Procurement skills | 7 advanced tips for inquiring purchases!

By justchinait
October 9, 2020

Request for Quotation is what we usually call RFQ (Request for Quotation). RFQ is suitable for products or services with uniform specifications and standards, sufficient spot supply and small price changes.

The inquiry seems simple as if you only need to find a supplier who can quote. In fact, many techniques can be used in-depth to do a good job of inquiry and comparison.

1. Clearly define requirements

The basis of supplier quotations is customer demand. In order for all suppliers participating in the quotation to have a clear and consistent understanding of the products or services we want to purchase, it is necessary to define the purchased products in the inquiry form clearly. The more specific the demand is described, the more accurate the price will be quoted by the supplier.

  • To purchase a product, you need to provide the supplier with a specific model and specification requirements. In addition to the necessary description of the product, you also need to include the necessary quantitative indicators (for example, when buying a computer, you need to specify the CPU, hard disk, memory, screen size, etc.) All parameters).
  • To purchase a service, it is necessary to clearly state the service and work content that the supplier needs to provide in the SOW, and try to quantify the deliverables at each stage (such as when and where to provide what results, how to judge the results as qualified Or not, etc.).
  • In addition, it is also necessary to define the acceptable methods and acceptance criteria for product or service delivery so that suppliers can understand the quality of the product or service.

2. Make an inquiry form template

The key to inquiry and comparison is how to compare Apple to Apple. The inquiry must ensure that all suppliers are based on consistent deliverables and conditions to ensure fairness and justice. In order to ensure comparability and to facilitate the summary and comparison of quotations by suppliers, it is better for purchasers to develop their own inquiry form templates instead of letting suppliers make quotations according to their own habits and formats.

In the inquiry sheet’s obvious position, all transaction conditions that affect the price must be listed, such as delivery date, delivery location, delivery terms, whether it is divided into batches, payment terms, quotation currency, etc.

3. Ask the supplier to break down the quotation

When designing the inquiry sheet, try to break down the quotation in detail to reflect the supplier’s cost structure. According to the different purchased products, it can be broken down according to raw materials, auxiliary materials, processing fees, freight, or different modules or individual items that make up the whole.

The advantage of decomposing the quotation is that the purchaser can find out which cost items of different suppliers are different, so as to analyze whether there is still room for negotiation with the supplier for cost reduction. For example, a purchaser found that the price of a specified brand zipper quoted by a certain supplier was significantly lower than that of other suppliers when comparing the price of work clothes. After communication, it was learned that this supplier was the first-level agent of the brand, so he could get Lower discount prices. The purchaser then negotiated with this supplier and asked this supplier to agree to supply zippers to other manufacturers jointly selected without increasing the price, thus realizing the reduction of procurement costs. This kind of negotiation based on cost structure is a win-win situation, rather than just squeezing the profits of suppliers, suppliers are more willing to accept.

4. Find suppliers for inquiry

The inquiry is best carried out among the suppliers in the company’s procurement system. The suppliers who have cooperated are preferred because they have been serving customers for a long time and have a clear understanding of the customer’s quality and delivery requirements. The efficiency of inquiry and quotation is higher.

Sometimes, there are not enough existing suppliers in the company’s supplier database to meet the requirements, or in order to test the competitiveness of the currently cooperating suppliers in the market, 1-2 new suppliers can be introduced to participate in the price comparison. At this time, it should be noted that the new supplier may not fully understand the requirements and habits of the procurement organization. It is necessary to set aside time to introduce the project background and answer questions to the new supplier to ensure that the new supplier’s quotation is based on the same understanding as the old supplier gets on.

5. Make two rounds of quotations when necessary

Sometimes, purchasers may not be very clear about their own needs, or purchasers cannot understand the quotation methods and price structures of various suppliers in a short period of time. In this case, a round of informal quotations can be used to understand the basic supplier quotation method. After analyzing and researching the first round of quotations, combined with their own needs, design their own inquiry sheet. In the second round of quotations, suppliers with insufficient sincerity or insufficient professional ability in the first round can be eliminated to improve inquiry efficiency.

6. Summary Quotation

  • The advantage of using an Excel worksheet to make an inquiry sheet is that the quotation is intuitive. If a supplier does not report all items, it is convenient for the buyer to ask the supplier to clarify the quotation in time.
  • Another advantage of using Excel quotations is that it is convenient to summarize quotations. After receiving the quotations of all suppliers, because the quotation format of each supplier is uniform, just a few simple copy, and paste, several suppliers’ quotations can be summarized in one form.
  • If the price data is more complicated, use the powerful chart function of Excel, and use a histogram and trend chart to make price comparison more intuitive.

7. Evaluation sample

For purchasing by inquiry, it is not necessary to choose the lowest priced supplier. The supplier’s evaluation also depends on other aspects of the supplier’s capabilities, such as sample quality and delivery time satisfaction. Therefore, stating in the inquiry form that “price is not the only factor in supplier selection, purchasers will comprehensively evaluate product quality, delivery date, payment terms, etc. to select suppliers” is also an effective way to protect procurement.

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