Make An RFQ For A Chinese Supplier:
In our previous blog post we discussed several items:
- China, a brief introduction to trading
- Where to start when sourcing items from China
- Original Ideas
- I have a product, now what to do?
- The Source
If you have not seen our above blog post it can be found here:
For our second instalment of China trading and following on from last week’s blog post, we will be looking into the RFQ process.
- What is an RFQ?
- Process flow of an RFQ
- How to construct an RFQ and templates
- RFQ Efficiency
What is an RFQ? And How to Make One For A Chinese Supplier?
An RFQ, or Request for Quotations, simply put is a process whereby you have an idea for a product (a new original idea or existing product), list down its specifications, material, size etc… and provide the document to suppliers for them to respond with a quotation of piece price and lead time based upon the information provided in the document.
This (like anywhere) requires a certain amount of trust, and a fine balancing act (not giving too much of a good design away in an initial RFQ is imperative). An RFQ content depends very much upon the product being quoted for; it usually contains 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, I would always recommend (if you are looking at sourcing original content) to have many RFQ’s to determine if the supplier is capable of manufacturing the requested items. There is no point in sourcing clothing from a steel pipe supplier!
The suppliers must return the RFQ by a select date in usual circumstances. Its always a good idea to ensure a follow-up meeting is pencilled in to ensure the supplier has fully understood the RFQ and any particular nuances.
This again may require feet on the ground. Or a conference call with a translator present to ensure no issues are found during any stages of the RFQ process.
The process flow for developing an RFQ is a simple one but requires a sort of sixth sense to understand the questions that may be posed by interested suppliers.
- Define the deliverables
- Define in detail what product you require, materials, what specifications if any you are to adhere to, be clear and concise. Leave no room for ambiguity in this section.
- Write the RFQ
- Several RFQ templates can be used for an RFQ easily found on the internet. Below is a simple table of contents to follow.
- Construct your list of suppliers
- We can discuss this in a further blog post as it’s a whole topic on how to navigate the Alibaba’s of the world
- Send your RFQ to prospective suppliers
- This is the next step of the dance which requires a certain amount of two and fro between you and the supplier. I always advise my customers here to have some sort of filter, be it an agent, or someone who can act as an intermediary, to remove some of the more insane questions that have been posted.
- Evaluate the quotes
- At the end of the tenure time limit, it’s time to review your quotes; this stage is usually straight forward. Based on piece cost and lead time.
How to construct an RFQ?
Writing an RFQ is not as daunting as it sounds. It is relatively easy and also allows you as the designer or sourcing contact to ask questions to yourself after reading the RFQ back. I always advise customers that imagine you were an alien, setting up a production line, what things would I need to know to accurately understand the requirements.
- Introduction and background
- Submission Requirements
- Pricing Table
- Further Information
How to ensure your RFQ process is efficient as possible:
You want to make it easy as possible for suppliers to respond to the RFQ, so ensure that you have a clear and concise email address (I always advise customers to use email best practice). Ensure that if you are sending emails at a relevant time for the recipient to be able to respond. It’s inconceivable to send emails on a Friday morning (in the West) for request that needs to be with you on a Monday, be considerate and ensure you know the time difference.
Follow up with emails ensuring that the supplier has received the email. Requesting to know if any further questions are surrounding the quotation. I would say more is better, but be careful of turning suppliers off by requesting too much in an unreasonable timescale.
We will be delving deeper into contracts, negotiations and the elephant in the room; quality, in further blog posts. But it is imperative to note at this point. If there is any correspondence between you and the supplier that may impact upon future contract negotiations; to save, sign and document each correspondence at this stage.