RFI vs. RFP vs. RFQ: Definitions and Differences
Request for information (RFI), request for quotation (RFQ), and request for proposal (RFP) all focus on different aspects of the vendor selection process. RFI, RFP, and RFQ are closely related. However, each acronym refers to a distinct step a business can take to get information from potential vendors.
Here is a closer look at the terms RFI, RFQ, and RFP, why each is important, and how to differentiate them.
What is a request for information (RFI)?
A request for information is the first step in selecting a vendor. As the name suggests, it involves getting data about vendors in the form of a written report. The RFI includes general information such as the vendor’s expertise, production schedule, shipping capacity, and other attributes that affect the ability to deliver products or solutions on time.
RFIs are most effective when they are delivered using a standardized format. This makes it easier to compare vendor information and determine which vendor is the best fit. RFIs should also include a deadline to ensure that prospective vendors respond in a timely manner.
In addition to obtaining RFIs for current needs, businesses typically store RFIs in a database so that they are available when future purchasing and procurement needs arise.
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RFI benefits and components
An RFI typically begins with a table of contents that outlines the document contents. The RFI should also open with a description of the problem or need that the purchaser is trying to address. Subsequent sections elaborate and provide additional details regarding the purchaser’s requirements. The first RFI section concludes with definitions and explanations of technical terminology.
The next section of the RFI is usually formatted so that the potential vendor simply adds the information requested. The final section of the RFI provides the vendor with details about the selection process and a timeframe for feedback.
RFIs provide three key benefits. First, they let vendors know that they are competing for your business. Second, RFIs help procurement teams gauge vendors’ ability to meet purchasing requirements. Third, RFIs standardize this information to simplify comparison and speed up the selection process.
What is a request for proposal (RFP)?
While an RFI is focused on establishing a relationship with a vendor, a request for proposal (RFP) pertains to a specific project. It includes a detailed description of the project, its aims, and the parties involved in the process.
The purpose of an RFP is to evaluate a potential vendor’s capacity to complete a particular job or support a discrete project. RFPs are commonly used during complex processes such as building construction; as a result they may contain detailed information about project components such as subcontractors, materials, machinery, and timeframes for the completion of the different phases.
Government agencies often use RFPs with the goal of collecting information and organizing it in a way to ensure the selection process is transparent and unbiased.
The difference between an RFI and an RFP is that an RFP goes more in-depth into the details of the project than an RFI. Companies may use both, with the RFP serving as the final document before the business selects a contractor or vendor.
RFP benefits and components
An RFP document starts with a detailed description of the project and any challenges or problems that the business anticipates. This allows vendors to determine whether or not they can offer a competitive solution.
Following the introduction, the RFP provides details about the current processes that businesses use in their projects. This additional context gives vendors an opportunity to further evaluate their fit for the project, and to explain how they plan to meet the purchaser’s needs.
The document ends with a summary of how and when the company will make the final decision about the contract. This section includes information about the criteria and timeframe for the choice. It will also mention the next step in the process, which is usually the request for a quotation (RFQ).
The primary benefit of an RFP is that it collects detailed information about solutions so that the business can make an informed decision about which supplier to choose. The RFP can also play a role in supplier relationship management.
What is a request for quotation (RFQ)?
A request for quotation (RFQ) is a document used to solicit price bids from suppliers. Unlike the other two documents — which focus on capabilities and solutions — the purpose of the RFQ is to assess the cost of a vendor’s service or product.
An RFQ provides deep detail to help the vendor understand exactly what they will receive, how much it will cost, and help them determine the value of the offer. After comparing all requests for quotation, the purchaser may select a vendor or initiate negotiations.
RFQ benefits and components
An RFQ starts with a detailed list of the products and/or services the buyer wants to procure. It also specifies exact requirements or other relevant information about the products and/or services.
The RFQ should also address details such as quantity, timeframes for delivery, and project deadlines. The document should also include terms and conditions, including payments and pricing.
The benefit of this document is that it allows the business to get a detailed estimate of how much the service will cost and if the arrangement with a contractor, service provider, or goods supplier will work on a practical level. The RFQ is typically the final document required before the purchaser can finalize their decision.
When to use an RFP vs RFI vs RFQ
Each type of document — RFI, RFQ, and RFP — provides information about the vendors’ ability to meet the purchaser’s needs. However, each of these documents provides a different type of insight.
In some cases, a purchaser may require all three documents before making a decision. In other situations, the purchaser may only require one or two.
Use an RFI when the primary need is to capture basic information about vendors. Because an RFI does not delve into specifics, it is primarily a relationship-building tool. Companies often use this document at the beginning of the bidding process, though they may also use it to reach out to suppliers in their industry to create a database for later use.
An RFP provides more information about a vendor’s ability to meet the purchaser’s needs. Use this document to assess whether or not the vendor can meet specific project requirements and abide by the project timeline. An RFP is also helpful to contextualize decisions and provide an explanation for why a particular vendor has been chosen. In this sense, the RFP can help maintain standards of transparency in the decision-making process.
When it comes time to compare details such as prices, terms, and conditions, an RFQ is the appropriate document to use. This is the only document of the three that addresses cost.
Soliciting an RFQ signals that the business is moving forward with the project and ready to determine the right vendor(s) for the job. In most cases, this document is the last one before the final vendor selection.
|Purpose||Establish a relationship between purchaser and vendor.||Assess ability of the vendor to meet project requirements and deadlines.||Obtain pricing information about specific products and services.|
|Detail||General description of the project and basic information about the vendor.||In-depth details about the project, processes, and requirements.||Information about pricing, timeframe, units, and payment terms.|
|Focus||Suitability for consideration.||Capacity to meet project requirements.||Pricing, costs, terms, and conditions.|
|Timing||Ongoing, but prior to bidding.||Planning phases.||Near the end of the decision-making process.|
RFI, RFP, RFQ tips and tricks
Businesses need accurate and timely information in order to make decisions and keep projects on schedule. This means that the quality of the RFI, RFQ, and RFP is critical for building vendor-buyer relationships, staying on budget, and moving projects forward. Here are some useful tips for making sure your company gets quality information every time.
- The RFI should focus on general information, so try to avoid getting into the weeds at this stage. Decide which details are essential for assessing vendor alignment, and avoid anything else.
- The RFI also helps vendors better understand the purchaser and their needs, so be sure to include as much context as necessary for vendors to determine if they are a good candidate.
- Highlight any relevant minimum requirements early in the document to help screen out vendors who are not a good fit.
- Use a standardized format to simplify the comparison process and make it easier to add the vendor to a database.
- Include details about the project goals and requirements. Establish the scope and any relevant limitations.
- Provide a timeline for the project to help vendors plan their delivery of products and/or services.
- Use a standardized format to simplify the comparison process.
- Provide as much detail as possible in order to anticipate the true cost of the product or service. The more details you provide, the more accurate and reliable the quotation will be.
- Spell out the selection requirements of the process to help bidders determine their suitability for the project and capacity to comply.
Challenges managing RFI vs RFP vs RFQ
The RFI, RFP, and RFQ have been a standard component of business for decades. They have been used frequently and widely, and that means it’s possible to anticipate three common challenges in their use.
- Lack of standardization. If vendors aren’t required to submit their information using a standard format or template, the purchaser will have to spend time organizing data and possibly chasing down missing or incomplete information. This is a drag on efficiency and introduces the possibility of errors. It also makes it more difficult to compare vendors.
- Too much manual work. RFI, RFP, and RFQ documents can be complex and time-consuming to complete and collect. Even when the documents are managed electronically, there are additional aspects of management that may have to be handled manually, such as approval flows and signature capture. Status updates may also have to be completed manually.
- Decentralized information. When these documents are solicited from different departments at different times, managing all of them can become unwieldy. Duplication occurs when multiple departments request information from the same vendor, or when a vendor is considered at different times. Centralization makes it easier for all teams to see which vendors are on file and to access their information.
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Fortunately, all three challenges can be overcome with the right tools. Low-code automation is a flexible and cost-effective choice for many businesses because it integrates with the components of the existing tech stack and can be easily modified when workflows or processes change.
Automation features are accessible to procurement teams through a visual user interface, so no coding is required. Low-code automation captures, routes, and centralizes all incoming documents and notifies all stakeholders when action is necessary or statuses change.