Request for Quotation (RFQ)

What is a Request for Quotation?

A Request for Quotation (RFQ) is a formal document sent to a set of pre-qualified vendors, asking each to submit a firm price and delivery terms against a clearly specified requirement. It is used once the "what" is already settled — quantity, specification, delivery timeline — and the goal is genuine price and terms competition among vendors capable of meeting that spec.

An RFQ typically follows an approved purchase requisition once the requisition crosses a value threshold, or whenever there's no existing preferred vendor with pre-agreed pricing for the category.

RFQ vs. RFI vs. RFP

These three are frequently conflated but serve different stages of sourcing maturity:

RFI (Request for Information) — used to explore an unfamiliar vendor market and gather capability information, without asking for a binding price
RFQ (Request for Quotation) — used when the specification is fixed and firm price/terms are being compared across pre-qualified vendors
RFP (Request for Proposal) — used for complex or under-defined requirements, where vendors propose their own approach rather than pricing a fixed spec

The RFQ workflow

Define the specification, quantity, and delivery requirement from the approved PR
Shortlist vendors — pre-qualified, with a minimum vendor count per policy for competitive defensibility
Issue the RFQ with a fixed response deadline
Collect quotes — price, delivery timeline, payment terms, validity period
Evaluate — price alongside delivery reliability and quality/compliance history, not price alone
Award and convert into a PO

Standard RFQ vs. reverse auction

A standard RFQ collects a single sealed quote per vendor, compared after the deadline closes. A reverse auction instead runs bidding in real time, with pre-qualified vendors seeing (anonymously) that they've been outbid and given the chance to requote — genuinely competitive for well-specified, high-volume categories where price is the deciding factor, less suited to categories where quality or service differentiation matters more than price alone.

Why vendor count and evaluation discipline matter

Two governance failures recur in RFQ processes: sending the RFQ to a single vendor (or to a shortlist that was never genuinely competitive), and awarding purely on lowest price without weighing delivery and quality history from a vendor scorecard. Both are standard findings in a procurement audit — the first because it can't demonstrate genuine competition, the second because "lowest bid, worst delivery" is a well-documented way to overpay on total cost while appearing to have saved on unit price.

How TRAXX supports RFQ and reverse auctions

RFQ generated directly from an approved PR, carrying the same specification and quantity — no re-entry
Configurable minimum vendor count enforced before an RFQ can be issued
Built-in reverse auction mode for eligible categories, with live bid visibility to qualified vendors
Weighted evaluation combining price with the vendor's live scorecard, not price in isolation
Full RFQ-to-PO trail preserved for audit

FAQs

What’s the difference between an RFQ, an RFP, and an RFI? +

An RFI (Request for Information) gathers capability information without asking for a firm price — used when exploring an unfamiliar vendor market. An RFQ (Request for Quotation) asks pre-qualified vendors for a firm price against a defined, specified requirement — used when the "what" is settled and price/terms are what’s being compared. An RFP (Request for Proposal) is used for more complex or less-defined requirements, where vendors propose their own approach, not just a price against a fixed spec.

How many vendors should receive an RFQ? +

Most procurement policies require a minimum (commonly three) to maintain genuine price competition and audit defensibility. Sending to only one vendor without justification is a common finding in a procurement audit — it looks like — and sometimes is — a pre-decided award.

What is a reverse auction, and how does it relate to an RFQ? +

A reverse auction is a competitive-bidding format where pre-qualified vendors submit successively lower bids in real time, in contrast to a standard RFQ’s single sealed-quote submission. It’s typically used for well-specified, high-volume categories where price is the primary decision factor and genuine price competition can meaningfully move the outcome.

Is the lowest RFQ quote always the one selected? +

No, and treating it as automatic is a common governance weakness. Most RFQ evaluations score price alongside delivery timeline, quality/compliance history (see vendor scorecard), and payment terms — the lowest bid that fails on delivery reliability can cost more overall than a slightly higher one that doesn’t.

Last updated: 2026-04-29