The Art of RFQs: How to Secure More Quotes from Suppliers

The Art of RFQs: How to Secure More Quotes from Suppliers

In the fast-paced world of procurement, sourcing professionals frequently deploy RFQs (Request for Quotes) to solicit bids from suppliers or to scout for emerging suppliers eager to make their pitch. Yet, a significant number of small to medium-sized businesses still rely on manual processes for these sourcing events. This often entails a buyer receiving a requisition from an internal team, drafting an email detailing the requirements, and then dispatching it to a mix of vetted and potential suppliers.

A recent study by eSupplier unveiled a startling revelation: for every 15 RFQ emails dispatched, buyers typically receive a mere 5-9 responses on time. Why such a low conversion? Our research sheds light on the underlying issues:

Training Gaps: Many procurement managers lack formal training in crafting professional RFQs. They typically relay the often scanty details provided by the user team directly to suppliers. This vagueness necessitates back-and-forth communications involving the end-user, buyer, and supplier. Such protracted exchanges often result in missed quotation deadlines or waning supplier interest.

Supplier Hesitation: A significant number of suppliers refrain from seeking clarifications or additional details essential for framing a quote. It's imperative for buyers to meticulously review and enrich the RFQ content before dispatching. Incorporating specifics like delivery timelines, location, packaging preferences, terms and conditions, and other pertinent details can significantly streamline the quotation process.

Sourcing Varieties: Sourcing can be broadly categorized into part-number-based and specification-based. For standard products, providing an exact part or model number expedites the quotation process, as suppliers can swiftly reference their price lists. On the other hand, custom items or those sourced based on specifications demand a more collaborative approach. Buyers should engage closely with the user team, ensuring comprehensive specifications and, where feasible, providing detailed drawings to elucidate their requirements.

Supplier Discovery: For first-time procurements, buyers should harness the power of online research to identify and connect with competent suppliers. The digital age has rendered traditional directories obsolete, making supplier discovery a more intricate task.

Enter the era of smart eSourcing software tools. These platforms empower buyers with pre-designed RFQ templates, drastically reducing the time spent on RFQ creation. Features like automated New Supplier Discovery eliminate the manual drudgery of finding new suppliers. Once a detailed RFQ is in place, the tool autonomously reaches out to potential suppliers. The process is streamlined for suppliers too, enabling them to submit quotes digitally. Buyers, in turn, can effortlessly generate comparative quote analyses using tools like MS Excel.

In essence, the future of efficient sourcing for SMB companies lies in leveraging technology, ensuring clarity, and fostering collaboration.  To better illustrate the functionality and advantages of the eSourcing Platform, let's delve into a case study that showcases the benefits of managing RFQs through innovative tool.

Case Study: Streamlining RFQs for Packaging Boxes at Titan Manufacturing Co.

Background: Titan Manufacturing Co., a leading producer of consumer electronics, was gearing up for the launch of a new product line. To ensure safe and consistent packaging, they needed to source standard-sized packaging boxes.
The Challenge: Historically, Titan's procurement process was manual and time-consuming. The buyer would send out RFQs via email, wait for responses, and then manually compare quotes, often leading to delays and potential errors.

The eSourcing Solution: Titan decided to leverage a smart eSourcing tool for this procurement cycle. Here's how the process unfolded:

1. RFQ Creation: The buyer used the eSourcing tool’s template to create a detailed RFQ for the packaging boxes, specifying dimensions, material quality, and other relevant details.

2. Target Pricing: To streamline negotiations, the buyer also added a target price for the required boxes, giving suppliers a clear benchmark to aim for in their quotes.

3. Supplier Outreach: The RFQ was dispatched to multiple suppliers, both existing and potential ones identified by the tool's New Supplier Discovery feature.

4. Online Quotation: Potential Suppliers submitted their quotes online, ensuring a standardized format that made comparisons straightforward.

5. Quote Analysis: The eSupplier eSourcing tool allowed Titan Manufacturing to compare quotes side-by-side. Suppliers, aware of the target price, sharpened their pencils, leading to competitive offers right from the outset.

6. Excel Integration: For internal discussions and further analysis, the buyer could effortlessly download the quotes into an MS Excel format.

Outcome: Titan Manufacturing Co. not only secured a competitive rate for the packaging boxes but also streamlined their procurement process. The target pricing feature reduced the need for prolonged negotiations, and the entire RFQ cycle was more efficient and transparent.

In today's rapidly evolving procurement landscape, leveraging digital technology by SMB companies is no longer a luxury but a necessity. The eSourcing platform exemplifies this shift, offering a streamlined, efficient, and transparent approach to RFQ process management. As showcased in our case study, eSupplier: RFQ eSourcing software platform not only simplify the sourcing process but also drive competitive pricing and foster better supplier relationships. Embracing these digital tools is a strategic move for businesses aiming to optimize their procurement operations and achieve a competitive edge in the market.

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