Sourcing from China: RFQ Process Guide

We previously wrote in depth about the RFQ (Request for Quotation) process and how to secure the best and most accurate quotes.

In this blog, we will discuss how having a professional China sourcing team could add value to your RFQ process, and how they would manage the process successfully.

Before the RFQ

Before sending out RFQs you’ll want to have all your product specifications, requirements, and relevant information in one place. Your team should then store this information in a document known as the Product Specification Sheet, or PSS (learn more about a PSS in this blog). A good sourcing team will establish your PSS and ensure all details are covered before beginning the RFQ process.

During the RFQ

Request form: In order to compare apples to apples, a good sourcing team or agent will develop a detailed RFQ form and use the same document to request quotes from various suppliers. This will ensure that all suppliers have all pertinent information and can provide quotes based on the same information. Ideally, it will need to contain the following information:

– Exact specifications for the product (PSS sheet)
– Target pricing
– Initial and estimated annual order quantities
– Request for itemized costs
– A deadline for submitting quotes
– Estimated delivery date of the goods

Procedure: In order to deliver results and gather information quickly, a structured procedure should be followed for all vendors and requests being processed. Below is a general guide to the process:

– Create the RFQ document
– Identify “ideal” suppliers based on size, experience, location, industry, reputation, etc.
– Create list of suppliers you will request information from (We suggest between 5-10 to start)
– Distribute RFQ document to suppliers
– Communicate with suppliers to confirm all details and requirements are clear and that there are no outstanding questions or information needed
– Review responses after deadline
– Compare quotes from various vendors in an organized and systematic way
– Negotiate with top 2-3 vendors to ensure best results
– Award a contract to your chosen supplier, solidify details, and sign contract with selected supplier
– Notify other suppliers they have not been selected

Timeframe: The RFQ process can take about a month if a good procedure is put in place and deadlines are enforced. However, delays do happen, and some RFQ processes can take up to 3 months. Your sourcing team should prepare ahead of time to ensure that this process does not cause delays to your order. For more on delays see: Avoiding Delays with Chinese Manufacturers and China Sourcing: The Delays You Can’t Avoid.

A structured and strong RFQ process can deliver success when looking to place an order in China – and a team that is well trained at executing this process can add value to your operation. Identifying the most qualified suppliers and securing the best pricing from them are essential first steps to optimizing your supply chain.

What methods does your China team use to request quotations from suppliers? Share your ideas with us in the comments below.

 

By Jocelyn Trigueros