6 steps to write a quote request
A request for quotation (RFQ) consists of inviting suppliers to submit quotations based on a specific file. Learn how to write the perfect RFQ with this guide.
Outsourcing work to another company is common in the field service industry, but it can be a task mired in miscommunication when mishandled.
Requests for Quotations (RFQs) are intended to make the process of hiring vendors and suppliers easier for all parties. In this guide, we’ll see what the difference is between an RFQ and a Request for Proposal (RFP), what the RFQ process looks like, and what to include in any future RFQ you create.
Presentation: What is a request for quotation (RFQ)?
An RFQ is a document used by businesses to obtain information from vendors and suppliers, whether for goods or services.
Tender documents contain detailed specifications of a company’s needs, such as technical requirements, length of contract, required labor, or quantities of goods. Once RFPs have been created by the buying company, they are sent to potential suppliers that the company wishes to work with, who can then respond with quotes based on the stated requirements.
Once the company receives these quotes, they can then select the supplier that best meets their needs.
Request for quotation (RFQ) and request for proposal (RFP): what is the difference?
A request for proposal (RFP) is a document used by businesses to source a vendor or supplier when they are not quite at the stage of knowing exactly what they want.
In terms of RFQ vs. RFP, an RFQ is compiled when a company knows what deliverables it needs and just wants price estimates, while an RFP is used to collect service information from companies potential. RFPs will contain information other than simple quotes, including:
- The purpose of the project or service to be undertaken
- The qualifications that sellers must have
- The scope of the project
- The schedule of deliverables
Much like the RFQ process, companies will send out RFPs to companies they want to work with. Recipient companies can then respond to the RFP in detail, usually in the form of bid proposals outlining how they will complete the project and how much it would cost.
How the RFQ Process Works
Let’s take a look at the six main steps that make up the RFQ process.
1. Prepare the RFQ document
This step consists of presenting your requirements and conditions in full; the document will likely include many of the following factors:
- Payment terms
- Quantities of goods
- Estimated working hours
- Project duration
- Contract terms
- Quotation submission requirements
Invest time in this part of the process. The quotes you receive will be as good as your quote request, and being clear about what you need will save you from repeating certain steps in the process.
We recommend that you use a document management tool to help you manage all iterations of the tender document and allow all stakeholders to easily participate in its creation.
2. Create a supplier list
You’ll likely have certain vendors or suppliers in mind, but it’s also important to research other companies you can send your RFQ document to. Gather all the necessary contact information and create a list of suppliers.
3. Send the RFQ document
This step sounds easy, but make sure you have consistent processes in place to support it.
For example, before sending out the RFQ, make sure it includes clear instructions on how it should be completed and when submissions are due. Plus, creating an FAQ ahead of time will save you time when potential bidders return with questions.
4. Receive responses from suppliers
Again, this step sounds easy, but you will need organized processes in place to help you manage a fair and structured bidding process.
Be sure to keep track of all responses and submissions, acknowledge receipt of these, and remind respondents of your timeline for notifying the selected vendor.
5. Select the chosen provider
Your review committee will now need to choose a vendor to award the contract to. Be sure to review the submissions carefully and most importantly ensure that the candidates meet the necessary requirements for the position.
If you’ve used a consistent template, it should be more than easy to compare vendor quotes to select the cheapest or best option.
Many field service management solutions offer features that allow you to create RFQs and allow vendors to respond. Below is an example of a response template created by Jobber which clearly indicates all the costs of the services required.
Once you have chosen the successful vendor, be sure to inform and thank unsuccessful vendors for their time.
6. Close the final contract
After verifying that everyone is on the same page regarding the contract, all that remains is to sign on the dotted line.
What should you include in a request for quotation (RFQ)?
A tender document should include the following:
1. Executive Summary and Project Requirements
Provide general information about your business and an overview of the services or goods you are looking to procure. Be as specific as possible about your needs.
2. Submission Dates and Contract Requirements
Be clear on the submission deadline, what must be included in each submission, and contract details.
3. Pricing details
No matter what kind of service or goods you want to buy, you’ll want your bidders to be as accurate as possible in their quotes. For example, ask bidders to break down labor costs and equipment costs so that you can identify these expenses during the review process.
4. Project schedule
If you are purchasing a service, be clear about the length of the contract and include specific dates. If you are looking to acquire goods, be upfront about when you expect the company to fulfill the order.
5. Contact details
Clearly identify relevant contact details that bidders can use when requesting more information. If you created one, also attach your FAQ document to the RFQ.
6. Selection criteria
Be open about how you will select the winning bidder. Most often, the winning bidder will be chosen based on price, but if there are other criteria that you will apply to the decision-making process, let bidders know in advance.
Sample Request for Quotation (RFQ)
Depending on your industry and the size of the request, each tender will be different. Below is an example of a typical tender document, which outlines pricing details and bidding instructions.
Pay attention to your Ps and RFQs
Good organization is the backbone of a good tendering process. Once you have established proper processes and guidelines, the bidding process becomes easier every time you start it.
By simplifying processes for you and your bidders, you can save time on administrative tasks and get to work quickly.