Create and process a request for quotation
The request for quotation (RFQ) process invites suppliers to bid on specific products and/or services. The RFQ is a document that is issued when an organization wants to purchase products and it chooses to invite companies so they can submit competitive bids. This unit explains how to create request for quotations in Supply Chain Management.
When you want to buy an item that can be supplied by more than one vendor, you issue an RFQ. First, you create the request for quotation, select the vendors that you want to reply to the RFQ, and then send the RFQ to the vendors. The request for quotation states the required response time (expiry date).
The RFQ process includes the following tasks.
- Creating and sending a request for a quotation to one or more vendors.
- Receiving and registering request for quotation replies.
- Transferring the accepted request for quotation replies to a purchase order.
You can manually start the RFQ process on the Request for quotation page from a list page or details page, or start it automatically from a planned purchase order or a purchase requisition.
For example, the Purchasing agent, performs the following tasks.
- Creates the RFQ case for an item and then sends it to the vendor(s). A procure agent then enters the vendor reply information for the RFQ. Alternatively, if the vendor is configured to use vendor collaboration, the vendor can reply to the RFQ from the vendor collaboration portal.
- Keeps the original RFQ information.
- Adds the new received vendor RFQ information.
- Performs a comparison of the best total price received from the vendor RFQs.
- Selects the vendor RFQ with the best total price.
- Selects and enters a reason code to reject the other vendor RFQs.
Set up RFQs
Before you can create requests for quotations, you must set up RFQ information in your system. The four basic steps for setting up RFQs are as follows.
- Define request for quotation parameters.
- Set up default request for quotation reply fields.
- Set up update parameters for quotation lines.
- Define request for quotation number sequences.
Define RFQ parameters
To set up request for quotation parameters, follow these steps.
- Open Procurement and sourcing > Setup > Procurement and sourcing parameters.
- Select the Request for quotation FastTab.
- Select the Purchase type. The purchase type that you select will be the default value for new RFQs. The value can be overridden on each request for quotation. The choices are either Purchase order or Purchase agreement. Purchase requisition cannot be selected manually.
- Enter the default days to be added to the system date expiration in the Days offset field.
- Optionally, you can enable the Working days option to only use working days from the company calendar when you are calculating the expiration date instead of all calendar days.
- Select a default value to be applied to requests for quotations in the Mode of delivery, Delivery terms, and Terms of payment fields.
- Select a trade agreement journal to apply by default for RFQs in the Default trade agreement journal field.
- You can lock RFQs when they are sent. This enforces an amendment process where you can change the RFQ case and then send it by finalizing the amendment process through a wizard. If a purchaser should enter a bid for the vendor, the purchaser should be able to edit the vendor's bid.
- You can select a template for the email with the amended RFQ that goes out to the vendor contact. The email template can handle %xxx% tags, where text provided in the wizard can replace the tags.
Define how the RFQ lines are updated when the RFQ header is updated
Specify whether you want to update RFQ lines and RFQ reply lines automatically when you modify the RFQ header and the RFQ reply header.
For each field, select one of the following options.
- Never - The lines are not updated when the request for quotation header is updated.
- Always - The lines are updated automatically when the request for quotation header is updated.
- Prompt - When the prompt appears, you can decide whether to update the lines.
The Sales tax group field applies only to RFQ replies.
Issue an RFQ
You can create requests for quotations manually, or you can issue them from planned purchase orders and purchase requisitions. You can create RFQs for the Purchase order and Purchase agreements types.
If the RFQ is created from a purchase requisition, the Purchase requisition type is automatically assigned to the request for quotation. For RFQs with the type of Purchase order, inventory transactions that have the receipt status of Quotation receipt are created when the RFQ lines are created. For RFQs of the type Purchase agreement, there are no inventory transactions.
Go to the Procurement and sourcing > Requests for quotations > All requests for quotations page, which contains the following sections:
- Filter options for the Buyer group and Vendor account, in addition to the standard list page filters
- A grid with each RFQ case
- Vendors FactBox, which displays each vendor that is associated with the selected RFQ case
The Lowest status and Highest status columns display the status of the order lines with the lowest and the highest status, respectively. The statuses listed in the hierarchy are as follows.
The RFQ vendor column displays the status of the vendors that are selected for the RFQ case header. The statuses are:
- None - No vendors are selected for the RFQ case.
- Single - A single vendor is selected for the RFQ case.
- Multiple - Two or more vendors are selected for the RFQ case.
The reply statuses that are visible on the RFQ reply page in Supply Chain Management are as follows.
- Not started
- Vendor updates
- Purchaser updates
- Submitted by Vendor
- Submitted by purchaser
The vendor's reply can only be entered onto a dedicated page that is accessed either from the Vendor collaboration interface or the Request for quotation page by means of the Edit reply action.