QUESTION

Critically assess the difference between Request for Quotation and Request for Proposal in the
Category Management process.

ANSWER
A request for quotation (RfQ) is a business process in which a company or public entity requests a
quote from a supplierfor the purchase of specific products or services. RfQ generally means the same
thing as Call for bids (CfB) and Invitation for bid (IfB).[1]
An RfQ typically involves more than the price per item. Information like payment terms, quality level
per item or contract length may be requested during the bidding process.
To receive correct quotes, RfQs often include the specifications of the items/services to make sure all
the suppliers are bidding on the same item/service. Logically, the more detailed the specifications, the
more accurate the quote will be and comparable to the other suppliers. Another reason for being
detailed in sending out an RfQ is that the specifications could be used as legal binding documentation
for the suppliers.
The ubiquitous availability of the Internet has made many government agencies turn either to state-
run or vendor operated websites which provide listings of RfQs as well as RfIs and RfPs. Many allow
vendors to sign up at no charge to receive e-mails of requests either generally or for specific
categories of product or service for which there is an interest. In some cases, the entire process is
done on-line with responses as scanned documents or PDF files uploaded to the server; in other
cases, or for legal reasons, a response must be sent in hard copy form and/or on CD/DVD disc
or flash drive by mail or delivery service.
The suppliers have to return the bidding by a set date and time to be considered for an award.
Discussions may be held on the bids (often to clarify technical capabilities or to note errors in a
proposal). The bid does not have to mean the end of the bidding; multiple rounds can follow. 

After the RfQ process, professional procurement organizations have to compare the quotations, and
try to get the best price for the job (by negotiations, or by conducting an e-auction (a reverse auction or a
ticker auction). Aim is to determine the fair market value of the goods or services and thus generate
savings for the company.
RfQs are best suited to products and services that are as standardized and as commoditized as
possible, as this makes each supplier's quote comparable. In practice, many businesses use an RfQ
where an RfT or RfI would be more appropriate.[2]
An RfQ allows different contractors to provide a quotation, among which the best will be selected. It
also makes the potential for competitive bidding a lot higher, since the suppliers could be quite certain
that they are not the only ones bidding for the products.

Requests for quotations are most commonly used in the business environment but can also be found
being applied to domestic markets.

A request for proposal (RFP) is a document that solicits proposal, often made through a bidding process, by
an agency or company interested in procurement of a commodity, service, or valuable asset, to potential
suppliers to submit business proposals.[1] It is submitted early in the procurement cycle, either at the preliminary
study, or procurement stage.

An RFP is used where the request requires technical expertise, specialized capability, or where the
product or service being requested does not yet exist, and the proposal may require research and
development to create whatever is being requested.

The RFP presents preliminary requirements for the commodity or service, and may dictate to varying
degrees the exact structure and format of the supplier's response. Effective RFPs typically reflect the
strategy and short/long-term business objectives, providing detailed insight upon which suppliers will
be able to offer a matching perspective.[2]
 Similar requests include a request for quotation (RFQ), whereby the customer may simply be looking for
a price quote, and a request for information (RFI), where the customer needs more information from
vendors before submitting an RFP. An RFI is typically followed by an RFP or RFQ.[3]
In principle, an RFP:

 Informs suppliers that an organization is looking to procureand encourages them to make their best
effort.
 Requires the company to specify what it proposes to purchase. If the requirements analysis has been
prepared properly, it can be incorporated quite easily into the Request document.
 Alerts suppliers that the selection process is competitive.
 Allows for wide distribution and response.
 Ensures that suppliers respond factually to the identified requirements.
 Is generally expected to follow a structured evaluation and selection procedure, so that an organization
can demonstrate impartiality - a crucial factor in public sector procurements.

When a company engages in business with other corporations on a business to business (B2B)
basis, they will have to navigate tricky clientele attainment processes. With thousands of
businesses to choose from, it can be difficult to find the best price for goods and services without
putting in hours of research. Companies engage in large-scale B2B operations through the
distribution of Requests for Proposals (RFPs) and Request for Quotes (RFQs).

These documents allow companies to send out requests to potential contractors and vendors for
certain goods and services. In turn, these vendors will send quotes and project proposals to the
company for approval and, hopefully, hiring. Usually, the procurement department of a company
will distribute these documents.

Though they are similar documents, different situations can lead to choosing RFQ vs. RFP use
by a company. A key factor in successful corporate sales is knowing when to appropriately use
one over the other. Luckily, there are a few key differences between an RFQ and an RFP that
can help corporate professionals navigate these documents.

Request for Quote

A Request for Quote, or RFQ, is a document that companies use to gather information about
goods from the potential vendor. Before the procurement of these goods, this document explains
that the company wishes to purchase a certain type and amount of goods from a vendor. The
RFQ will detail the specifications and quantities of those goods.

The company will send the RFQ to specific companies they are interested in working with. In
response, potential vendors will send quotes and price estimates to the company who put the
RFQ out. From these responses, the company can choose which vendor can provide the best
products at the best prices. Usually, a company uses an RFQ if they need to make a large-scale
purchase.

For example, imagine that an office is in the market to purchase a large quantity of paper for an
upcoming conference. They need to purchase 2,500 reams and are trying to find the best price
for their project. The office will send an RFQ to various paper suppliers in their area to find the
best quote for the amount they need.

RFQ may also stand for “Request for Qualifications.” Companies use this document to solicit
vendor and contractor qualifications to narrow down choices for a project bid.

Request for Proposal

A Request for Proposal, or RFP, is a document that companies use to gather information about
services from a potential supplier or contractor. These documents are more complicated than
RFQs since they ask for more than just a price.

Since the document is a request for services, not products, the information contained in the RFP
is more detailed than information in an RFQ. The RFP will detail the goals and nature of the
project that the company needs completed. In addition, it will detail the number of pages and
illustrations that the proposal should contain, what laws the project is subject to, and what
qualifications the contractors should have. The company may request the proposal contain other
information as well, depending on the project.

In return, the potential contractor will submit a proposal detailing:

 What the contractor needs for project completion

For example, imagine that a corporation is looking to open a new store location in a different
state. They need to find a contractor to renovate their property to match the design of their other
locations. They will send an RFP to various contractors in the area detailing the nature and goals
of the project, the different building codes that the contractor will have

to adhere to, the company’s style guide, and the licensing requirements the company is seeking.
Contractors will return proposals to this company and the company will select the best proposal
for hire.