Revealing the secrets of sending RFQ’s to Suppliers.
The Ultimate Time-Saving Hack When Starting Work With Suppliers
I am the first to admit that this is not the most entertaining of subjects to sit through. But bear with me as this small hack will teach you what and RFQ is, how it can help you Source the items that you need from anywhere in the world. If you are a hardware startup looking to get off the ground, then these are the topics that you need to know.
What is an RFQ?
An RFQ stands for request for quotation, (I apologise if I am teaching you to suck eggs here), trust me it gets a bit more informative than this…
Now, a request for quotation is the most overlooked piece of documentation in purchasing interactions. Simply, it’s the instructions to a vendor (supplier) to supply you with a price of something that you need, that they have, or, the ability to produce. You are providing an opportunity for a group, to swap money for goods or services.
Why is it the most overlooked process you ask?
Purchasing interactions happen, literally, millions of times a second on a global scale, the art of buying in person is fading. With each interaction where someone is buying something without seeing it, we are losing a little skill that a previous version of us had.
Let me explain a little:
When we go into a shop or store, we pick up and feel products; we inspect them to ensure they are the correct size, fit and function.
Without knowing it, you are analysing the potential purchase in specific details that you may not even realise. You’re learning what’s in the market by comparing items, side by side, hand in hand. For millennia, as humans, we have been doing this.
Is this product good enough quality, or will perform its function to my expectation?
However, we are at a point in time where no longer do we have to be in a brick and mortar shop, apples physically in each hand, comparing like for like. Instead, we look at photos on a screen, comparing what we deem like for like.
How often do you look on your I-phone, tablet or computer screen, tongue one side of the lips, squinting; frantically looking from screen to room; trying to guestimate if that Amazon faux tree will fit into the corner of your apartment, all based upon the rough dimensions given on-screen?
Global sourcing is no different.
The RFQ document allows you to put all the information in one place, which you need; material, height size, colour, dimensions and any questions that need answering such as ‘how a supplier would get it to you’.
Compiling this information means that you can copy it numerous times, this, therefore, splits you, as the perfect buyer into many copies. Meaning that you can send it to many more manufacturers and ultimately countries. You don’t need to be in the market, product in hand:
If these instructions are detailed enough, you may as well be there comparing like for like in person. This is the art of bulk buying in the modern age.
A robust RFQ.
The benefits of sourcing like this initially are vast.
You save time with suppliers.
You invite suppliers to provide you with quotations, you remove the need to ask every single supplier individually the same questions over and over again. Suppliers instead will tell you if they want the work or not, if they can produce parts to your specifications, drawings, colours and you get the price they can do it for.
RFQ response form.
If you tailor a response form to your RFQ document, then you can get the exact answers that you want in the format that you want. This is the biggest time-saving hack that I found when sending RFQ’s out to global suppliers; you make the supplier answer your questions in a format that suits you.
If you have sourced or bought from manufacturers before, especially overseas, you will know that the initial correspondence can be somewhat convoluted, you get more questions back than you initially asked.
All drawings are in one place.
If you are in the hardware world, you will know drawings are crucial; these are the ultimate instructions that you need to make anything. They bridge language, cultural and physical borders and reduce confusion. And with these being in a single space, in a single easy to read format, they are easily referenced, and importantly, is what the supplier is using to construct their quote.
The price will be more accurate.
If you have enough details in the RFQ, suppliers will provide you with a more accurate quote, the more quotes you have, the better an idea you have of the true cost of the product that you are trying to source.
Think about it; you get 30 quotes in for a component, they all are around the £100 mark a single supplier comes in at £30… Why the gap? What corners are being cut?
The more quotes you have, the more information you have; the more information you have, the more informed decisions you can make; the more quotes and information you have, the easier negotiations will be with your chosen supplier.
It removes emotion from the supplier selection process.
Bias is one of the killers in business decisions. When selecting suppliers, you want to be basing your selections on data; removing the influences of bias from the selection.
This is where having things on paper, in your format helps remove the ambiguity of the situation.
Comparisons are much more manageable.
Ultimately you will have a normalised response from suppliers, they will have (all being well) supplied a quotation in a format that is legible, and you are easily able to compare the quotes side by side, much like when comparing items in a shop. You can really start to get a feel of the supplier by working to this sort of process. Besides, you can really start to get a feel for the manufacturing process too.
Does having a robust RFQ procedure give you a sure-fire way to ensure you get a robust supplier for your product, no, there are many pillars of due diligence needed when conducting supplier selection; it can be a tedious and time-consuming. But ensuring that you have a good RFQ process gives some great foundations for gaining the best product for your investment.
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