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What Does RFx Mean?

eRFx is a term used for a procurement technology software that allows sourcing professionals to submit an electronic request for a particular type of information to qualify potential suppliers. The “x” stands for proposal, quote, information, or tender.

Before advancements in sourcing and procurement technologies, these kinds of requests were issued on paper, over the phone, or by fax or email, which made apples-to-apples comparisons among different suppliers difficult and time consuming. eRFx software makes the process for requests for proposals, quotes, information, and tenders standardized, efficient, and compliant.

eRFx Types and Formats: RFI, RFP & RFQ

Electronic RFI, RFP and RFQ also known under the umbrella: RFx software. eRFx software streamlines gathering qualitative and quantitative information from potential suppliers. By standardizing the supplier evaluation process with the software’s tools and templates, the source-to-contract timeline is expedited. This makes the process more efficient for both buyers and suppliers. With all the information housed in a central repository, supplier information can quickly be searched and information can be extracted for further analysis and evaluation.

An eRFx can include a supplier pre-qualification (RFI) or a price collection/request for quotation (RFQ), or a combination of both with a request for proposal (RFP).

RFIs, RFPs, RFQs, and RFTs Defined and Common Formats

Several types of Request for formats exist due to the complexity of the RFx process, which can consist of one simple RFQ or several RFx’s in connection with each other. For example, the process may begin with an RFI, then transition to an RFP, and finally an RFQ.

There is a widespread agreement about the definition of the RFI, but formats for RFPs, RFQs, and RFTs can vary between countries and companies.

Below are the most common 'Request for' formats:

  • Request for Information (RFI) – An RFI is commonly used to collect information about products, services, or suppliers. It typically precedes the other RFx processes listed below and is used to help a buyer to shortlist potential suppliers to evaluate. An RFI can be used with any of the RFx processes.
  • Request for Proposal (RFP) – This document’s purpose is intended to collect a third-party provider’s products, solutions, pricing, and capabilities in the form of a pricing proposal. An RFP should include the guidelines, instructions, and forms necessary for the applicant to submit a proposal. The end goal of this document is to invite suppliers to make a bid.
  • Request for Quotation (RFQ) – After a shortlist of qualified suppliers is determined, an RFQ is issued to a subset of suppliers for a quote on the products or services and is typically used to make an award decision.
  • Request for Tender (RFT) – A formal request asking for offers from potential suppliers to supply clearly defined goods or services or works. There are often highly technical requirements and a prescriptive solution.

The Difference Between RFQs and RFTs

Although both RFQs and RFTs typically request pricing, the binding nature of the incoming bids varies. Some perceive the bids as non-binding because the buyer is investigating the possibility of sourcing a product or service, while others view the prices as direct offers that can lead to a supplier contract.

The Difference Between RFPs and RFIs

An RFP typically includes open-ended, free-text questions, whereas a standard RFI has closed-ended questions. RFPs can be used for creative projects or service agreements in which the capabilities of the suppliers are harder to compare. However, an RFP can also just be a request for pricing, where the prices are binding offers that lead to a contract.

Scanmarket’s RFx Software

Scanmarket’s eRFx tool automates the RFx process, creates more transparency, and helps you reach more suppliers.

RFI - Request for Information
RFQ - Request for Quotation
RFx - Request for Information, Quotation & Proposal

“I decided to start with an eRFx because I had a lot of suppliers I wanted to invite – not only our existing ones but also some potential new suppliers. The eRFx gave me the opportunity to retrieve detailed information about each supplier, especially about their environmental profile, which is a crucial issue to Grundfos.”

JEPPE K. PEDERSEN, CATEGORY MANAGER, GRUNDFOS A/S
Read the full customer case

How to Use RPI, RFP, RFI & eRFx in the Strategic Sourcing Process

eRFx software is primarily used in the supplier pre-qualification process, but it can also be used to conduct category analysis. Using eRFx software does not require transitioning to a completely new sourcing process, instead it’s a more efficient and strategic way to find and select qualified suppliers.

For example, rather than having multiple meetings with each supplier to review the company’s capabilities, products, services, pricing, etc., you can issue one RFx to all suppliers simultaneously. This allows you to evaluate everything at once, with all suppliers working in the same timeframe and on a fair playing field.

By issuing an RFx, a buyer is requesting qualitative and quantitative information from suppliers, which gives the buyer more information about the suppliers’ capabilities and their competitiveness with respect to prices.

Gather Information With an RFI

To get an understanding of services or products, or collect general market data, you can launch an RFI. This is most commonly the first step in an RFx strategy to evaluate suppliers’ capabilities. An RFI is a useful tool to involve new suppliers on a new project, assess the market for better suppliers, create a shortlist of suppliers for your portfolio, or to inform the next phase of your RFx strategy.

Create a Supplier Shortlist and Follow Up with an RFP or RFQ

Once you have collected enough information to make an initial evaluation of suppliers, then you move on to the next phase of your strategy. An RFI is often follow by an RFP or RFQ. Which one you use depends on the scope of your project.

An RFP is used to request a solution for specific problems or issues and give suppliers the opportunity to provide pricing on your services or products. This request also allows you to evaluate the supplier’s skills.

If you are managing standardized products or services, an RFQ may be the best approach. The RFQ should include a detailed list or description of all the items or services to receive competitive bids from the suppliers. An RFQ is often used when the buying company is already familiar with the supplier’s capabilities and interested in the supplier’s competitiveness in relation to price. The price can be either binding or non-binding.

eAuction software, on the contrary, is most often used in the step “Conduct negotiations.”

Learn more about Conducting Supplier Negotiations with Auctions 

When to Initiate an RFx

The primary reason that buyers initiate an eRFx is to find new potential suppliers, gather information from current suppliers and conduct internal analysis of suppliers. However, eRFx can also be initiated as part of the strategic sourcing process to conduct category analysis, pre-select potential suppliers, and to select qualified suppliers, among other reasons.

Following are some of the most common reasons to initiate a ‘Request for':

Sourcing new suppliers:

  • Sourcing and screening for new potential suppliers
  • PQQ and normal tenders

Gathering updates on current suppliers:

  • Consolidation of internal supplier base
  • Benchmark current suppliers against the market
  • Development of the current suppliers
  • Equality and diversity surveys
  • Supplier satisfaction surveys
  • Selection of supplier of the year
  • Summer holiday schedules
  • Measurement of Carbon footprint

For internal information gathering:

  • Surveys
  • Evaluation of courses/training exercises
  • Gathering of stakeholder requirements
  • Consolidation of volumes

What Can be Sourced Through RFIs, RFPs, and RFQs?

In contrast to eAuctions, everything can be sourced through a Request for Information, Proposal, or Quotation. There are no risks related to running an RFx. Running your requests for information, proposal, or quotation via an online tool simplifies and structures the process, while saving your team time and resources.

Everything from indirect commodity materials such as paper and toner to complicated non-commodities such as debt collection, hotel and conference booking, and TV ads can be sourced via an eRFx. The only limit for the products and services is your imagination.