​​RFQs Explained: How to write a request for a quote for business?

For this purpose, RFQs explained: How to write a request for a quote must be your consideration so that you can go through effective bidding and find the best vendor for your company.

What are RFQs?

RFQ is the request for quotes you are looking for getting any service or product for your company. RFQs help companies find the best vendors by sharing their requirements through a document. Through RFQs, you can even find out new suppliers from the market with new skills or products your company may need.

Once you have selected the supplier, you can send him the documents called RFQs, having all information about the project, like needs, timeline, quality, workplace, pricing, and contract length. So, RFQs help you to find out a potential vendor for your company in the meantime.

When should we use RFQs?

As sellers and buyers depend on each other, they need to satisfy each other's needs. Sometimes, when the buyer and seller have worked before this time, and sometimes, it is a new experience. If you have worked before this time, you will only send RFQs to clarify the project's requirement.

If you do not know about the company you are looking for goods or services, you must look for RFI before working on RFQs. It will help you gather information about the company's products or services.

In how many ways can we formulate the request for quotation?

To present an RFQ to the suppliers, you can go through four different RFQ types of RFQs after knowing their useful and dark aspects. So, here are four different types of formulating the requests of quotation.

1. Open bidding

In open bidding, everything is visible to all. Every vendor or supplier can see what other is offering and at how much prices. In this bidding type, the seller can change the offers until the deadline arrives.

As in open bidding, the suppliers can see the bidding prices of other suppliers, and it can encourage the new suppliers as well. But unfortunately, this open price-telling bidding can also be a problem for the buyer if the vendors start price-fixing. It becomes challenging for the buyer to choose one on its budget.

2. Sealed bidding

In sealed bidding, the offers from the vendors' sides are not visible to everyone. The buyer opens the requests after reaching the deadline and reads the offers. It is when you have reached the due date, and you get multiple offers.

 It is helpful for the buyer as it allows transparency through the vendor's offer, and the buyer can select the best matching one. You will be avoiding fraud and time wastage, but you may lose motivation to new sellers as they could not come to know about your requirements and experience the bidding of some old supplier companies.

3. Reverse auction

A reverse auction is based on the pricing requirements. In this type of bidding, the sellers only offer their lowest prices, and automatically through the internet, the lowest price-telling vendor wins the project. No doubt, it takes a very short time to get the lowest price offer, but all other important considerations are neglected other than the pricing. 

4. Invited bid

An invited bid is supplier limited as the buyer sends RFQs to the vendors with whom he has previously worked. In this type of bidding, only older sellers will get the opportunity to place their offer. It can be opened or sealed.

Steps included in RFQs explained: How to write a request for a quote

Having a complete understanding of the RFQ will help you generate quotes that will be profitable for the vendors as well as manageable in your budget. Below are the steps you need to follow.

Look into the needs of the company and explain them clearly

As you are looking for services or products to meet the need needs of the company so, you must figure out the needs. The needs must be relevant to the product and services as you will tell yours about these needs to your vendor. So, there is a great need to be clear and transparent on this part.

Give a short introduction about your company.

When writing an RFQ, you must tell the vendor about your company by mentioning its name, vision, specialties, and requirements. It would help the new sellers or vendors to understand your company and make a decision quickly.

You should clearly mention how you and your team are working and what challenges are ahead. It will explain to the vendor what type of help you are looking for.

Describe the products or services clearly you are looking for

Here, you need to talk about the type of product or services you are looking for. When you are writing RFQs, the product or service requirement must be very clear that suppliers and match their eligibility criteria before bidding.

You need to explain the quantity of the product or nature and duration of services you need. If the seller or supplier falls right on the eligibility criteria, you have mentioned in RFQs. They can write you back with their offer.

Set a timeline for response collection

All the bids cannot be open all the time as the company has to start its project on time. So, you need to set a timeline or deadline for the supplier to reply to your quote. It also helps you to keep the schedule for getting efficient services or products for your company.

Clearly explain the terms and requirements your vendors need to know.

When you are writing RFQs, you should develop a list of terms and requirements of the project. It will clarify the vendors to understand what you want from them and on which conditions. In this section, you will clearly define the objectives and criteria for the vendors.

You will also describe how you will be evaluating the sellers or suppliers to check whether they are eligible or not.

Now, request the quote by using templates.

You can use different templates for developing and organizing authorized and understandable RFQs. It must contain the company's name, description, mission statement, project information, terms and condition, consideration for vendors, and deadlines. It will explain a summary of your request for a quote that the seller can easily read and understand.

Receive responses from vendors

When you properly write an RFQ, you will start getting responses from different vendors depending on which type of bidding you have selected.

Select the best vendor for your project

Develop a list of vendors you find well matching with the requirements of your projects. You can compare pricing, timeline, quantity, quality, availability, and many other important factors as per your project's nature. Enlist the chosen vendors and send a thank note to the vendors you are rejecting, no matter for what reason you are rejecting them.

Sign the contract and close the bidding process

So, you have selected the best matching vendor for your project. Now it is time to have a meeting, either face-to-face, visual, or audio meeting. In the meeting, you will decide about the duration for which you are working with them and clearly tell them about the terms and conditions again.

Usually, a written contract is developed having all requirements for the project services or products. It would help you to keep the vendors on track and deal with problems legally if any appear. You are not guilty if you find any objection against any terms and policies of the company.

What important elements a perfect request for a quote must have?

When looking for RFQs explained: How to write a request for a quote, you must know about the important elements of RFQs. The following are important elements that need to consider before sending it to the vendors.

·   An open and clear bid invitation, along with a distinct summary

·   Document the overview of the company so the seller can recognize your need

·   Set criteria for vendors

·   Clear terms and conditions about the project

·   Be very much clear on Earnest money deposits for the project

·   Manage pricing of bids to identify the best one

·   The timeline must be included by following the deadline

·   Clearly identify the contact details of the vendor

Conclusion

For businesses, it is necessary to look for the proper way to find competent vendors for your company, and you can find them easily by understanding about RFQs explained: How to write a request for a quote and write an effective quote following the deadline.