Understanding the 3 Types of Requests in the Procurement Process

by Edgar R. Olivo

Writing proposals is a key skill small-business owners must develop to do business with larger organizations that have procurement systems in place to supply their need for goods and services. There are a few key definitions within the procurement process that a small business must know to be successful in bidding for opportunities that exist in the marketplace. First, a small-business owner who bids on an opportunity is considered a “supplier” or a “vendor.” The large organization seeking the goods and services is considered the “buyer.” And once the supplier or vendor is awarded a contract, the small-business owner then becomes a “contractor.”

But key definitions do not stop there. How does a supplier or vendor know what information to present when a bid opportunity appears in their inbox? By understanding what the different types of requests a buyer makes. A request is a formal soliciting document that includes instructions for a supplier to submit information about their goods and services. This is the bidding stage.

There are three types of requests every small-business owner needs to become familiar with. They are: 1. Request for Information; 2. Request for Proposal; and 3. Request for Quote.

Buyers can find emerging technologies hard to understand or do not know what better options are available in the market. This is why a buyer team will prepare a request to solicit information from their supplier pool to help determine which supplier can meet their needs the best. Typically, a buyer team will read through many white papers, brochures and data sheets, and invite the supplier to give a presentation or demonstration when they need additional information.

Even with all this research, a buyer team may still not grasp how the solution will fit their project. This is where a buyer team then takes the next step and publicly releases any of the three requests to solicit more information from a larger supplier pool. When a supplier gets a request in their inbox, here is what they mean:

1. Request for Information or RFI: This type of request is a way for buyers to determine what is available from suppliers who respond to its requirements. The buyer team may not be ready to make a purchase yet, but it does help them get closer to making a purchasing decision. Small businesses are encouraged to respond to RFIs because it is a great way to introduce their company to a buyer team, especially if they provide a solution that is perfect for the buyer team. They will remember suppliers who stand out in this process.

An RFI is a great opportunity to submit marketing materials like brochures, samples and more. This also positions the supplier to have most of the information prepared for a formal purchasing request.

2. Request for Proposal or RFP. The RFP is a formal request for proposals from the buyer team who is interested in making a purchase of goods and services. The RFP also becomes the basis for the contract when it is awarded to a supplier. Unlike an RFI, an RFP means the buyer team is ready to decide on a solution that meets their project needs. This is a significant opportunity for suppliers to sell their products, systems or services, and an RFP is the more important request in the procurement process.

This step allows suppliers a chance to interact with the buyer team and learn more about the needs of an organization. A well-written RFP will require time and resources to ensure it is formatted exactly how the buyer wants it.

In general, an RFP includes sections like technical, management, qualifications and pricing requirements. These are the nuts and bolts of this kind of request, as it discloses in detail how the supplier plans to successfully solve the problem for the buyer team.

3. Request for Quote or RFQ. A request for quote contains information that is more specific to a part or component that a buyer team may already have information about. This type of solicitation is usually issued for clearly defined and active projects. These are the most specific of requests because they will ask for unit prices, packaging information, FOB terms, lead times, manufacturing substitutes and quality assurance programs like ISO, environmental and more.

All these requests have a time validity, meaning they have a deadline to submit. Small-business owners should try to always address the expectations and instructions within the requests and review the terms before submitting. Responding to these requests and composing them well is important because they are the face of your company in the procurement process and can exponentially grow your small business overnight.

Edgar Rafael Olivo is a bilingual business educator, economic advisor, and contributor for several media outlets. He’s a nonprofit executive who is passionate about education. He is certified in finance and data analytics and holds a business degree from Arizona State University.

Para la versión en español de este artículo, haga clic aquí.

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