How to run an RFQ: a step-by-step guide

A request for quotation (RFQ) asks several suppliers to price exactly the same items, quantities and terms, so you can compare like with like and award to the best offer. Done well, it's the simplest way to create real competition. Done on email, it often turns into rekeying attachments and arguing about which quote was cheaper.

This guide walks through an RFQ from start to finish, with a checklist you can reuse.

RFQ, RFP or RFI?

1. Define exactly what you're buying

List every line with its specification, unit of measure and quantity. Add the delivery location and date, the certificates you need (for example ISO 9001), and the commercial terms you expect: payment terms, warranty and Incoterms. Ambiguity here is the main reason quotes can't be compared later.

2. Set a target price and a baseline

Before you invite anyone, decide what a good result looks like. Use your last price paid, recent market prices or an estimate. A baseline is what lets you measure, and later prove, the savings.

3. Choose and invite suppliers

Invite enough qualified suppliers to create competition, typically at least three. Include your incumbent and at least one new supplier. Make sure each one has the documents your qualification requires before they are invited, not after they win.

4. Write a clear RFQ

• A short description of the requirement and the line items
• The response deadline, and how to ask questions before it
• The format for prices (per unit, currency, what's included)
• How you will evaluate: price only, or total cost and a technical score
• Terms that apply to the award

Answer supplier questions to all invited suppliers, not just the one who asked. It keeps the process fair and the quotes comparable.

5. Compare quotes on total cost, not just price

Put every quote in one comparative statement, line by line, against your target. Then look beyond the unit price: lead time, warranty, payment terms and freight can change which offer is really cheapest. Rank suppliers (L1, L2, L3…) and note anything that isn't compliant.

Sometimes the best result is a split award: different suppliers win different lines, or you cap any one supplier's share to reduce risk.

6. Negotiate or run a reverse auction

If quotes are close, a second round or a short reverse auction often improves the price further. Suppliers see their rank (not each other's prices) and can improve their bid within a fixed time.

7. Approve and award with a record

Send the recommended award for approval with the comparison attached. Record why the winner was chosen, especially if it wasn't the lowest price. Notify the winning supplier, thank the others, and turn the award into a purchase order.

8. Close the loop

Record the savings against your baseline, and check the delivered goods and the invoice match what was awarded. Keep the event, its documents and its approvals together so the next RFQ for the same category starts from a template.

RFQ checklist

• Line items, specifications, units and quantities are final
• Target price and baseline are recorded
• At least three qualified suppliers are invited
• Deadline, question process and evaluation method are stated
• Quotes compared line by line and on total cost
• Award approved, with the reason recorded
• PO raised, savings recorded, documents filed

Doing this in software

RFQ software turns these steps into a guided flow. In Procxara, you can describe what you need in a sentence and get a draft RFQ with target prices from past purchases, invite suppliers who bid from an email link, see every quote side by side, and send the award for approval with the comparison attached. See AI sourcing and RFQs, or watch the walkthrough.