When you need to competitively procure a product or service from prospective vendors, determining what type of solicitation tool to use can be confusing. Do you use an RFQ or an RFP? What is the difference between the two? While they may sound similar, there are in fact specific use cases for each one.
Let’s take a look at the main differences between these two methods of procurement.
Request for Quotation (RFQ)
A Request for Quotation, or an RFQ, is a method of procurement used to obtain price quotes from vendors. RFQs are most commonly used when:
You have a commodity-style procurement (i.e. goods rather than services)
- Exact quantities and requirements are known
- Price will be the primary evaluation factor used to determine a winning vendor
Take the following procurement for example, which illustrates when an RFQ is appropriate:
- What information do you have? Extremely clear details about the product or service you require.
- What do you need vendors to provide? Pricing.
- What is your primary goal? To get the best price.
Request for proposal (RFP)
- You are dealing with a large, complex procurement
- You understand your project objectives but likely do not have well-defined specifications
- You will select a vendor based on the creative solution they propose (not necessarily the vendor with the lowest cost).
- What information do you have?You understand the project objectives, but need help defining the exact details of how to accomplish it.
- What do you need vendors to provide? A creative solution.
- What is your primary goal?To select a vendor that will help you achieve your project objectives.