RFI vs. RFQ vs. RFP: Which Does Your Company Need?

Originally Published December 25, 2017 — Updated February 22, 2024.

You’d never buy an expensive laptop online without doing some research first, right? From price to customer reviews to delivery times, you consider many factors before placing it in your cart and entering your credit card number.

The same research process happens for companies looking to buy a product or service from a supplier or vendor and for suppliers sourcing direct materials.

When companies buy goods, materials, or services, it’s a key part of the procurement function. To help streamline procurement and sourcing processes, companies use a request for information (RFI), a request for quote (RFQ), and a request for proposal (RFP).

The company prepares the request, sends it to suppliers, and evaluates suppliers’ responses to find the best candidate. These requests bring structure and ease of comparison into vendor and supplier evaluations. And while all three requests have some features in common, each has its own distinct usage.

So, how do you choose the best request method for your company? In this blog, we’ll explain when to use each one and how they work.

Table of contents:

• What is an RFI?
• What is an RFQ?
• What is an RFP?
• RFIs vs. RFQs vs. RFPs
• Are your RFI/RFQ/RFP processes efficient?
• How Coupa can help your company secure bid opportunities

What is an RFI?

A request for information (RFI) gathers general information about a prospective supplier’s capabilities, goods, or services.

You can think of an RFI as an informal first step in evaluating a supplier’s ability to do business with you. It’s also a chance for suppliers to see if the request is a good fit for their business. Many consider an RFI a research step that helps companies get ahead of decision-making in the procure-to-pay or source-to-contract process.

It’s important to know that an RFI is not a contract or a signal that a supplier will be chosen. The same can be said for RFQs and RFPs — they are used only for evaluation.

RFI Meaning

A request for information (RFI) is a document that gathers general information about a prospective supplier’s capabilities, goods, or services. It’s used during the procure-to-pay or source-to-contract process and is typically — but not always — the first step in vendor selection. RFIs are a research tool that helps companies better understand what offerings are generally available in the market, enabling them to narrow down their supplier requirements before moving into an RFQ or RFP.

How do RFIs work?

Typically, a company’s procurement or sourcing team prepares an RFI. It’s usually a high-level questionnaire that includes:

• A brief background of the company
• What goods or services the company seeks
• Specifications regarding the goods or services requested (delivery timelines, etc.)
• What information is required from the vendor

The process includes preparing the RFI, sending it to a select group of vendors, and receiving responses by the set deadline on whether the vendors can or can’t fulfill the request. Usually, RFIs are straightforward and do not require much detail from the vendor.

When to use an RFI

An RFI is particularly useful when a company is early in the buying process and trying to figure out its specific requirements for a good or service. At a minimum, an RFI is followed up by an RFQ or RFP, but some companies skip an RFI and go straight into an RFQ. Some companies like the added step of an RFI for extra due diligence in their procurement process.

Take IT hardware, for example. A company seeking 60 new laptops may send out an RFI to help narrow down its list of potential suppliers. The company can then move confidently and efficiently into the RFQ process by knowing what types of laptops are available and confirming which suppliers can fulfill the order.

What is an RFQ?

A request for quote (RFQ) gathers comprehensive price options for a specific good or service. Companies that know exactly what and how much they need will often skip an RFI and go straight to an RFQ. An RFQ can be sent alone or before a request for proposal (RFP).

RFQs are often used for highly commoditized or general items, which vary by industry. For example, beakers, gloves, or protective eyewear are considered commoditized items for companies in the life-science industry. For those in food service, it may include plates, utensils, or napkins. No matter what the item is, there’s often little room to distinguish between suppliers except for very tactical factors such as pricing, delivery times, etc.

RFQ Meaning

A request for quote (RFQ) is a document that gathers comprehensive pricing for a specific good or service. It’s used during the procure-to-pay or source-to-contract process and is typically the second step in vendor selection. It can be used as a secondary step to an RFI or be used in place of one. RFQs are used when a company has a better idea of the requirements that certain groups of suppliers can provide or fulfill.

How do RFQs work?

RFQs — which focus on costs — follow a similar process to RFIs but require additional information, including:

• Description of the goods or services with specifications
• Pricing
• Quantities
• Delivery requirements
• Payment terms
• Evaluation criteria (so vendors know what to expect)
• Submission requirements and deadline

Many procurement teams prefer to use templates for RFQs to ensure each vendor responds in a similar format. This makes it easy to quickly compare quotes, saving the team time and money.

An RFQ follows six key processes:

1. Identify requirements and prepare the bid (RFQ) document.
2. Determine the supplier list.
3. Send out RFQ.
4. Collect responses and analyze.
5. Negotiate any terms and conditions and award a supplier.
6. Put a contract in place with the supplier and begin to onboard them.

It’s common to run an auction during the RFQ or RFP process. Procurement and sourcing teams may decide to add this extra step if they receive similar bids from vendors. Let’s say the team wants to secure the best price, so they run a live auction that lasts 24 hours.

Once the supplier has been selected and awarded, the company and supplier move into a contract. Generally, with RFQs, a company selects the vendor to deliver the goods or services at the lowest bid within their specification requirements.

When to use an RFQ

An RFQ is generally used when the spend or service requested isn’t necessarily strategic but is more price-focused. It’s not ideal for every procurement situation, but it works well when a company:

• Knows precisely what, how much, and the quality of what they need
• Is purchasing goods (or highly commoditized items)
• Is looking for the best possible price or quickest delivery time

What is an RFP?

A request for proposal (RFP) is a formal business document that provides a comprehensive project overview, describes requirements, and solicits vendor bids. While RFQs compare pricing, RFPs compare total value, especially in cases with complex supply chains.

RFPs are common for complex projects that may involve different requirements, such as sourcing raw materials. If a technology manufacturer needs to source and purchase hundreds of different materials to produce one laptop, it’s much more complex than ordering a highly commoditized item — like a company purchasing a built laptop from the technology manufacturer!

RFPs include a statement of work, completion timeline, the evaluation criteria by the buyer, and the selection process. As the most formal procurement process out of this list, RFPs identify the best vendor through competitive bidding on various factors. Those factors vary based on the company’s goals. For example, many companies are placing more importance on emissions reduction.

A major evaluation criterion of the RFP could focus on this. Let’s say a beverage company is sending out an RFP for fleet transportation. The procurement and sourcing team runs several routing scenarios through their spend management platform, finding a route that will lower their emissions. Their RFP includes, “We’ve surfaced a route that will help us reach our sustainability goals. Are you able to use this suggested route?”

RFPs are used to drive a creative bidding process — giving vendors the opportunity to come up with unique solutions and for companies to consider multiple scenarios in the evaluation process.

Take a manufacturer looking for steel or aluminum. During the RFP process, a vendor comes back with an alloy alternative that’s just as durable but is cheaper. It still meets the requirements, but it’s a different material than what was initially asked for. Alternative inputs to design and specification levers, such as payment, alternative materials, delivery terms, discounts, bundles, etc., help create win-win agreements for everyone involved.

RFP Meaning

A request for proposal (RFP) is a formal document that provides a comprehensive overview of a project, describes requirements, and solicits vendor bids. It’s used during the procure-to-pay or source-to-contract process and is typically for cases where complex bidding is required. Companies use RFPs when they have a specific objective and need to evaluate many factors to achieve it.

How do RFPs work?

Creating an RFP generally starts with a procurement team creating an event based on the outcome they want to achieve and preparing a request proposal. The request includes key elements, such as:

• Cover page
• Overview of the company and scope of work (statement of work)
• Defined requirements
• Vendor questionnaire
• Detailed overview of how to fill out the questionnaire
• Defined bidding and evaluation process
• Deadline to submit

It’s important for the team to consider the format of how vendors will respond to the request. Spreadsheets have been a traditional tool for gathering responses, but they’re prone to errors and accidental format changes by the vendor.

Vendors also typically respond in whatever way they want, making it difficult to evaluate and compare vendors across the board.

Today, best-in-class companies use procurement software to create an automated and streamlined event structure. Procurement teams can quickly collect and analyze vendor responses in one place.

After analyzing vendor responses, the procurement team and relevant stakeholders can narrow down the list of possible vendors.

Then, negotiations on specific factors — pricing, emissions, delivery times, etc. — can occur. Procurement teams often run scenario analyses during this time to determine which factors will create the most significant impact for the company.

When to use an RFP

RFPs are used for critical projects or when companies are procuring complex categories. Raw materials, fuel, and logistics are some examples. It’s not typically used for one-off purchases. Using an RFP is most useful when a company:

• Is spending a significant amount of money
• Requires multiple stakeholders to take part in the evaluation process and provide feedback on bids
• Wants to be presented with creative solutions

RFPs are also helpful in eliminating bias in the evaluation process and promoting robust bidding.

RFIs vs. RFQs vs. RFPs

Which request is best for your company? Choosing the best one will depend on your needs.

An RFI is best when you want to explore new suppliers or are just trying to determine the most important specifications. An RFQ is best when you know exactly what you need and when you need it. You should use an RFQ when your main concern is getting the best price. Meanwhile, an RFP is about the comprehensive value of a vendor. It is the most time-consuming and formal, but it enables more creative and strategic bidding for large projects and significant spending.

Are your RFI/RFQ/RFP processes efficient?

Manual processes, such as spreadsheets, email, and phone, limit a competitive bidding process. With these tools, there is no way for vendors to see how their bid is performing against others. And if questions arise during the auction, a quick communication method is not readily available. For buyers, collecting and analyzing bids and sharing them with relevant stakeholders is also time-consuming.

Today, there are many ways to increase the efficiency of your procurement processes with technology. Comprehensive procurement software can automate event design, collect and analyze responses, improve bidding visibility, and enable near real-time messaging with vendors. Procurement software is also capable of running sourcing scenarios. If a company has thousands of transportation methods in its procurement process, it may run an AI algorithm to analyze effects on costs, emissions, delivery times, and more.

How Coupa can help your company secure bid opportunities

The RFI/RFQ/RFP process requires high collaboration between procurement teams, stakeholders, and vendors. The Coupa platform powers collaboration with cutting-edge technology and AI-driven insights. Coupa helps you handle all of your sourcing needs by:

• Securing the best value. Community benchmarks powered by AI enable you to understand what others in your industry are paying so you can negotiate better prices.
• Running better auctions. Choose from multiple ready-to-go auction formats and gain access to a network of trusted suppliers to increase effectiveness and competition.
• Driving effective collaboration with suppliers. Know exactly when responses come in, answer your prospective suppliers' questions immediately, and drive better relationships with an award-winning supplier portal.
• Working smarter with stakeholders. Empower finance, legal, HR, and other relevant stakeholders across the business to review, score, and refine RFIs, RFQs, and RFPs from one place.

A centralized platform like Coupa empowers companies to gain more value from bidding.

From source to contract to payment, do it all in one place with Coupa.

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