Procurement process documents are used to help a business or government narrow their focus and determine what vendor best meets their needs. Going from learning about an industry, segment, or space, to signing a contract with a preferred vendor can be complex; fortunately, using the right documents helps significantly.
In this article, I want to review three key procurement documents that help identify what vendor makes the most sense for your needs.
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Types of Procurement Documents: RFI, RFP, RFQ
The three most common types of procurement process documents are Request for Information (RFI), Request for Proposal (RFP), and Request for Quotation (RFQ). Each document serves a different purpose. You might not need to use all three for any given procurement project; however, it’s likely that you’ll need to use each document type at some point.
Request for Proposal is the most common document type as it acts as a catch-all for the others. We’ve seen companies issue an “RFP” that requests information or a request for quotations.
Request for Information (RFI)
The first document type is the Request for Information. These are typically used when a buyer has limited experience and access to an industry. Take enterprise CRM as an example; if you as the buyer have never used a CRM and have a limited understanding of what CRMs are, you may issue an RFI to get a better handle on the industry.
Here are some key defining features of when a buyer should use an RFI and what a seller should expect to provide in response:
- Used to get high-level information about vendor capabilities, general industry landscape, competitive landscape, etc.;
- Asks general questions to invite a wide range of responses; and
- Lists broad criteria.
- Shorter, faster response time;
- A broad overview of your products/services and company capabilities; and
- Prove your expertise and leadership position in the industry.
Request for Proposal (RFP) and/or Request for Quotation (RFQ)
The second step in the procurement documentation process is the Request for Proposal or Request for Quotation. These two documents aren’t interchangeable, but there are cases where you can jump right to the RFQ.
If the Request for Information process gave you enough information to determine your exact needs, then you may directly use a Request for Quotation.
With an RFQ, the buyer is telling the sellers exactly what they want: “provide me with a quotation for the following items.” A RFP, however, asks the seller to propose how they will resolve or address the buyer’s needs: “provide me with your proposal on how to solve my problems.”
Request for Proposal:
- Seller-side driven – seller provides direction and guidance on how to complete the project; and
- Buyer is responsible for outlining what their needs and project requirements are.
Request for Quotation:
- Buyer-side driven – buyer provides direction on everything they need and asks sellers for pricing on meeting the requirements; and
- Seller is responsible for packaging their service/product to buyer specifications.
Completing the Procurement Process: Getting to Contract
In many cases, the procurement process will unfold from Request for Information through to Request for Proposal, to Request for Quotation, and then finally to contracting. At each point, the funnel of potential vendors gets smaller as the buyer gains better insight into their needs and preferred working relationships.
If you’ve framed your RFI properly, it’s possible to pull out enough information to identify a shortlist and jump right to the quotation process.
The RFI process may help you identify what your wants and needs are, which allows you to develop a more strategic RFP. From there, you can move right to the contracting process if vendors respond to the RFP with a proposal that meets your needs.
From the buyer perspective, we find that the procurement and tender process is most successful when there’s an RFI followed by either an RFP or RFQ. In cases where the buyer already has experience with the procured products/services, then we would recommend skipping the RFI process.
From the seller perspective, you’re more likely to win a contract when you put effort into responding at each level. Get your name in front of the buyer early, provide as much information and education up front as you can, and validate your standing with testimonials/references. Even when your offering can’t match the RFP/RFQ requirements perfectly, it’s important to put a full bid package together that addresses every area under question.
Invest in the Procurement Process
If you have limited procurement experience from either the buy or sell side, you’re going to see diminishing returns. From the buyer’s side, you may not be able to articulate exactly what you want, be specific enough (or be too specific), or outline criteria for the responses. This impacts the interest from vendors as well as the quality of submissions.
Your goal, as the buyer, is to identify as many qualified sellers as possible. From the sell side, you need to make your bid packages stand out amongst the crowd.
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