RFQRequest for Quotation

RFQ stands for Request for Quotation. It's a formal document a buyer sends to potential suppliers asking for a specific quote — covering price, lead time, MOQ, payment terms, and any other commercial terms — for a clearly defined product specification.

It's the most concrete step in supplier sourcing. By the time you send an RFQ, you know what you want; you're asking suppliers to compete on price and terms.

RFI vs RFP vs RFQ

The trio of formal sourcing documents:

• RFI (Request for Information) — earliest stage. Asking general questions to understand the supplier landscape. "Tell us about your capabilities."
• RFP (Request for Proposal) — middle stage. Asking suppliers to propose how they'd solve a problem. "Here's our challenge; describe your approach."
• RFQ (Request for Quotation) — latest stage. The product spec is locked; you want pricing. "Here's exactly what we want; quote us."

You might run all three on a major sourcing decision (e.g. selecting a new manufacturing partner). For a routine reorder of a known product, you skip straight to RFQ — sometimes called a "spot RFQ" — to multiple suppliers to refresh competitive pressure.

What to include in an RFQ

Tighter is better. A clear RFQ produces comparable quotes; a vague one produces apples-to-oranges responses.

A solid RFQ includes:

• Product specification. Detailed enough that no two suppliers can interpret it differently — dimensions, materials, tolerances, components, packaging, labelling, certifications required.
• Quantity bands. Pricing usually scales with volume — ask for pricing at multiple tiers (e.g. 1k, 5k, 10k, 25k units).
• Lead time question. What's the lead time at each volume tier?
• MOQ question. What's your minimum order quantity for first order vs ongoing?
• Incoterms requested. FOB, DDP, EXW — specify so quotes are comparable. See Incoterms.
• Payment terms requested. Net 30, 50% deposit + 50% on delivery, etc.
• Sample requirements. Will you need pre-production samples? Who pays?
• Response deadline. When you need quotes back.
• Decision timeline. When you'll award the business.
• Contact for questions. Single point of contact for clarifications.

The samples and certifications questions matter more than they seem. A supplier whose pricing is 10% lower but who can't produce a pre-production sample to spec is a much bigger commercial risk than the headline saving suggests.

How to evaluate quotes

Three layers of evaluation:

Comparable cost. Normalise quotes to the same Incoterm, the same volume tier, the same currency, and the same payment terms. The quoted price difference often shrinks once you do this.

Total cost of ownership. Beyond unit price:

• Tooling or set-up cost (often quoted separately)
• Sample costs
• Quality risk (defect rate × cost of dealing with defects)
• Payment terms (a 60-day term has working capital value vs a 30-day term)
• Lead time (longer leads = more buffer = more capital tied up)
• Switching cost (qualifying a new supplier takes months)

Soft factors. Communication quality, sample turnaround, willingness to accept your spec without scope creep. Hard to quantify; very predictive of how the relationship will run.

The best price isn't always the best supplier. The best supplier is the one with the best total cost of ownership and the lowest operational risk.

When to RFQ

Common triggers:

• New product — RFQ is part of the sourcing process for any new SKU
• Annual review — refresh competitive pressure on existing supply
• Significant volume change — if buying volume has jumped 5×, the existing supplier's quote may no longer be competitive
• Performance issue — supplier scorecard problems trigger an RFQ to alternates
• Cost pressure — margin compression forces a hunt for better pricing
• Supplier risk — a key supplier is at risk (financial, geopolitical, capacity); RFQ alternates as backup

How many suppliers to RFQ

Typical:

• Routine spot RFQ: 2–3 suppliers (existing + 1–2 alternates)
• New product or strategic sourcing: 5–8 suppliers
• Major sourcing event: 10+ suppliers, often via a multi-stage funnel (RFI → shortlist → RFP → RFQ)

Too few = no competitive pressure. Too many = paperwork and reduced supplier engagement (suppliers know their odds are low).

Common pitfalls

• Vague specification. Suppliers quote different things; comparison becomes guesswork.
• Price-only evaluation. Hidden costs and risks dominate the difference; missing them buys a problem.
• No follow-up. Quotes received but no decision communicated. Suppliers stop responding to your RFQs.
• RFQ as a price-pressure tool only. Running RFQs you have no intention of awarding burns supplier goodwill. The next time you actually need them, the response is slower.

RFQs and supplier relationships

A well-run RFQ process strengthens supplier relationships rather than weakening them. The hallmarks:

• Clear spec, clear timeline, clear decision criteria
• Honest feedback to losing suppliers (they will lose other opportunities; helping them improve helps the broader market)
• Awards based on the criteria stated, not after-the-fact relationship factors
• Reasonable cadence — annual or trigger-based, not fishing expeditions

Suppliers respect a process that's predictable. They resent one that's manipulative.