If you seek a new supplier and are considering ones you don’t know, we believe you can do some rather simple things to get better RFQ results. We have lots of thoughts on this; future newsletters will have more.
Most of what we see is an RFQ to manufacture or fabricate some metal or plastic part, or perhaps some assembly. Our job is to recommend candidates for this new situation. The RFQ wants a price and delivery for a stated quantity, and sometimes an “answer by” date is provided. Other than a drawing and specifications, that’s usually the extent of the information received.
The RFQ circumstances may be anything from a minor, simple item or a vital piece of some critical assembly. The item in question might be a developmental item, a first production part with a bright future volume-wise, or perhaps a quest to develop competition for an existing supplier. In most cases these is not indicated, and so the perceived future is unknown to the potential supplier.
The point in all this is simply that if you want better suppliers, write better RFQ’s when you are looking at new candidates. Here are just a few areas for potential response improvement from our point of view. We would encourage and greatly appreciate any blog comments you might have on this topic.
- We understand the pros and cons of target pricing information. However, buyers might consider stating a price range or approximation of what price is necessary for any consideration. We have seen great diversity in pricing for what appears a straightforward item. Potential suppliers have equipment and schedule limitations at any given time, and price accordingly. If potential suppliers knew approximately what pricing was needed, those unable to compete would not bid. A bid not worthy of consideration is usually a waste of both parties’ time.
Providing candidates with some idea of what’s needed price-wise is especially an issue when the RFQ is looking for a supplier to compete with internally made items or things from an overseas facility.
- The same thought applies to needed delivery. If the buyer inserts some safety factor into the delivery date, and requests 4 week delivery for something actually needed in 6 weeks, that might eliminate good candidates from bidding. The buyer might also want to see quotes from specific suppliers that meet some criteria, so even if the delivery cannot be met, the request could ask for bids outside the desired delivery if other factors are met. For example, if a candidate has “a certain capability, please bid, even if the delivery cannot be met”. This way the buyer might obtain a candidate for some future work, even if the present project cannot be supplied by that candidate.
REAL LIFE EXAMPLE: Recently we received a RFQ for a high precision small item, needed quickly. Our supplier candidate, new to this buyer, could neither bid nor deliver in time for this particular circumstance. We thought this supplier would present a competitive choice and so we encouraged them to submit a bid anyway. Ultimately, that supplier’s pricing was far better than the known supplier who got the original order, and our candidate stands a good chance of winning future business.
- The buyer may have access to advantageous material pricing not available to some small job shop. In addition, the shop will mark up materials unless there’s some very unusual circumstance. This means there may be occasions where the shop is able to do the work very efficiently, but cannot win the quote because their material price is too high. The buyer might consider an RFQ that asks for a response with and without the buyer supplying the material. This might generate a really good deal for both sides.
These are just a few aspects that immediately came to mind as we reviewed a file of RFQ’s we’ve received. Over the several years of our experience, we have yet to see a buyer respond to a potential suppliers’ unsuccessful bid with a question such as this: What would it take to get to this price”?
Since RFQ responses are equally important for buyer and seller, we’d be most appreciative of blog comments on this vital subject.