Best Practices for RFQ Management in the Supply Chain

The administration of the movement of goods and services is referred to as SCM (supply chain management). This includes all procedures that turn raw materials into finished commodities. And it’s an essential part of most businesses’ success stories. One area of SCM that can quickly become a bottleneck for retail and consumer packaged goods companies is RFQs. In this article, we’ll look at a typical RFQ process, the reasons why RFQs can cause delays in the supply chain, and how we can improve RFQ communication between partners, suppliers, and manufacturers.

What is an RFQ?

An RFQ (request for quotation) is a competitive bid document used to invite suppliers or contractors to submit price bids for items or services with standardized or repeatable specifications.

What do common RFQ processes look like?

A typical RFQ process consists of 3 steps:

• Preparation
  • Creating the RFQ
  • Preparing documentation
  • Listing plausible vendors
  • Risk assessment
• Management
  • RFQ distribution
  • Reviewing vendor responses
  • Drawing contract
• Deal closing
  • Negotiating and signing
  • Courtesy responses

How can we improve RFQ processes?

Centralization and standardization

Most mistakes, delays, and omissions in the product development and selection process result in higher expenses, quality difficulties, missed sales, and inventory build-ups. SCM unites all internal and external stakeholders, from merchandisers and buyers to product development, quality, designers, and sourcing and suppliers. A centralized hub for managing RFQ processes means that all interactions are standardized, and variances are much easier to identify.

Data sharing and access

Whether you’re a manufacturer, retailer, or supplier, you’re used to handling multiple contracts at any given time. Many of the interactions throughout those projects will generate some documentation. And each organization has different processes, storage methods, and communication lines. How often do you find yourself searching for a document when the digital paper trail goes cold? By unifying storage within a single platform, each stakeholder throughout the supply chain has simple, appropriate access to the information they need. This way, there’s no need to tailor specific operations and routines to manage external communications. And there’s no risk of transactional data loss.

Demand variance planning

Demand variance planning gives buyers, merchandisers, and sourcing teams real-time visibility into OTB (open to buy) and forward planning. Product planning loops in the most up-to-date estimated numbers from operations, and the plan variance report gives buyers, merchandisers, and sourcing teams real-time visibility into OTB and forward planning. Having the ability to integrate into existing enterprise systems is critical for organizations to enable a single source of truth so that buyers can get visibility into this critical information when working with suppliers throughout the RFQ processes. Ultimately, the key to any supplier-facing system is that you have a holistic view of all the necessary information and are able to make informed decisions.

Best practices for RFQ management

Use of technology

Leveraging technology such as e-sourcing software can automate parts of the RFQ process, including bid submissions and Q&A sessions. This not only speeds up the process but also ensures consistency and fairness in bid evaluations.

Clear communication

Providing clear instructions and maintaining open communication channels with suppliers is essential. This includes setting realistic timelines for bid submissions and ensuring that all suppliers have equal access to information.

Sustainability and social responsibility

Modern supply chains must consider sustainability and social responsibility. By incorporating these elements into the RFQ process, businesses can align their operations with ethical practices and enhance their brand reputation.

How can TECHNIA help?

Exchange Hub provides the ability to create a library of different forms of documentation, such as specifications, terms and conditions, etc. This collateral is not specifically tied to a given RFQ, but is accessible to suppliers to view and collaborate against. With Workflow, when a document is updated or introduced, relevant suppliers receive notification.

Building simple, reliable, and efficient RFQ management is crucial to the broader context of supply chain management. It’s also key to ensuring traceability throughout the supply chain, something that more and more consumers are becoming concerned with. Exchange Hub is an affordable, flexible, and secure solution that can help you to improve RFQ processes, B2B supplier collaboration, and corporate transparency.