Request For Information (RFI) – 7 Strategies For Better Deals
Giving a request for information is one of the most important steps when you’re about to start your procurement process. It’s only vital to do so so that you’ll have an idea of several variables, such as pricing, the number of products available, and the quality of each. Have a look at our very own procurement process here!
For this article, we are going to tackle how to create a request for information. We will talk about the process involved and the right timing to do so. Once you’re done reading this article, you should now have a pretty good idea of what you’ll need every time you create your request for information template.
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.
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.
What are the Areas of Use of RFI?
RFI can be used in a lot of industries such as IT, advertising, and construction. Additionally, RFIs can help in procuring tools for enterprise resource planning and electronic health records.
In the IT sector, it is typically used to acquire software from suppliers. The software is commonly used for a long period of time. Thus, it is important for an organization in the IT sector to select the right supplier.
For advertising agencies, RFI is used to ask for a list of industry-specific clients, areas of conflict, and areas of strength of a supplier.
In the construction industry, RFIs may be sent by a contractor to a client, a contractor to a designer, or from a subcontractor to the main contractor. Additionally, RFIs are used to submit queries regarding the specifications of materials, design drawings, or contract information.
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.
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.
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.
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:
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:
- Table of Contents
- Introduction and purpose of the RFI
- Explanation of the Scope
- Abbreviations and terminology
- Template to complete
- Details of next steps – RFP or RFQ
Once you have the variables listed down, you also need to think of the information that you want to get from the other party:
- The state of the supply market
- Supply market dynamics
- Trends and factors that are driving change
- Alternative pricing strategies
- Supplier competition
- Supplier facilities, finances, motivations, attitude
- Supplier strategic focus, business, and product plans
- A detailed list of products/services for pricing requests
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!
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
+ What does RFI stand for?
RFI means Request for Information.
+ What is a Request for Information?
It is a process of collecting data from your list of potential suppliers. The information will help you decide on whom should you procure your supplies.
+ How to do RFI?
To do an RFI, you need to complete your template for creating the RFI. Once that is finished, the RFI will be sent to your suppliers.
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