A Request for Information (RFI) is a standard business process used by customers to collect written information regarding the capabilities of various suppliers, which will better inform buying decisions.
Business requests are used to determine which suppliers can best meet a buying organization’s needs. The three standard types of business requests are the RFI, the RFP (Request for Proposal) and the RFQ (Request for Quotation).
The RFI is the document created by demand or buy side companies to obtain service and resource information from supply side companies. The 3- to 5-page document provides an executive summary of the operation(s) to be outsourced, along with detailed information on the vendor’s specific capabilities.
The RFI is used less by procuring companies, but it can be very useful if there is little familiarity with prospective suppliers, or when there is a multitude of potential bidders. RFIs reduce the time and costs involved in evaluating potential suppliers and help ensure that bid participants are directly aligned with the needs of the buying company. Its primary objective is to determine which suppliers should receive an RFP or RFQ.
In addition to gathering basic information, an RFI is often used as a solicitation to a broad base of potential suppliers for the purpose of developing strategy, building a database, and preparing for an RFP or RFQ.
An RFI signals to potential bidders that a competition will ensue for a product or service, and that the potential client is seeking information in a formal, structured and comparable way. Ideally, it also demonstrates that the buyer respects the vendor’s time and resources by requesting only the basic information needed to move forward with the process. Here are several best practices that have been identified within the RFI process:
- Follow an established format. It is important to gather information in a formal and structured manner that enables direct comparisons of supply-side companies.
- Be specific about the information needed. The more specific you are about the information you need, the more likely you are to receive a useful response. If your questions are too vague, the supplier may not understand what you are seeking, and will provide information that is irrelevant to your needs. Define precisely the information you want the supplier to include in the response.
- Limit the information request. Seek service and resource capability information only. Appropriate information could include specific details concerning the vendor’s abilities to perform a given service, or to provide personnel, facilities, etc. It might also include financial statements, an explanation of the supplier’s corporate culture, and profiles of its senior management, company goals, quality assurance activities, and projects under contract.
- Do not request pricing information. Pricing information is not needed at this introductory stage. Extraneous details concerning methodology are similarly useful only in later stages.
- Be considerate. Remember that the ultimate goal of this information gathering exercise is to establish a relationship with a respected business partner. The success of any such partnership involves mutual consideration, beginning with initial requests for time and resources. Above all, the process should be engaged without prejudice for or against any individual supplier.
- Be cost conscious. Remember also that there is a cost to the supplier to prepare responses. The more you ask of the supplier during the request process, the more cost you add to their business. They will need to add that cost into their pricing models.
- Give the supplier appropriate time to respond. Preparing a response to an RFI typically takes less time than for other request documents, such as an RFP or RFQ. A one week turnaround is the minimum time expected for a supplier to respond to an RFI. A more standard time frame is two weeks, but the process may take longer depending on the amount of information requested.
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