Managing Indirect Spend: Enhancing Profitability Through Strategic Sourcing

CHAPTER FOUR

The RFx Process

THE MAJORITY OF THE WORK performed thus far has taken place within the boundaries of your organization. The only outside party you have consistently interacted with at this point is the incumbent supplier. The bid phase, often referred to in industry jargon as the RFx process (request for x; either information, a quote, or a proposal), is the step in which discussions begin with other outside parties—competitors of the incumbent. In this phase of the sourcing initiative, buyers utilize the research gathered in earlier phases and the list of suppliers, which has been whittled down from long to short in the previous phase, to begin requesting proposals and pricing from the supplier community. While continuing to communicate with the incumbent, buyers are also ready to present current and future business needs to the marketplace.

The RFx process is considered by many to be the most important step of a strategic sourcing initiative, as it is the phase where crucial information is exchanged between buyers and suppliers. RFx branches off into three primary functions—request for information (RFI), request for proposal (RFP), and request for quotation (RFQ). The previous chapter defined the purpose of an RFI and the role it plays within the research phase of a sourcing process. This chapter further expands on this method, but concerns itself primarily with the additional methods companies utilize to collect information from potential suppliers: the RFP and ...