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"Procurement is about creating value for the organization, not just about buying things."
Procurement is a complex process that involves detailed analysis, negotiation, and the purchase of products from suppliers. Organizations need to ensure that they are getting the best value for their money and that the products and services are of the highest quality.
To achieve this, organizations follow a string of processes such as Requests for Information (RFI), Requests for Proposal (RFP), and Requests for Quotation (RFQ).
So, understanding the different types of requests (RFI, RFP, and RFQ) is essential in any business setting. Different projects, contracts, and situations require different approaches to finding the right vendors and suppliers for your needs.
Knowing which one to use and when can be difficult if the teams are unable to understand what they are in the first place. So this article will discuss the various types of requests, their roles in the procurement process, and their benefits.
TL;DR
- RFI (Request for Information): Used in the early procurement stage to gather general vendor info, explore available solutions, and build a qualified supplier list.
- RFP (Request for Proposal): Sent when a company knows its needs and wants vendors to propose detailed solutions, pricing, and timelines for a project or service.
- RFQ (Request for Quotation): Used when product specs are clear and the goal is to get competitive pricing from shortlisted suppliers.
- Key Difference: RFI = info gathering, RFP = solution proposals, RFQ = price quotes — each aligns with different stages of the procurement lifecycle.
- Use Case in SaaS: From CRM research (RFI), to ERP solution planning (RFP), to final pricing for HR software licenses (RFQ), these requests guide smart, structured vendor selection.
RFI vs. RFP vs. RFQ
RFI, RFP, and RFQ are the three main components of the procurement process.
- An RFI or Request for Information is used to gather information from vendors about their capabilities, products, and services to verify before making the right decision.
- Once requirements are identified, a Request for Proposal(RFP) is sent to attract proposals from vendors that address the organization's requirements. It is used to evaluate and close down a single vendor from a qualified pool of suppliers.
- And finally, a Request for Quotation(RFQ) is used to request quotes from suppliers for specific products and services. Quotations can help select vendors for future purchases.
These three terms are used throughout the procurement process. Moreover, they all share the same goal: to procure the best products and applications at the best price.
Let's take a closer look at each one.
What is an RFI in business?
A Request for Information (RFI) is a formal document used in procurement to collect general information about vendors, their capabilities, and available solutions. It’s issued during the early stages of a project to help businesses understand what the market has to offer, before moving to more detailed steps like a Request for Proposal (RFP) or Request for Quotation (RFQ).
RFI is used when an organization wants to collect information from potential vendors to understand the market better and determine which vendors may be suitable to partner with. As it is the first step in the procurement process, it does not require vendors to submit a formal proposal.
When do businesses use an RFI?
Early. RFIs are used in the exploration phase, when you know the problem but don’t yet know what the right solution looks like.
Before investing time in an RFP or RFQ, companies use RFIs to:
- Understand the available tools or services in the market
- Learn which vendors can meet baseline needs
- Discover new approaches or technologies they hadn’t considered
Benefits of RFI
“A survey by the Institute of Supply Management found that 43% of organizations use RFIs to gather information on products or services.”
There are several benefits to using RFIs in procurement.
- First, they can help an organization quickly and easily gather information about potential suppliers and their products or services. This can save time and effort in the procurement process.
- Additionally, RFIs can help ensure that all suppliers are given an equal opportunity to provide information, promoting fair competition.
- Furthermore, RFIs can help organizations identify new suppliers and stay up-to-date on industry trends and new technologies.
Example of RFI in SaaS buying
RFI in SaaS procurement would be a company looking for a new customer relationship management (CRM) system.
They may issue RFIs to multiple vendors, asking for information about their CRM software, including features, pricing, and implementation timelines.
The RFI is not intended to result in the purchase of a product but rather to gather information and determine which software options are available and suitable for the company's needs.
What does RFP stand for in business?
RFP meaning in business, stands for Request for Proposal.
It’s a formal document organizations send to potential vendors when they’re ready to evaluate solutions and expect a detailed proposal in return. An RFP outlines the project goals, scope, timelines, budget, and evaluation criteria. In response, vendors submit their plans for how they’d deliver the work.
You’re not just asking who can do it. You’re asking how they’ll do it, how long it’ll take, and how much it’ll cost.
Why is RFP used?
An RFP helps you:
- Compare solutions side-by-side, based on set criteria
- Invite multiple bids to encourage fair competition
- Document expectations clearly for both sides
- Choose a vendor confidently, backed by data and analysis
It’s especially helpful for large purchases or complex projects where you need more than just a price quote.
Benefits of RFP
On average, companies source 33% of their sales revenue through deals involving RFPs.
The benefits of RFPs include
- RFPs allow organizations to communicate their needs and requirements to potential suppliers.
- It provides a structured process for evaluating potential suppliers.
- RFPs assist businesses in shortlisting suitable vendors to partner with.
- It allows organizations to identify potential cost savings and other benefits.
- It can also increase competition among suppliers, leading to better prices and services.
Example of RFP in SaaS buying
An example of RFP in the SaaS industry would be a company looking for new enterprise resource planning (ERP) software. They may issue RFP to multiple vendors, asking for detailed information about their software, including features, pricing, and implementation timelines.
The RFP also includes a section for vendors to provide detailed information about their company and their qualifications to provide the software. The RFP process is more formal than the RFI and RFQ, and it's used to make a final decision on the vendor selection and the software's purchase.
What is a Request for Quotation (RFQ)?
A Request for Quotation (RFQ) is a formal document businesses use to request pricing from suppliers for specific goods or services. It’s used when the requirements are clear, and the goal is to find the best price.
RFQs are all about cost and terms. You already know what you need. You just want to know how much it’ll cost, who can deliver, and on what timeline.
RFQ meaning in business
In business, an RFQ is commonly used when you're purchasing standardized products or services where the scope is fixed, and you don’t need creative input or complex solutions.
Examples include:
- Hardware purchases
- Office supplies
- SaaS licenses with fixed seat counts
- Manufacturing components
It’s most useful when you want multiple vendors to compete on pricing for the same deliverable.
Role of RFQ
RFQ's role in procurement is to establish a competitive process for suppliers to bid on a specific project or purchase order. It allows the buyer to compare the proposals and pricing from multiple suppliers and select the one that best meets their needs and budget.
RFQs are commonly used in the procurement of goods and services, especially in the construction, manufacturing, and engineering industries. But in the recent time, an abundance of RFQs can be seen across SaaS buying processes as the procurement teams are reluctant to proceed with the purchase unless the vendors are transparent in their quotes.
The document should include a detailed description of the requested products, the quantity needed, and other pertinent information. It should also include a timeline and any specific requirements.
Benefits of RFQ
According to a survey by the e-Sourcing Forum, 63% of organizations use RFQs as a way to gather information on pricing and availability.
- Establishing a competitive process for suppliers to bid on a specific project or purchase order
- Allowing the buyer to compare proposals and pricing from multiple suppliers
- Helping to ensure that the buyer gets the best value for their money
- Facilitating the selection of the best supplier for a particular project or purchase order.
Example of RFQ in SaaS buying
An example of RFQ would be a company looking to purchase a new human resources management system. They may issue RFQ to multiple vendors, asking for specific details such as cost, implementation timeline, and references to the software.
The RFQ is used to determine the pricing and terms of the software and to compare the prices and terms of the different vendors.
Listen to Terry Larock, head of procurement at Tipalti, to master procurement and get the best SaaS deals through effective negotiations. He shares his journey in SaaS procurement, achieving great results and offering valuable tips to sharpen negotiation skills.
When to Use RFQ and RFP?
Use an RFQ (Request for Quotation) when you know exactly what you need, product specs, quantities, delivery terms, and your goal is to compare prices.
Use an RFP (Request for Proposal) when you have a problem to solve, but you're open to different approaches and want vendors to suggest solutions, timelines, and execution plans.
RFQ: Best for clear, fixed needs
Use an RFQ when:
- Requirements are standardized
- You're comparing pricing and terms only
- You want to move fast with minimal back-and-forth
- You’re sourcing commodities, licenses, or repeat services
RFP: Best for complex or undefined needs
Use an RFP when:
- The project requires strategic input from vendors
- You want to assess experience, methodology, or creativity
- You’re open to different approaches or technologies
- You need to evaluate more than just price
In short:
- RFQ = You know what you want. You’re shopping on price.
- RFP = You want ideas. You’re choosing based on value and fit.
This format gets you the best vendor for the situation, without overcomplicating it.
What is the Difference Between a RFI, RFP, RFQ, and a RFT?
Each document plays a different role in procurement. The difference comes down to what you need: information, a solution, pricing, or a formal bid.
Here’s a breakdown:
1. RFI (Request for Information)
Use it when: You’re early in the process and want to understand the market.
Purpose: To gather general information about vendors, products, or services.
Typical use case: You’re exploring CRM tools but don’t yet know what features you need.
Key traits:
- Non-binding
- Used to build vendor shortlists
- No pricing or solutions expected
2. RFP (Request for Proposal)
Use it when: You know your problem and need vendors to propose how they’d solve it.
Purpose: To get detailed proposals, including timelines, methodology, and cost.
Typical use case: You need a software solution built to spec, and want vendors to show how they’d do it.
Key traits:
- Bids include strategy and implementation plans
- Evaluation is based on more than just price
- Often follows an RFI
3. RFQ (Request for Quotation)
Use it when: You know exactly what you need and want to compare prices.
Purpose: To get pricing and delivery terms for standard products or services.
Typical use case: You need 500 units of a known hardware component and want to compare vendor quotes.
Key traits:
- Requirements are fixed
- Quotes are easy to compare
- Focus is on price and turnaround
For more information on difference between RFI vs RFQ vs RFP, you can refer this guide: RFP vs RFP vs RFQ: How Do They Differ?
4. RFT (Request for Tender)
Use it when: You’re running a formal, competitive bidding process, often in public sector procurement.
Purpose: To invite legally binding bids under strict guidelines and documentation.
Typical use case: A government agency issues an RFT for the construction of public infrastructure.
Key traits:
- Legally enforceable in many contexts
- Highly detailed technical and legal documents
- Used for large-scale, regulated projects
Conclusion
There you go, the three musketeers of procurement, RFI, RFP, and RFQ. A procurement process will be incomplete without these. Now you know the definition and chronological order of RFI, RFP, and RFQ.
Having a clear understanding of these documents is essential, which is why we created this article and talked about the roles they play in the procurement process and their benefits.
These official documents make the difference between a transparent procurement process and a regrettable one. Never make the mistake of overlooking them, when done the right way, you can secure the best vendor and build a long-lasting relationship with them.
FAQs
1. What comes first, RFI or RFQ?
An RFI typically comes first. It's used to gather general information about vendors and the market. Once the buyer understands what's available, they may issue an RFQ to request pricing for a clearly defined product or service.
2. What is the difference between RFI and RFP?
An RFI is used to collect broad, exploratory information from vendors. An RFP is more detailed: it asks vendors to propose solutions, including timelines, methods, and pricing, for a specific business need or project.
3. Who prepares RFQ?
The buyer or procurement team prepares the RFQ. It includes clear specifications, quantities, and delivery needs, and is sent to vendors to request pricing and terms for a well-defined product or service.
4. Are RFP and RFQ the same?
No, they're not the same. An RFQ focuses on getting price quotes for specific needs. An RFP asks vendors to propose full solutions and explain how they'll deliver value beyond just cost.
5. How to prepare RFP and RFQ?
Start with clear goals. For an RFQ, list exact specs, quantities, and deadlines. For an RFP, include background, scope, evaluation criteria, and proposal instructions. Make sure vendors can respond clearly and competitively.
6. What are the types of RFQ?
Common types of RFQ include open RFQ (any vendor can respond), invited RFQ (sent to selected vendors), and sealed bid RFQ (used in formal bidding with confidential pricing until review time).
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