Request for QuotationThe Foundation of Systematic Procurement in B2B Purchasing
Procurement glossary · Updated · 8 min read
Also known as: RFQ, Request for Quotation, quotation request, enquiry, price enquiry
Short answer
- A request for quotation is the non-binding invitation to suppliers to submit a quotation for defined goods or services.
- It typically contains quantities, dates, technical specifications and commercial terms such as payment terms and early settlement discount.
- The quotations received are compared in a structured manner and form the basis for the award and the order.
The request for quotation is a company's formal request to suppliers to submit a binding quotation for goods or services. It is the central instrument of market enquiry in operational procurement and forms the basis for comparing prices, terms and delivery capability. As part of the Source-to-Pay (S2P) process, the quality of the request for quotation largely determines how robust the subsequent quotation evaluation and award decision will be.
Key facts
- The request for quotation is a non-binding invitation to suppliers to submit a quotation; only the supplier's quotation becomes binding, typically in the form of a Binding Offer.
- In practice, it is usually processed using standardised enquiry packages with position lists, technical specifications and commercial framework conditions.
- The response deadline is typically between one and four weeks, depending on complexity and procurement requirements.
- Essential components are part numbers, quantities, dates, drawings, standards and requirements regarding certificates and quality assurance.
- A structured request for quotation improves the comparability of responses and significantly reduces the clarification effort during quotation evaluation.
- Digital procurement platforms and marketplace connectivity (e.g. via OCI) often shorten the enquiry cycle in practice to just a few days.
Contents
Definition: Request for Quotation
The request for quotation (also quotation request, Request for Quotation, RFQ) is the written or electronic invitation from a buyer to one or more suppliers to submit a quotation covering price, delivery time and terms for defined services. As a rule, it is legally non-binding; only the quotation received – for example as a Binding Offer with a validity period – can become binding for the supplier.
Distinction from other types of enquiry
The request for quotation differs from a tender, which aims at a formal award procedure with defined criteria, and from a request for information (RFI), which is only intended to establish capability and provide a market overview. In practice, the terms are often used synonymously, which leads to misunderstandings among suppliers. Clear terminology and uniform document templates within the company prevent this. The choice of instrument follows the procurement strategy: for simple requirements, a brief RFQ suffices; strategic awards require a complete tendering strategy with evaluation schemes defined in advance.
Legal classification
In private-sector purchasing, there is no obligation to accept the best or indeed any quotation; the request for quotation is fundamentally non-binding. The situation is different for public-sector bodies, which are bound by procurement law. In free commercial transactions, a contract is only concluded upon placement of the order (acceptance of the quotation). Advance payments, contracts for work or sale of goods characteristics may alter the legal classification in individual cases; the specific arrangement should be examined contractually and, where uncertain, legally. It is important to expressly document the non-binding nature in the enquiry in order to avoid deemed acceptances.
Position in the procurement process
The request for quotation follows requirements identification, market research and supplier selection (long list) and leads into quotation comparison, award and ordering. It thus forms the link between the operational and negotiation phases in the Source-to-Pay (S2P) process. For catalogue-based requirements, the enquiry and ordering steps are often handled via electronic connectivity using an OCI catalogue, while project-related or tooling-related procurement requires individual enquiry packages.
Methods and approach for the request for quotation
A professional enquiry process follows a fixed sequence: requirements clarification, supplier selection, preparation of the enquiry documents, dispatch with a deadline, bidder questions, comparison of submissions and quotation evaluation. Standardisation and thorough preparation determine the quality and speed of the responses.
Structure of the enquiry documents
A complete request for quotation typically contains: a requirements list with part numbers, quantities and units; technical documents such as drawings, functional specification or standards; required certificates and test evidence; requested delivery dates and delivery terms (Incoterms); payment terms and required conditions such as early settlement discount; the deadline for the response and the validity period of the quotation. For series parts, quality requirements are additionally included, such as APQP requirements in the automotive industry or defined inspection plans. Incomplete documentation is the most common cause of delays and miscalculations by bidders.
Supplier selection and limiting the number of enquiries
Three to five suppliers are frequently approached in order to enable a robust price comparison without committing bidders to unnecessary calculation effort. Particularly with complex initial quotations – for example for injection moulding tools with tooling amortisation clauses or customer-specific manufactured parts – fairness towards bidders is important, since the scope and selection shape the willingness for future cooperation. A strategically prepared tender process defines in advance which criteria will be evaluated and whether alternative bids are permitted.
Bidder questions and clarification phase
During the response period, suppliers typically raise clarifying questions regarding tolerances, materials, packaging or supply chains. Professional purchasing organisations consolidate these questions and answer them as round-robin information to all participants, in order to ensure equal treatment and comparability. Technical clarifications, such as material availability checks (ATP) at the supplier or manufacturing capacity checks within the framework of Rough Cut Capacity Planning (RCCP), belong in this phase before quotations are finalised.
Key KPIs in the enquiry process
Enquiry processes can be measured well. Typical key figures relate to speed, response rate and the cost effect of the award. In practice, the following benchmarks serve as orientation:
Process duration and response rate
The average time from dispatch of the enquiry to receipt of the quotation is often five to ten working days for standard parts, and several weeks for complex manufacturing packages. The response rate of the bidders approached should typically be above 90 per cent; lower values indicate unclear documentation, unattractive volumes or an incorrectly chosen supplier setting.
Price effect and comparison quality
The savings effect compared with the benchmark price (Last Price Paid or budget) is frequently between five and fifteen per cent in practice for structured multiple enquiries. The completeness rate of quotations – i.e. the proportion that can be evaluated directly without follow-up requests – should typically exceed 95 per cent. The share of post-award negotiation in the overall result shows whether the enquiry itself was already sufficiently competitive.
Evaluation beyond price
A scaled quotation comparison takes into account not only price but also delivery time, quality, logistics concept and risk aspects. Quotation evaluation therefore includes cost breakdown, review of the calculation documentation and assessment of security of supply. For strategic goods, supplier evaluations and a Risk Mitigation Plan supplement the purely quantitative assessment.
Risks and controls in the request for quotation
Common sources of error are unclear specifications, inconsistent evaluation standards and inadequate documentation. Appropriate controls ensure legal certainty, comparability and traceability of the decision.
Specification and documentation risks
Vague specifications ('please quote for a similar part as before') lead to non-comparable quotations and disputes during execution. Every enquiry should therefore contain a unique reference, valid drawing statuses with revision index and a date. Changes during the enquiry phase are communicated to all bidders simultaneously and documented – also with a view to subsequent warranty and guarantee claims.
Compliance and non-binding nature
Side agreements with individual bidders outside documented channels, renegotiations circumventing the published criteria or selective disclosure create legal and reputational risks, particularly towards rejected bidders. Internal four-eyes principles, defined thresholds for formal tenders and a clean enquiry register mitigate these risks. Tax aspects such as the treatment of early settlement discounts or VAT details in the quotation must be examined on a case-by-case basis.
Quotation and execution risks
Prices below a plausible calculation may be based on misunderstandings or lead to later follow-up claims; such quotations should be examined critically rather than awarded automatically. A Supplier Development Plan helps to support newly onboarded suppliers during the start-up phases. To safeguard against failure of critical parts, contingency management (alternative suppliers, second source) supplements the actual award decision.
Current developments: digitalisation of the request for quotation
The enquiry process is increasingly shifting from email and Excel to digital platforms, marketplaces and standardised interfaces. This fundamentally changes the speed, transparency and reach of the market enquiry.
Digital platforms and AI support
B2B marketplaces and procurement suites enable the creation, dispatch and comparison of requests for quotation in one place, including quotation comparison based on criteria-driven schemes. AI-supported tools provide support in preparing enquiry documents, matching suitable suppliers and conducting an initial review of incoming quotations. The buyer remains responsible for the evaluation; automation primarily accelerates standard requirements and recurring enquiries.
Standardisation and international supply chains
Interfaces such as OCI for catalogue orders and structured data formats for RFQs reduce manual transfer errors. In international procurement, supply chain topics are gaining in importance: evidence obligations, for example around EUDR in the purchasing of relevant raw materials, or customs and payment safeguards such as letters of credit in new customer relationships, must increasingly be addressed already in the enquiry. Supply Chain Finance questions, such as payment terms and their cash flow impact on both sides, are also being addressed earlier and more transparently.
Strategic further development
Category Vision and Category Management transform the ad hoc request for quotation into planned market engagement: a known supplier landscape, predefined evaluation criteria, pre-qualified bidders. In addition, slow-mover analysis and outsourcing potential analysis identify which requirements are worth enquiring about or tendering at all, and where make-or-buy decisions need to be revisited.
Typical metrics
| Metric | Benchmark | Context |
|---|---|---|
| Response rate of the bidders approached | > 90% | typical benchmark; lower values indicate unclear documentation or the wrong supplier setting |
| Lead time from enquiry to quotation | 5–10 working days | standard parts; complex packages take considerably longer in practice |
| Completeness rate of quotations | > 95% | proportion of quotations that can be evaluated directly without follow-up requests |
| Price effect compared with the benchmark price | 5–15% | a frequent outcome of structured multiple enquiries; not a guaranteed value |
Typical practical benchmarks – they vary by industry, part and contract.
Practical example
A medium-sized mechanical engineering company requires 500 forged and machined gear shafts per year. Instead of enquiring by email with attachments as before, the buyer creates a structured enquiry package: drawing status with revision index, bill of materials, required material certificates, annual volume with monthly call-off ranges, Incoterms, payment terms with early settlement discount option, and a two-week response deadline. Three qualified bidders are approached in parallel; clarifying questions are consolidated and communicated to all parties.
- Uniform quotation comparison sheet covering price, delivery time, tooling costs, minimum order quantities and early settlement discount calculation
- Binding quotations only with a validity of at least 90 days (Binding Offer)
- First sample approval agreed prior to series release with defined APQP milestones
- Award to two suppliers to ensure security of supply, with planned tool rotation at the second supplier
Conclusion
The request for quotation is more than a formal act: it determines whether the subsequent comparison is robust, fair and fast. Carefully prepared documents, clearly communicated deadlines and a uniform evaluation scheme reduce clarification effort and measurably improve the outcome. Digitalised processes shorten lead times and increase the response rate of bidders. Those who embed enquiries within an overarching procurement strategy achieve sustainably better terms than with ad hoc enquiries. The request for quotation thus remains the workhorse of operational purchasing – and at the same time a lever for cost, quality and security of supply.
Frequently asked questions
What is a request for quotation (RFQ)?
A request for quotation (RFQ) is the non-binding invitation to suppliers to submit prices and terms for defined goods or services. It contains quantities, dates, technical specifications and commercial framework conditions. The quotations received form the basis for comparison, negotiation and award.
Is a request for quotation legally binding?
In private commercial transactions, the request for quotation is fundamentally non-binding; even the best bidder has no entitlement to the award. The supplier's submitted quotation, however, can become binding, for example with an agreed validity period as a Binding Offer. The contract is only concluded upon placement of the order; the legal assessment must be examined on a case-by-case basis.
How many suppliers should be included in a request for quotation?
In practice, three to five suppliers have proven effective for a robust price comparison. Where calculations are very complex or services are customer-specific, the number should be deliberately limited so as not to burden bidders with fruitless expenditure. The decisive factors are the procurement strategy, the market situation and risk aspects such as security of supply.
What information belongs in a request for quotation?
Essential elements are a position list with part numbers and quantities, valid drawings and specifications, required delivery dates and Incoterms, payment terms and early settlement discounts, quality and certification requirements, as well as the response deadline and quotation validity. Complete documentation is the most important prerequisite for comparable quotations. Any changes during the enquiry phase are communicated uniformly to all bidders.
What is the difference between a request for quotation and a tender?
The request for quotation is the flexible operational instrument for market enquiry without formal procedure requirements. A tender follows a defined procedure with documented evaluation criteria and deadlines, as is common in particular under public procurement law, but also for large private-sector volumes. Both instruments can form part of an overarching tendering strategy.
How long does it take to respond to a request for quotation?
For standard parts, response times in practice are typically five to ten working days; for complex manufacturing packages, two to four weeks or longer. Deadlines that are too short impair the quality and completeness of quotations. The deadline should be proportionate to the effort required for the calculation and consistently adhered to.
