Definition of e-RFx

E-RFx is the most complicated process in strategic sourcing; RF stands for “Request For”, and “x” represents I as information, P as proposal and Q as quote.  In general, RFx means requests for Information (RFI), requests for Proposal (RFP) and/or requests for Quote (RFQ), or request for Bid which is less likely to be used.

Technically, those terms all have similarities even though they work differently in strategic sourcing cycle.  It is essential to have a good understanding of them to ensure the proper usage.

The RFx Process

While processing RFx, from simple RFQ to higher level of RFI/RFP, e-Sourcing process can be completed successfully.

The complete e-Sourcing process consists of three phases.

1.RFI: To aggregate supplier information and evaluate their qualification

2.RFP: An assessment on supplier product, service and suggestion

3.RFQ: To ensure the suppliers are willing to provide a final bid at end of the auction

RFQ includes reverse auction or sealed bid, and gathering information regarding supplier sourcing services and their products.

The sourcing services professionals determine which steps are required to produce the desired sourcing outcomes. Some guidelines and steps are excluded as follows:

1.The initial phase of RFI can be excluded if there is a clear understanding of purchaser’s requirements and standards, or if they are frequently sourced commodities,

2.If supplier’s interests are known, the second phase of the RFI can also be excluded.

3.If there are qualified suppliers from previous projects, it is possible to exclude the third phase of the RFI.

4.If a commodity or a simple custom-made component does not require supplier input or collaboration, then the RFI/P phase can be excluded.

Other phases of RFx process will likely need to be executed when:

• sourcing components have no clear requirements for a new item or service;
• new suppliers needed to be included;
• a supplier’s capabilities to produce one or more new components;
• confirmation from additional teams when making decision on design/engineering, marketing, quality, etc.

RFx Strategy Choosing

Procurement strategy is based on spend behavior analysis; it is to help purchasers to cut down costs on their commodities, components and different product categories. To ensure a strategy is implemented correctly, there are two main factors.

1. Contract Status– evaluate spend based on:

• Contract status (available, unavailable)

2. Commodity Characteristics– evaluate spend based on:

• Commercial attractiveness (high, medium, low)
• Definable requirements (high, medium, low)
• Competitive supply base (high, medium, low)
• Savings opportunities (high, medium, low)
• Inherent risk (high, medium, low)

The final decision is made by an experienced sourcing services professional based on her interpretation of the project characteristics. The complexity of the RFx process is then determined by the completeness of the requirements, the number of suppliers that have been qualified, expected competition in the supplier base, inherent risk in the sourcing effort, and the projected savings or cost avoidance opportunities.

Definition of RFI