Today’s post is by Mark Davis; Vice President of Operations and CTO at SafeSourcing. Mark asks "What is a Request For Proposal (RFP) and how is different than an RFI?"
Yesterday’s post began to uncover the search for information needed to make important sourcing decisions by highlighting the Request For Information (RFI) process. Today we take a look at the Request For Proposal (RFP) process, how it compares to an RFI and when you need one. Let’s begin by looking at how the two processes are different.
Project details – Typically you will not have all of the details necessary to provide the suppliers on what it is you are going to do in an RFI. With an RFP it is necessary to have those details and be able to effectively communicate to the suppliers what the sourcing project is going to look like, complete with the quality and amount of product or service you need and if necessary to what regions of the country/world this project applies. It takes much more time to prepare an effective RFP than it does for an RFI because you need to supply as much information about what you want as the suppliers do in answering.
Pricing – As touched on above, there is a much more focused request for pricing details in an RFP than in an RFI. RFIs ask general questions about fees and how a supplier charges for their products or services while an RFP requires specific pricing as it relates to their project. (i.e. An RFI would ask “What types of fees are associated with buying your product?” an RFP would ask “What are the fees associated with buying 25,000 of your product with these specifications and having it delivered in 3 groups to 5 regions throughout the U.S.?”)
Next steps – The other major way the two differ is in the expected next steps. With an RFI a customer is looking to gather basic information about companies in order to determine the handful they wish to proceed with seriously considering. Conversely, in an RFP the goal is to collect much more detailed information about the supplier and their capability to deliver as well as enough project specific pricing and product or service details to allow you to proceed immediately into negotiating a contract. In some cases there will be a short list of vendors invited to compete further on pricing or present their offering to the customer before the final contract is completed.
Going back to Monday’s blog, in an RFI “we don’t know what we don’t know” and we gather accordingly. In an RFP, “we KNOW what we don’t know” and that process is the time to collect it from your selected vendors.
Tomorrow we will focus on internal information gathering in the form of surveys, when to use them and what to expect from them.
For more information on SafeSourcing and how we can assist your company with sourcing these goods and services, please contact a Customer Service Representative for more information.
We look forward to and appreciate your comments.