A Request for Quotation (RFQ) is a formal document issued by a company to one or more vendors requesting detailed pricing, terms, and conditions for specific goods or services. Unlike a purchase order, an RFQ is not legally binding, but it serves as a key tool in the procurement process to compare vendor price offers and capabilities. RFQs are especially prevalent in industries like manufacturing, where made-to-order or custom production workflows require precise cost estimation.
An RFQ identifies the goods or services needed and defines specifications such as delivery requirements and other terms. It is then sent to selected vendors who can fulfill the request. Vendors or suppliers submit quotations, including prices, lead times, and terms of service. The purchasing team then compares quotations, taking into account price, quality, and compliance with specifications. Based on the evaluation, the company may proceed to issue a purchase order or negotiate further with preferred suppliers.
RFQs help businesses understand market prices and compare multiple vendors. It also ensures that suppliers respond with comparable information, encourages precise definition of products, and reduces time and errors in supplier selection. Additionally, it provides a basis for price and terms negotiation.
While RFQs (Request for Quotation) focus on price and terms for specific goods and services, RFPs (Request for Proposal) seek solutions and proposals for projects, not limited to price— different vendors may offer different products or services. On the other hand, RFIs (Request for Information) gather information about suppliers or products without requesting pricing.
Many modern procurement and ERP systems, including no-code database tool Ragic, support RFQs. Features may include:
Systems streamline the RFQ process, reduce administrative overhead, and improve traceability.
