RFQ

(Request for Quotation)

1 From need to RFQ Design

2 The RFQ Execution Phase

Michele Romano
www.linkedin.com/in/michele-romano-m99
RFQ Process
(Request for Quotation)

From need to RFQ Design

An RFQ is a bidding approach resulting from a sourcing choice. When the
need to be met is extremely well defined along with the related solution
and its minimum technical requirements, then it can be useful to check out
the market with an RFQ to directly identify the supplier who offers us the
services/supplies we need at the best price.

In order to do this, we need to have defined the technical specifications of

the service/supply, the contractual clauses, and generally also the pricing
models, the only variables being in fact the economic ones.

In the diagram below we identify 2 processes that precede the RFQ

Execution phase, Procurement Planning and Tender Design.

Procurement Tender
Need
Planning Design

Definition of need • Plan of tender

•
• Goals and requirements
• Timeline of activity
• Contract duration and
budget
• Supplier selection criteria
and vendor list
Design
activities
• Design of contract,
technical specifications
and pricing methods
• Design of Request for
Quotation (RFQ)

• Detailed plan of RFQ activities

• Form for proposal formulation and for requested information
• Volumes (hyphotesis) for proposal formulation
• Technical constraints

Careful preparation and planning is needed so that the Execution phase is

carried out properly, on time, respecting roles and, never forget, respecting
the work of our and others' people.

Michele Romano
www.linkedin.com/in/michele-romano-m99 Ep. 27/en - 2023 1
RFQ Process
(Request for Quotation)
When preparing for the Execution phase, it is necessary to pay attention to
some important aspects:
Preparation of the RFQ
Planning of activities
Clarity of roles

Preparation of the RFQ

The RFQ and related documentation (technical specifications, draft
contract, required information, and bidding instructions) must have been
carefully studied and prepared. Stakeholder and procurement involvement
is required, in a process where stakeholders are not mere "requesters" but
co-protagonist in the preparation of the RFQ together with procurement.

Planning of activities
The activities of the Execution phase must be carefully planned, both for
supplier activities and for our own activities. For example, time must be
provided for suppliers' review of RFQ documents, and so our time for
reviewing bids, our and suppliers' time for formulating responses to
requests for clarification, and time for final sharing of results with
management. In an overall master plan, it will then be necessary to add to
the RFQ the time for contracting, dependent on the subject matter of the
contract, the total economic value (better if TCO), and the eventual final
phase of negotiating prices, terms & conditions.

Clarity of roles
In the execution of activities, there should be a clear definition of roles
between the stakeholder team and procurement. The former is
responsible for technical questions/answers and verification of minimum
technical requirements. The latter is responsible for the role of liaison with
suppliers, questions/answers of a contractual/economic nature, and
verification of economic bids. Clarity of roles has the merit of devoting
expertise and "focus" to only those aspects and roles to which
stakeholders and procurement are deputed/competent. Depending on the
enterprise, this separation may be imposed by internal procedures.

Michele Romano
www.linkedin.com/in/michele-romano-m99 Ep. 27/en - 2023 2
RFQ Process
(Request for Quotation)

The RFQ Execution Phase

The execution of the RFQ is that phase that starts from the sending of the
RFQ to the suppliers and ends with the identification of the winner and
then, generally, with the conclusion of the contract.

Procurement Tender
Need
Planning Design

Execution

Sending Requests for Answers to suppliers

Receipt
the RFQ to clarification from and, if necessary, RFQ
of Bids
suppliers suppliers documents update
C S S C C S S C

Administrative Verification of Economic

Requests for Requests for
Verifications of compliance with Bid
clarification clarification
Bidders techn. constraints Verification
C C C S C C C S C

Results
Contract
review and C customer
C 🤝🤝 S
identif. of winner S supplier/suppliers
C

Let's look at the content of the various activities

Michele Romano
www.linkedin.com/in/michele-romano-m99 Ep. 27/en - 2023 3
RFQ Process
(Request for Quotation)
RFQ Execution Phase activities can be summarized as follows.

Sending the RFQ to suppliers

The Request for Quotation is sent to suppliers along with all the
documents (technical specification, draft contract, etc.), bidding forms, and
related instructions for submission.

Requests for clarification from suppliers

Suppliers read the submitted documentation and can ask any questions
they may have. This is an important step for suppliers so that they can be
sure they understand correctly and ask any additional relevant information
they may need. It is also important for us because after all it is a "test" of
what we have prepared, from the questions of the suppliers we may in fact
find that we need to supplement or change some aspects of the RFQ
documentation provided.

Formulation of answers
The questions received are analyzed and responses are sent to suppliers.
This is an activity that we need to plan both in terms of the
resources/competencies involved (the questions can cover any aspect of
the RFQ documentation) and as time required to formulate the responses
and/or check with other business functions (e.g., the legal function). The
responses must be carefully studied because they are integration of RFQ
documentation and additional reference for the RFQ and future contract.

Receipt of Bids
Suppliers formulate and deliver their bids based on RFQ documentation
and our responses to their questions. With delivery of bid a supplier that
we have invited to bid becomes bidder.

Administrative Verifications of Bidders

Bidders' company documentation is checked for formal aspects (e.g., for
signatory powers), for the composition of the bidder (who can participate
to the RFQ as a single company or as an aggregate of companies), for
information required by law (e.g., for anti-bribery regulations), etc.

Michele Romano
www.linkedin.com/in/michele-romano-m99 Ep. 27/en - 2023 4
RFQ Process
(Request for Quotation)
(continua dalla pagina precedente)

Verification of compliance with techn. constraints

The technical part of the bid is "opened" and checked for compliance with
the Technical Minimum Requirements (usually by a dedicated technical
team). If it meets all the Technical Minimum Requirements, the supplier's
bid can move on to the stage of checking the economic part; if it does not
meet even one of them, the bidder is excluded from the process
(regardless of everything else, including economic quotation). If necessary,
requests for clarification are sent to the bidders; following the responses,
the verification of the Technical Minimum Requirements is concluded.

Economic Bid Verification

The economic part of the bid is "opened" and the proposed prices are
checked (see also ep. 26/en - "Fair, reasonable, advantageous prices"). If
necessary, requests for clarification are sent to the bidders. When all
economic bids have been verified and any doubts clarified, the economic
bid verification is concluded.

Results review and identif. of winner

The selection criteria defined in the RFQ design phase (e.g., lowest price) is
applied, the winner is identified, and the result is shared with management
in order to proceed to the activities following the RFQ (i.e., typically
contracting, possibly preceded by a final phase of price, terms & conditions
negotiation).

Michele Romano
www.linkedin.com/in/michele-romano-m99 Ep. 27/en - 2023 5
RFQ Process A complete view
(Request for Quotation) of the process
Procurement Tender
Need
Planning Design

Definition of need • Plan of tender

Design
•
• Goals and requirements activities
• Timeline of activity • Design of contract,
• Contract duration and technical specifications
budget and pricing methods
• Supplier selection criteria • Design of Request for
and vendor list Quotation (RFQ)

• Detailed plan of RFQ activities

• Form for proposal formulation and for requested information
• Volumes (hyphotesis) for proposal formulation
• Technical constraints

Execution

Sending Requests for Answers to suppliers

Delivery
the RFQ to clarification from and, if necessary, RFQ
of Bids
suppliers suppliers documents update
C S S C C S S C

Administrative Verification of Economic

Requests for Requests for
Verifications of compliance with Bid
clarification clarification
Bidders techn. constraints Verification
C C C S C C C S C

Results
Contract C customer
review and
C 🤝🤝 S S supplier/suppliers
identif. of winner
C

Michele Romano
www.linkedin.com/in/michele-romano-m99 Ep. 27/en - 2023 6