The sourcing strategy or response strategy defines the type of procurement event that will be undertaken, for example, RFI, RFP, RFQ, or RFT. The following paragraphs define the 7 most common sourcing strategies:
- Request for Application (RFA)
- Request for Documentation (RFD)
- Expression of Interest (EOI)
- Request for Information (RFI)
- Request for Prices / Request for Quotation (RF$ / RFQ)
- Request for Proposal (RFP)
- Request for Tender (RFT)
Introduction
- Request for Application (RFA)
Description: To solicit applications from candidates to apply for money in the form of a grant or similar.
Characteristics: Associated with Government agencies and not-for-profit organisations, it indicates the scope of the project, guidelines and boundaries, and how much money is available.
Example: A Government agency has earmarked funding for research on quiet vehicle exhaust systems so it issues an RFA to find one or more suitable candidates to carry out the research.
Characteristics: Associated with Government agencies and not-for-profit organisations, it indicates the scope of the project, guidelines and boundaries, and how much money is available.
Example: A Government agency has earmarked funding for research on quiet vehicle exhaust systems so it issues an RFA to find one or more suitable candidates to carry out the research.
Request for Documentation (RFD)
Description: To solicit an acknowledgement that indicates interest from candidates capable of delivering the specified requirements.
Characteristics: Usually the first stage of a multi-stage tender process. An EOI may be used to establish potential service providers or a panel of service providers. It usually requests a lesser amount of detail than an RFI and is used when the requirement is well understood and articulated.
Example: A manufacturing company is looking for an innovative and complex solution for an energy efficient power supply for a new range of products. To enable them to kick off the procurement process with an appropriate short-list of potential bidders, the manufacturing company issues a wide-reaching EOI to test the market, that is, to understand which candidates may be willing and able to respond to a full-blown RFP.
Characteristics: Usually the first stage of a multi-stage tender process. An EOI may be used to establish potential service providers or a panel of service providers. It usually requests a lesser amount of detail than an RFI and is used when the requirement is well understood and articulated.
Example: A manufacturing company is looking for an innovative and complex solution for an energy efficient power supply for a new range of products. To enable them to kick off the procurement process with an appropriate short-list of potential bidders, the manufacturing company issues a wide-reaching EOI to test the market, that is, to understand which candidates may be willing and able to respond to a full-blown RFP.
- Request for Prices / Request for Quotation (RF$ / RFQ)
Description: To solicit information from potential bidders about their products and services as well as the company’s strengths and availability to meet the specified requirements of the buyer.
Characteristics: Often used in substantial and / or complex procurements exercises, where a requirement could potentially be met through several alternate means. Often used to assist the buyer in framing a detailed solution and requirement specification. Usually requests a greater amount of detail than an EOI but less than an RFP. Maybe a forerunner to another RFx such as an RFP or may be a standalone procurement strategy. May, or may not, include committed pricing information.
Example: A transport company is looking for an innovative and complex solution for a GPS-based logistic tracking and scheduling system. They haven’t settled on a final design and call on selected candidates to provide potential solutions using their own products and services by way of responses to an RFI.
Characteristics: Often used in substantial and / or complex procurements exercises, where a requirement could potentially be met through several alternate means. Often used to assist the buyer in framing a detailed solution and requirement specification. Usually requests a greater amount of detail than an EOI but less than an RFP. Maybe a forerunner to another RFx such as an RFP or may be a standalone procurement strategy. May, or may not, include committed pricing information.
Example: A transport company is looking for an innovative and complex solution for a GPS-based logistic tracking and scheduling system. They haven’t settled on a final design and call on selected candidates to provide potential solutions using their own products and services by way of responses to an RFI.
- Request for Information (RFI)
Description: To solicit from one or more potential bidders to provide detailed documentation relating to specific products and / or services.
Characteristics: Often an early stage of a multi-stage tender process. It may, or may not, include committed pricing information.
Example: A large civil engineering firm is looking to design a unique pedestrian bridge using novel, high-strength, light-weight materials. They request relevant documentation from a short-list of potential bidders of these materials.
Characteristics: Often an early stage of a multi-stage tender process. It may, or may not, include committed pricing information.
Example: A large civil engineering firm is looking to design a unique pedestrian bridge using novel, high-strength, light-weight materials. They request relevant documentation from a short-list of potential bidders of these materials.
- Expression of Interest (EOI)
Description: Used when the specifications and performance of particular products and / or services are already known. In such cases the price is the main or only factor in selecting the successful bidder.
Characteristics: Used to purchase well known products and / or services. Used for commodity products and / or services where pricing is the only basis for commercial comparison.
Example: An extensive food chain franchise goes to market for supply of 100,000 rolls of 3-ply toilet paper for the outlets. They solicit responses by issuing a public RF$.
Characteristics: Used to purchase well known products and / or services. Used for commodity products and / or services where pricing is the only basis for commercial comparison.
Example: An extensive food chain franchise goes to market for supply of 100,000 rolls of 3-ply toilet paper for the outlets. They solicit responses by issuing a public RF$.
Description: To solicit business proposals from potential bidders, submitted through a competitive bidding process (though not essentially). To solicit information from potential bidders about their products and services, strengths and availability to meet the needs of a buyer.
Characteristics: Usually the most well-defined request, soliciting the most detailed response, of all the procurement strategies. The RFP process brings structure to the procurement decision and is meant to allow the risks and benefits to be identified clearly, up front. The RFP presents preliminary requirements for the commodity or service, and may dictate to varying degrees the exact structure and format of the supplier’s response. It includes committed pricing information.
Example: A large Asian food importing and distribution company issued and RFP to a short list of four previous suppliers for the design, supply, implementation and integration of a mid-range computing platform to support a new Enterprise Resource Planning (ERP) system.
Characteristics: Usually the most well-defined request, soliciting the most detailed response, of all the procurement strategies. The RFP process brings structure to the procurement decision and is meant to allow the risks and benefits to be identified clearly, up front. The RFP presents preliminary requirements for the commodity or service, and may dictate to varying degrees the exact structure and format of the supplier’s response. It includes committed pricing information.
Example: A large Asian food importing and distribution company issued and RFP to a short list of four previous suppliers for the design, supply, implementation and integration of a mid-range computing platform to support a new Enterprise Resource Planning (ERP) system.
- Request for Proposal (RFP)
- Request for Tender (RFT)
Description: To solicit suppliers, to bid, to supply products and / or services. As a consequence of the scale of the tender process the majority of RFTs are published by the Government sector, but companies in the infrastructure and utilities sectors may also publish RFTs.
Characteristics: Most rigid structure and often used by Government buyers. An RFT is formal and structured. In the case of Government buyers an official fee is usually needed to fortify and secure the tender bid documents, such a process is to ensure that competition is open, fair and free from bribery and nepotism.
Example: A Government has a large building project in the pipeline so it publishes an invitation for candidates to make a proposal for the building’s construction by way of a response to the tender.
Characteristics: Most rigid structure and often used by Government buyers. An RFT is formal and structured. In the case of Government buyers an official fee is usually needed to fortify and secure the tender bid documents, such a process is to ensure that competition is open, fair and free from bribery and nepotism.
Example: A Government has a large building project in the pipeline so it publishes an invitation for candidates to make a proposal for the building’s construction by way of a response to the tender.
