X)’s well you can have a fast and efficient sourcing and procurement process. Many think that they need to have a professional buyer or sourcing professional to do this, and you don’t. It certainly helps to work with an experienced sourcing company in this process but many prefer to do the process on their own. If you do seek to do it one your own make sure that you know how to negotiate and define your objectives if you do not then you can end up wasting your time or most important your money. We hope you enjoyed this guide.