A standard business process always
possesses a request for quotation or RFQ. The main purpose of this method is to
provide an invitation to the suppliers. This invitation is consequently
followed by the bidding process that has the capability to bid on specific
services or products. It is a kind of procurement solicitation. Here, the
company has to ask the vendors from outside to give a quote so that they can
complete a specific project or a particular text.
However, RFPs stand for a request for proposal for which comprehensive
information is provided to the bidder in accordance with the requirements of
the project. According to the RFQ, the bidder is frequently asked to itemize
the costs as per the phases in the project. It allows soliciting the company so
that they are capable of competing with several bids.
Bidder pricing is asked to the vendors, and the bid must comprise of the
following tags:-
- Payment terms
- Consideration
- Factors for choosing a particular bid
- Deadline for the submission of the bid
However, an RFQ is mostly concerned
with the pricing of the item. Its main focus is the cost. The potential vendor
with the lowest bid has generally signed the contract on condition that the
minimum criteria of the company are fulfilled.
Advantages and disadvantages: - An RFQ is not a
matter to broadcast on a public stage. If the company uses an RFQ, the
procurement is reduced. It also decreases the processing time since the company
does not require to prepare any sorts of solicitation documents. The submission
of the number of bidders quotes puts a request on the limit of the amount that
the RFQ receives. Another advantage for this is that it also helps in
diminishing the time consumption for the process of selection.
RFQ may lead to certain deviations in
the usual process. This is due to the determination of the soliciting company
while sending the RFQ to the vendor.
It also limits the competition. Vendors who are successful in establishing the
minimum criteria can include themselves in the process of solicitation.
