Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
What is RFx? — Everything You Need To Know
Key take-aways
- RFx stands for Request for “X”, wherein “X” is a blank variable that can represent any procurement requests.
- Using RFx enables companies to make informed decisions, and at the same time, get the best price available for their needs.
- To make RFx, companies need to identify objectives, requirements, and RFx type, prepare documents, identify suppliers, review proposals, and negotiate.
Request for X or also known as “RFx” is the term that encompasses all the requesting processes that take place in every stage of the procurement process. Whenever and wherever there is procurement, there is RFx.
For this article, we will explore the term RFx and provide its definition. Additionally, we will take a look at the types of RFx commonly present in a procurement process and provide an overview of the purpose and process flow of those.
After reading this article, you will have a deeper knowledge of the importance of RFx and its types, as well as how each one is different from the others.
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 you want to ask for information about the materials you want to buy for your procurement process. I even included a video explaining how to use the templates.
Whatis RFX?
RFx means Request for x with “x” being a blank variable and represents various types of procurement requests. It basically means Request for (anything) and is entirely dependent on what is required during a specific stage in the procurement process. RFx is a formal and structured process executed in a document form used by organizations and businesses to acquire information, proposals, quotes, and bids from various potential suppliers.
It greatly helps in the procurement of goods and services needed by the organization as well as the end result of the entire operation. In addition to acquiring the said examples above, RFx also contains some information about the organization or business that executed it; information such as, but not limited to, organizational or business goals, scopes, visions, and specifications.
In summary, RFx is a systematic way of requesting information, bids, or quotes from potential suppliers and providers in the procurement process.
Why Incorporate RFx in Procurement?
The use of RFx in procurement enables organizations to make more informed purchasing decisions, allowing them to get the best price available for their needs, with a view to ensuring transparency, competition, and fairness in supplier selection procedures.
Furthermore, it is possible that RFx could contribute to streamlining the procurement process, saving both time and money. In addition, RFX may contribute to improving the communication of purchasers and sellers as well as providing valuable market information.
Incorporating RFx in Procurement
In my experience as a procurement manager from Ahold and Royal Friesland Campina, the RFx process can be used for both simple and complex procurements.
It could be used where there is only one potential supplier (for example if you negotiate with A-brands and you need this brand in your store) and where there are several potential suppliers (for example with white labels, private labels, or raw materials).
However, the goal of the process would probably be different. If there is only one potential supplier, this process is mainly used to gather information or formalize agreements.
When there are several potential suppliers, the RFx process could be used to receive several competitive bids and leverage market competition.
Therefore I would definitely recommend using it when you have several suppliers who can deliver your products. The main advantage here is that it will help you to identify new potential suppliers for the same products.
The basic rule here is that when you can increase the number of suppliers where you can buy your product, it will increase competition during the negotiation phase and will definitely lead to better conditions.
RFx Process Flow
An RFX shall identify what you are looking for in a good or service, and allow the vendor to make its best offer. It may seem difficult to create RFx, but it doesn’t have to. RFx does not create itself, so here are some helpful hints on how to make RFXs:
1. Identify the need
The first step is the identification of the need to purchase goods, services, or projects by the organization. It shall be carried out by either a procurement team or project stakeholders. This would relate to a particular product, service, or project that the organization needs to meet its objectives and should be as specific as possible in order to get the best results from suppliers.
2. Define Requirements/Specifications
The procurement team will work together with relevant stakeholders in order to identify the specific requirements once they are determined. It shall include the specification of technical characteristics, quality standards, quantities, delivery dates, and any additional essential criteria.
3. Choose the RFx Type
The team shall decide which type of RFX is the most suitable, taking into account the nature of the procurement. It could be an RFP (Request for Proposal) for more complex projects or services, an RFQ (Request for Quotation) for straightforward purchases, or an RFI (Request for Information) for preliminary research.
4. Prepare RFx Document
Once you know how to find what you are looking for, the RFx needs to be written. Make sure it’s clear and brief; the supplier should be in a position to understand what you want with no difficulty. It shall contain all the required information related to a tender such as duration of works, technical requirements, evaluation criteria, conditions, and instructions for submitting tenders, all of which shall be prepared by the procurement team.
5. Identify Potential Suppliers
Potential suppliers or service providers that can meet these requirements are identified by the procurement team. Research on the markets, supplier databases, and contact with known suppliers may be used for this purpose. Once they are identified, send the RFx.
6. Clarifications
Suppliers may ask questions or obtain clarifications regarding the RFX document in order to get a better understanding of their requirements at this stage. In order to ensure a fair and transparent tendering process, the procurement team shall provide appropriate clarifications.
7. Supplier Response
Suppliers shall submit their replies no later than the specified deadline. Responses may include detailed proposals (in the case of RFPs), price quotes (in the case of RFQs), or relevant information (in the case of RFIs).
8. Review and Selection
You need to review the proposals from vendors and make a decision as to who will be awarded contracts. This could involve technical evaluation, financial analysis, compliance checks, and other relevant factors.
9. Negotiation
In the event that it’s necessary, negotiations with selected suppliers are carried out in order to finalize the terms and conditions. The selected supplier shall receive the contract or procurement order after negotiations have taken place.
10. Contract Execution and Management
The contract with the selected supplier is created and executed stipulating the terms and conditions, deliverables, payment terms, and other details relevant to both parties.
The procurement team shall keep a close eye on supplier performance and compliance with contractual requirements throughout the duration of the contract period, in order to achieve successful project execution and delivery.
Types of RFxs
We defined what an RFx is and provided its process flow. Now it’s time to take a look at its various types. There are many types of RFxs, but here are the three main types used in the procurement process.
1. Request for Information (RFI)
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.
2. Request for Proposal (RFP)
A request for proposal (RFP) is a document that contains the description of the project and solicits bids from potential contractors to complete it. This document defines the project, goals, and the organization that sponsors it and outlines the bidding process and contract terms.
3. Request for Quotation (RFQ)
RFQ or Request for Quotation simply means soliciting products or services for a company. The more detailed explanation would be the company asking its trusted vendor for an estimate of the costs for the completion of a service or project.
Now we have seen the three most used types of RFx in Procurement, but there is so much more. Here are the other lesser-known types of RFxs:
1. Request for Bid
Similar to an RFQ and is used when seeking bids from suppliers to provide goods or services at the lowest cost possible.
2. Request for Tender
In government procurement, an RFT is used in a similar way to the request for proposals. The invitation to tender is used for the purpose of inviting bids from suppliers in respect of a specific project or contract.
3. Request for Qualifications
The RFQual shall be used to determine which suppliers are qualified in terms of their qualifications, experiences, and ability to carry out specific types of projects. This ensures that the selection process for suppliers is simplified.
4. Request for Solution
In cases where an organization has a particular problem or issue and is looking for innovative solutions from potential suppliers, it will be using the RFS. This study focuses on the creative aspects of solving this problem.
5. Request for Partnership
A request for partnership is used when the organization is looking to establish a partnership or collaboration with other businesses or organizations. The objectives and conditions of the partnership are set out in this report.
My Insight on RFx
For this article I will be sharing my personal insight about RFx.
1. Can you share a personal example of RFx? What can readers learn from this?
“As a procurement manager at Ahold, I utilized the RFx process several times a year for each category, including an RFI, RFP, and RFQ phase. We used this when purchasing our own brand, and looked for multiple suppliers that could provide us with the items we needed.
The use of the RFx process ensured that the procurement process proceeded in a structured manner. All suppliers received the same questions and information from us, allowing us to receive the same information from all suppliers.
This enabled us to make a good comparison of what each supplier could deliver, and primarily focus on the most important part of the tender, which is the price”
2. What should readers know about RFx?
“It’s common for many businesses to purchase products from the same supplier for years. If you have a good relationship with your supplier and feel you are getting a good price, you might not see any reason to change. However, I would recommend implementing a process to evaluate your options.
By doing so, you’ll be able to notify your current supplier that you’re reviewing your options, which could lead to better conditions. Moreover, you might even find a better deal with a new supplier.”
3. What is the biggest misconception about RFx? What do most people get wrong about it?
“The common misconception is that if incorrect information is fed into the system, the output will also be incorrect. Hence, it’s important to ensure that accurate information is provided during the RFI phase.
Another is that most people do not spend enough time during the RFI phase, which results in unclear instructions for the suppliers. This ultimately leads to delays and more time being spent in the end.
Lastly, make sure you know the suppliers and the quality of the products upfront. If there are multiple suppliers available, it is advisable to have the option of switching between them, as this can help during the negotiation phase.”
4. How do you ensure that the RFx process remains transparent and unbiased?
“To ensure transparency and fairness throughout the process, make sure that the only difference between the parties is the price. This means that all the parties can provide the right quality, quantity, and services.
If everything is on the same level, you can really go for the best price during this phase. However, if there is a difference in service/quality or service offered then value this difference by a percentage or an amount.”
5. What strategies do you employ to promote innovation and encourage vendors to propose creative solutions in response to RFx documents?
“It is important to promote innovation and creativity in the procurement process. However, it is best to do this before the RFx phase. When you reach out to suppliers, it is important to be clear about the information you need from them.
If you allow suppliers to add other solutions during this phase, you’ll never receive quotes or the right information from other suppliers to create competition in purchasing products.
Therefore, it is best to have already incorporated creative solutions for this process. I did this by always maintaining good contact with my key suppliers before this process. This way, I could determine if there were any new trends that needed to be integrated into the RFx process”
Conclusion
In the realm of procurement, the term “RFx” encapsulates a spectrum of requesting processes integral to each stage of procurement. This article sheds light on the essence of RFx, its definition, significance, and explores the various types commonly employed in procurement processes.
By delving into the RFx process flow and dissecting its types, readers gain a comprehensive understanding of the pivotal role RFx plays in informed purchasing decisions.
Frequentlyasked questions
What is RFx?
RFx means Request for x with “x” being a blank variable and representing various types of procurement requests. It is a formal and structured process executed in a document form used by organizations and businesses to acquire information, proposals, quotes, and bids from various potential suppliers.
Why use it?
The use of RFx in procurement enables organizations to make more informed purchasing decisions, allowing them to get the best price available for their needs, with a view to ensuring transparency, competition, and fairness in supplier selection procedures.
What are the types of RFx?
The three main types of RFx used in Procurement are Request for Information (RFI), Request for Proposal (RFP), and Request for Quotation (RFQ).
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.
