In the business industry, there are a couple of things that an organization doesn’t just to customer satisfaction but also involves the financial capacity to fund the company’s operations.
Luckily, there are several ways to fulfill this need, and it’s good enough that it comes in the form of RFP and RFQ for better understanding. But first, let’s begin by clarifying the RFP and RFQ meaning as some still feel confused about their differences.
How is RFP different from RFQ?
RFP is used by companies sourcing for specific services or products from various suppliers. It entails an overview of the distributor’s offerings and their relative costs.
The form requests the contractors to submit their detailed proposals that include the tasks to be performed by the winning bidders and a feasible timeline in completing the project, which could vary according to the complexity and availability of materials.
Meanwhile, the Request for Quotation (RFQ) is the formal request made by the procurement team via the approved purchase requisition agreement or a demand request to purchase either service and physical goods with clear indicated parameters.
As an RFQ, its primary role is to order under the commercial parameters and terms set by the suppliers concerning commoditized products. It entails the list of requested products, their quantities, suggested payment method, and the preferred delivery conditions for when the user receives the packages.
Which information is needed?
Whether you’re structuring an RFP or RFQ document, both of these papers should remain clear and concise once given to the sub-contractors. Even though their forms may change slightly according on the type of firm, they all include a few basic components, such as:
Submission details
This section should provide the vendors the important information that they should know before making a bid, like the expected deadlines, the business’ mailing address, and the contact person that they should approach for any clarifications and questions.
Introduction and executive summary
The potential contractors you’re considering for the project must be made aware of the company’s background and be given a brief overview of the company’s operations, along with requirements for the sourced services or products.
In general, it’s recommended that this be taken care of after the whole document has been drafted, so it’ll be easier to conclude the key takeaways of the business papers.
Company overview and background
A good business overview should describe the company’s market sector and products to give the prospective vendors an idea of the needs you’re trying to fill. Plus, provide them the opportunity to weigh in if they’re capable of doing the job.
Comprehensive specifications
This part is well-known for being the most extended piece within the document. In an RFP, this section demands the qualitative requirements and measures that impact the selection decision in the end. While for RFQ, this portion is responsible for filling in the details using quantitative measures that you’re currently seeking in each of the vendors’ responses.
An example of this might be engineering tolerances, business or technical requirements, product drawings, hardware requirements, milestones, timelines, deliverables, service levels, and software functionalities.
Terms and conditions
As its name suggests, the terms and conditions indicated apply to the contract length, service levels, financing options, late delivery penalties, warranty, and even renewal options so that the supplies could make a fair and honest response to the business.
Final words
There is no one-size-fits-all for these documents. The objectives of the business and their background have a heavy influence on the formatting. Remember that since you’re sourcing for a specific project, you are likely to encounter a couple of pieces of information that should be included for consideration throughout the structuring of the business papers. Fortunately, if you feel lost in this task, you’re always free to look up templates to guide you with the process.
