RFI/RFP Process
The first step of the process is to obtain a small amount of key information from a large number of theoretically capable suppliers using RFIs (requests for information). The next step is to obtain highly detailed information from a small number of interested, qualified suppliers using RFPs (requests for proposal).
The RFI / RFP process has become part of the basic repertoire of purchasers, who have gained wide-ranging experience in its use. Nonetheless, there still seems to be room for improvement in its application.
The RFI has two main functions. The first is to obtain basic information from suppliers concerning their product range, capabilities, customer references, and technologies. This data provides a basis for selecting the suppliers to whom an RFP will be sent. Second, the RFI has a communicative function: sending the RFI to a large number of targets communicates to a broad audience that new suppliers are being sought. This has the effect of waking up the competition at an early stage of the sourcing process and producing a speedy improvement in negotiating position, especially on the part of existing suppliers.
An RFI should be as concise and simple as possible. (Frequently, due to its numerous pages and questions, an RFI looks like a commercial or technical audit!) As its main goal is to achieve the highest possible response rate, those completing it should be able to do so in a matter of minutes, preferably by simply checking boxes.
An RFI typically consists of three parts:
A cover letter to introduce the inquiring company and arouse the interest of the supplier
A general section, typically the same for all RFIs, requesting details about a small number of key aspects such as sales, employee numbers, and customer referrals
A section specifically relating to the sourcing category (s) concerned. This includes a limited number of questions that enable the inquiring company to determine whether the supplier can meet specifications and is interested in an RFP
The RFI is then sent to the maximum possible number of potential suppliers of the goods in question. The list of potential suppliers should be based on a wide variety of sources and resources—for example, databases, Internet research, and known suppliers. Formerly, RFIs were sent manually by fax. Today, more elegant methods such as specialized portals are available.
The RFI responses become the basis for selecting those suppliers that will receive an RFP and the relevant technical data. Note that it's also important to make the RFP as supplier-friendly as possible, to avoid tying up their resources. Suppliers do not have an unlimited number of engineers and cost accountants at their disposal, and have to prioritize their deployment.
A key component of the RFP process is a clearly structured proposal sheet that lists required parts, with space for the supplier to enter its prices. It is important to clearly define what price level is being requested (for example, ex works or delivered duty paid ; with or without tooling costs; and so on). The proposal sheet should be easy to understand and complete, and should allow a simple and systematic evaluation of responses.
All the necessary technical information, including drawings for each part number, specification, or data sheet, and generally applicable technical standards, should accompany the proposal sheet, and the supplier should be able to clearly identify what technical information refers to which component. Ideally, data files with technical drawings should have the same name as the parts being inquired about. Unclear inquiries are one of the most common reasons suppliers discontinue preparation of an offer and turn their attention to another inquiry instead.
Feedback should be given to participating suppliers immediately after an offer is received, and should compare the offer's terms with those of existing suppliers. Providing feedback allows the opportunity to improve on an offer right at the start, and has the double benefit of ensuring a supplier has properly understood all the requirements. Finally, since preparing offers requires a great deal of time and effort on the part of suppliers, the practice of providing feedback also ensures that excluded suppliers bid again in future (this time perhaps successfully).