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A Request for Quotation (RFQ) serves as a formal document used in procurement to invite suppliers, vendors, or contractors to submit price quotations. It enables buyers to collect detailed offers for goods or services and compare them on consistent terms.
This process creates transparency, reduces risks, and supports informed decision-making in procurement.
Defining the RFQ Process
The RFQ process begins when the purchasing entity issues the document to potential suppliers. Each Request For Quotation specifies requirements such as product descriptions, quantities, delivery timelines, and payment terms. Once issued, suppliers respond with written quotations that match these criteria. As a result, the buyer receives structured data for direct comparison.
Evaluating Supplier Quotations
After collecting quotations, the buyer evaluates each proposal against predefined factors. These often include price, product quality, delivery reliability, and compliance with specifications. By applying evaluation criteria, the buyer identifies the supplier offering the best value. This systematic comparison also reduces procurement bias and ensures accountability.
Strategic Role in Procurement
An RFQ not only secures competitive pricing but also strengthens supplier relationships. Buyers gain insights into market conditions, while suppliers understand buyer expectations more clearly.
Therefore, the RFQ process fosters efficiency and supports larger procurement strategies. In addition, it aligns with legal and contractual frameworks, making it a reliable tool for both private and public sector projects.
Advantages for Buyers and Suppliers
For buyers, the RFQ provides clarity, consistency, and control over procurement decisions. For suppliers, it offers an equal opportunity to compete fairly.
Furthermore, the RFQ creates a paper trail that supports compliance audits and future contract negotiations. Thus, both parties benefit from a structured, transparent, and mutually advantageous procurement process.
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References:
- Investopedia – Request for Quote: Definition and How Businesses Use RFQs
- GEP – What is Request for Quotation (RFQ) in Procurement?
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