Written by Marijn Overvest | Reviewed by Sjoed Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
Request For Information (RFI) in Procurement — Definition & Template
As taught in the Annual Procurement Strategy Course / ★★★★★ 4.9 rating
What is a request for information (RFI)?
- Request for information (RFI) is the process of collecting details from suppliers before the procurement manager formally sources products or services.
- Request for information (RFI) is crucial for gathering supplier information and establishing an accurate procurement database.
- The Request for information (RFI) helps procurement teams assess the suppliers’ capabilities in fulfilling the company’s goals and objectives.
What is a Request for Information?
A Request for Information is a method of collecting information from different suppliers before the procurement manager starts to formally source products or services. In simple terms, this is the get-to-know part during the introduction phase.
A request for information is usually applied once there are multiple potential suppliers but there is not enough information about the said suppliers. The procurement manager often collects data on potential suppliers but he/she will need to find which among them is the best pick for the company. And the only way to pick one would be to collect and identify information about the said suppliers.
Thus, a request for information will be sent to these suppliers. Once given, the procurement manager will start taking out the suppliers with the least potential until finally, a supplier is chosen by the company.
Before you read the whole article, I want to share that I have created a free-to-download, editable request for information (RFI) template. It’s a set that includes a PowerPoint file and a Word file.
You can use and tailor them to your needs when asking for information about the materials you want to buy. I even created a video explaining how to use the templates.
How to Create a Request for Information
Creating an RFI can feel overwhelming, especially if it’s your first time. Use this guide to help you write an RFI that sets the stage for better procurement decisions.
1. Draft a Statement of Need
Begin your RFI with a brief overview that outlines your goals and objectives. Include some general information about your company, the project’s purpose, and the outcomes you hope to achieve. This section should provide a quick overview of your project to give suppliers a clear understanding of your needs, even if they have no background knowledge.
2. Add Organizational Context
Provide additional context about your organization, which can help suppliers tailor their responses. Include details like the department leading the project, your target customers, and any relevant company values or objectives. This information helps suppliers align their offerings with your organization’s specific needs and priorities.
3. Specify the Details and Requirements
Describe the specific problem or need you’re looking to address, along with the information you require from suppliers to help solve it. Detail any specific skills, credentials, or capabilities that suppliers must have, as well as any timelines or scope constraints. You may also want to clarify what you’re not looking for, helping suppliers avoid unnecessary information in their responses.
4. Explain the Response Process
Clearly outline how suppliers should respond to your RFI. Include any response templates or formats you expect, deadlines for submission, and an explanation of the review process. If applicable, mention any evaluation criteria you’ll use to shortlist suppliers, so respondents understand the factors that will guide your selection.
What Does RFI Mean in Procurement?
As we told you earlier, RFI is a method used to collect information from different suppliers before the procurement manager starts to formally source products or services.
In addition to what we told you, the RFI in procurement forms part of the buying cycle as it entails collecting information about a supplier. The main goal of RFI in procurement is to help procurement teams with the relevant information they need to make a purchasing decision.
It helps procurement teams to avoid any issues such as non-compliance and to know if the supplier can provide their needs.
RFI, RFB, RFQ, and RFP – What’s the Difference?
Since we’re talking about requests for information, we might as well tackle the other sourcing processes. These processes are requests for proposals (RFP), requests for quotations (RFQ), and requests for bids (RFB). All four are used during the procurement processes but they are all different from one another in terms of usage.
To make things simple and easier, we created this table wherein each request are classified with their different objectives and goals. These requests are very important when it comes to the procurement process and they will be discussed in greater detail in our Negotiation Course For Procurement Professionals.
RFQ means a request for a quotation. This is usually presented as a chance for potential suppliers to competitively cost the final selected options. It is best suited for products and services that are standardized and commoditized.
Requests for proposals are usually sent to potential suppliers where the company believes they can create a creative relationship or partnership with them. Therefore, RFPs usually leave all or part of the specifics of the proposal based on the response of the suppliers. It is in the RFP where the negotiation strategies of the procurement manager shine.
Meanwhile, RFBs or requests for bids are sometimes called requests for tender. This is an open invitation for suppliers to respond to a defined need, which is in total the opposite of a vague request. It usually covers bidding, hence the reason for calling out many potential suppliers.
What Are the Details Included in an RFI Template?
Many procurement software offers free templates to companies that are utilizing its services. However, not all have the resources to integrate procurement software.
To help you in making a template, here are some common details that you will need:
1. RFI Main Information
The first part of the RFI consists of the important tracking details. In this section, you will be able to number your RFI for recordkeeping. And just like other documents, you need to put the details of your company and to whom you will submit it.
2. RFI Description
In this section, a large space is provided for you to write the information you are looking for. You must take note to keep things short and straightforward.
3. RFI response
In this section, a supplier is given a large space to respond to your RFI. underneath this is a field where the person who provided you with the information will sign and put the date he responded to your RFI.
6 Requests for Information Tips– What to Include?
We discussed the overview of the details of an RFI. To help you start making one, we are going to show you more of what to include in the document.
The following are the variables you should have in your RFI:
1. Table of Contents
A clear Table of Contents helps suppliers quickly navigate your RFI. Ensure each section is organized and labeled for easy reference.
2. Introduction and Purpose
Start your RFI with a clear introduction that explains the purpose of the document. This section should briefly state the objectives of the RFI, such as gathering information about potential suppliers, understanding current market solutions, or identifying innovative approaches to meet specific needs.
Clearly communicating your goals helps suppliers tailor their responses to your specific requirements and provides them with an understanding of your expectations.
3. Scope of Inquiry
Define the specific areas you’re interested in, like product specifications or service capabilities. Mention any particular requirements, such as sustainability practices or technological capabilities. This ensures suppliers focus on the details relevant to your needs.
4. Abbreviations and Terminology
Provide definitions for industry-specific terms or abbreviations used in the RFI. A glossary prevents misunderstandings and ensures consistent responses. Clear terminology reduces confusion, especially for diverse suppliers.
5. Template for Supplier Responses
Supply a structured template for responses, including sections for company background, product details, and pricing. Standardized responses make evaluation easier. Setting length and format guidelines helps suppliers stay concise and relevant.
6. Next Steps
Outline the process following the RFI submission, such as moving to an RFP or RFQ phase. Briefly explain the criteria that will guide your evaluation. This transparency helps suppliers understand what factors they prioritize.
Key Information to Request from Suppliers
Once you have the 6 main variables listed down, you also need to think of the information that you want to get from the other party:
1. Current State of the Supply Market
Request an overview of current supply and demand conditions. Understanding market stability helps you assess availability and potential risks. Suppliers’ insights here add valuable context to their offerings.
2. Market Dynamics and Competitive Landscape
Ask suppliers to describe the factors shaping the market, like economic or regulatory impacts. Understanding competitive pressures helps you compare supplier positioning. This information reveals unique advantages and potential pricing influences.
3. Trends and Drivers of Change
Request information on industry trends, such as technology shifts or sustainability initiatives. Understanding these drivers helps you assess each supplier’s adaptability. It also reveals how external changes might impact your sourcing strategy.
4. Alternative Pricing and Cost Strategies
Inquire about different pricing models, like volume discounts or performance-based pricing. Learning about alternative cost strategies helps you identify value-optimized options. Flexible pricing options can be key to your decision-making.
5. Supplier Capabilities, Facilities, and Financial Stability
Request details on each supplier’s operational capabilities and financial health. Understanding resources and financial stability helps gauge a supplier’s long-term reliability. This insight reduces risks related to capacity or financial issues.
6. Supplier Strategy, Business Plans, and Future Product Development
Ask for an overview of the supplier’s strategic focus and future product plans. This shows their alignment with your goals and potential for long-term collaboration. Understanding their growth plans aids in evaluating compatibility.
6. Detailed List of Products/Services and Pricing Requests
Request a detailed list of products or services with specific pricing and additional costs. Clear itemization aids in accurate cost comparisons. This transparency ensures you understand the full cost structure.
Why Is There a Need for Requests for Information?
A very simple answer to this question would be to take a look at how a procurement process is developed. Before you can start procuring supplies, you need to know how much the supplies cost and if the price itself is a good bargain.
If you’re not going to utilize RFPs, then you might as well just buy your supplies from any known suppliers. But for the smart procurement manager, he/she will know that doing so will be detrimental to the growth of the company. When procuring products or services, only the best quality suppliers are bought at a good price. And it doesn’t necessarily mean the cheapest price as well. If the quality of the suppliers is really good, the pricing per supply may sometimes not matter.
Apart from the explanation above, here are other reasons why there is a need for RFPs:
- To advise suppliers that you intend to source this product or service competitively.
- To gather information in a way that decides your next step
- To compile details about potential suppliers and their capabilities.
- To show that you are fair by including all potential suppliers
Conclusion
Mastering the art of crafting an effective Request for Information (RFI) is pivotal for any procurement professional.
This multifaceted document serves as the initial step in the procurement process, providing a platform to collect crucial information from potential suppliers.
By understanding the nuances of an RFI, including its purpose, components, and strategic importance, procurement managers can lay the groundwork for informed decision-making.
The ability to discern supplier capabilities, assess market dynamics, and align procurement activities with organizational goals underscores the significance of a well-constructed RFI.
As procurement practices continue to evolve, adeptly utilizing RFIs becomes not only a procedural necessity but a strategic advantage in securing optimal value for the organization.
Frequentlyasked questions
What does RFI stand for?
RFI stands for Request for Information, a process used to gather preliminary information from potential suppliers.
Why use a Request for Information?
An RFI helps procurement teams understand supplier capabilities, compare offerings, and make more informed sourcing choices.
How do I create a Request for Information?
To create an RFI, start by outlining your project’s goals and providing relevant background on your organization. Clearly specify the requirements, including any qualifications, timelines, or constraints for suppliers to consider. Define the response process with submission guidelines, templates, and evaluation criteria to help suppliers align with your expectations. Using a structured RFI template can further streamline responses, enabling easier comparison and more informed decision-making.
Create flawless RFIs in minutes!
Our Negotiation Course For Procurement Professionals is designed in a way to help procurement managers and negotiators create the best requests possible. Enroll today!
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.
