Request for Quotation (RFQ)
Definition
A formal invitation asking suppliers to submit prices for clearly specified goods or services, used when requirements are well defined and price is the main decision factor.
In Practice
An RFQ works best when you know exactly what you need: part numbers, drawings, quantities, delivery dates, and quality standards are fixed, and suppliers compete primarily on price, lead time, and payment terms. Buyers send the same specification package to several suppliers, compare quotes on a like-for-like basis, and award to the best offer.
For planners, RFQs matter because the quoted lead times and minimum order quantities become planning parameters once the award is made. A sloppy RFQ that omits packaging specs or delivery frequency often surfaces later as receiving problems or unexpected freight costs.
Example: a machine shop needs 5,000 machined brackets to a specific drawing. It sends an RFQ to four vetted suppliers with the drawing, tolerance requirements, and required delivery schedule, then awards to the supplier offering the best combination of price and four-week lead time.
Related Terms
A formal document asking suppliers to propose how they would meet a business need, evaluated on solution quality, capability, and total value as well as price.
Request for Information (RFI)A preliminary questionnaire sent to potential suppliers to gather facts about their capabilities, capacity, and offerings before running a formal RFQ or RFP.
Purchase OrderA legally binding commercial document a buyer issues to a supplier specifying the items, quantities, prices, delivery dates, and terms of a purchase.
Price BreakA quantity threshold at which a supplier's unit price drops, so ordering more units per order earns a lower price per unit.