When working through a proper sourcing process, one important step to understand is dealing with a Request for Quotation (RFQ). This is a standard business process that allows suppliers to place bids on specific products or services. Here are 3 great tips to a get the quotes you are looking for when submitting your Request for Quotation.
1. Send Out Detailed RFQs
To receive correct and accurate quotes, RFQs should include detailed specifications of the items/services listed in order to make sure all of the suppliers are bidding on the specific item/service. You could even attach a specification sheet when requesting a quote, but be wary of sending proprietary information to unknown suppliers. Logically, the more details provided, the more accurate the quote will be.
With your RFQ you can include the following:
- Specification Sheets
- Additional technical drawings and pictures
- Sizes and dimensions
- Material specification
- Packaging requirements
- Production methods
- Types of samples
2. Understand and Submit Additional Relevant Information
It is important to understand the import/export regulations or any additional taxes/tariffs on the product you would like to import.
- Foreign trade regulations and restrictions on the product in China and the customer’s country
- Certification requirements by the customer or the government of the customer’s country
- Patent and intellectual property information as necessary
- VAT and other taxation issues
- Product classification for export/import duties
In most cases it is a good idea to submit more information to get better pricing or terms on the quotation. For example, if your first order is small, but have a large annual order volume, you can negotiate better pricing.
Here is a list of some items that you could include with your RFQ:
- Order quantity (annual)
- Target price (you could always include this on the negotiation segment of the RFQ if your target wasn't met)
- Type of quotation expected (FOB, CIF, etc)
3. Follow up after submitting the RFQ
After submitting an RFQ, it is a good idea to try to receive at least three quotations from different factories per item. Also, after submitting your RFQ, you can increase your opportunities for receiving a better quotation by doing the following:
- Establish a friendly relationship with the supplier representative. It can only help your cooperation and ease of communications.
- Explain to the factory any special details for the item.
- Emphasize the order details with the vendors by reiterating order quantities, payment terms, timelines, and so on.
- Double check the quotation to make sure the details are correct.
- Check for any additional fees such as mold fees, packaging, etc.
- Make sure your order meets the Minimum Order Quantity (MOQ)
The above are a few tips on how to deal with a Request for Quotation and how it can help you obtain the quotes you are looking for from vendors. A proper Request for Quotation process with multiple suppliers will give you the opportunity to compare and negotiate better pricing.
Good luck on your RFQs!