It is a standard business process whose purpose is to invite suppliers into a bidding process to bid on specific products or services.
An RFQ typically involves more than the price per item. Information like payment terms, quality level per item or contract length are possible to be requested during the bidding process.
To receive correct quotes, RFQs often include the specifications of the items/services to make sure all the suppliers are bidding on the same item/service. Logically, the more detailed the specifications, the more accurate the quote will be and comparable to the other suppliers.
The suppliers have to return the bidding by a set date and time to be considered for an award. Discussions may be held on the bids (often to clarify technical capabilities or to note errors in a proposal). The bid does not have to mean the end of the bidding. Multiple rounds can follow or even a Reverse auction can follow to generate the best market price.
RFQ's are best suited to products and services that are as standardised and as commoditised as possible, as this makes each suppliers’ quotes comparable. In practice, many businesses use a RFQ where an RFT or RFP would be more appropriate.
Read the rest of the article here