Forms used by Purchasing Professionals

In order to manage the need to purchase supplies and services, purchasing professionals utilize certain forms to obtain the internally requested products or services.

When it comes to forms most used by purchasing professionals you may already be familiar with some of these standard forms. For example, the Request for Quotation; Request for Proposal; Invitation to Bid; and there are many others.

While most of these procurement forms are relatively straightforward, the Request for Proposal process is a tool that has continued to evolve since its first started to appear in the early ’80’s. Since then, RFP’s have become more prevalent, have continued to be refined and in some cases is the only form companies issue (not what we recommend!). Regardless, companies that purchase goods and services need procurement forms to help manage their business. These forms are used when your selection criteria might include factors other than price, like service capabilities or technical support.

Role players in an RFP / RFQ

Typically there are 3 or 4 role players in the RFP or RFQ process. There is a Tenderer aka Supplier / Offeror / Vendor / Bidder; then there is the Owner which is the parent company that pays the invoice  submitted by the Supplier — next the user or internal department which developed the scope of work or department that originally made the request — and last, the procurement officer who is the person managing the RFP / RFQ. There are others like the accounting department which will pay the Supplier and so on.

Supplier/Vendor:   A seller of materials and or supplies who submits a proposal or quotation on your requirements identified in the request for proposal (form).

RFQPro is launching a Step by Step Guide which will help you manage the RFP Process from start to finish and best of all it includes each form you would use during each step identified in this process. All these forms will be provided in edit friendly Microsoft word documents. This comprehensive guide and template pack will be offered at a discount to all of our present subscribers with an additional discount to past or present customers before it is released to the general public. Subscribe and purchase any of our template packs today to be eligible for this discounted offer.

Part 1

The RFQ or Request for Quotation is also referred to as a Request for Qualifications. Both procurement forms are used by Buyers when they approach Vendors for goods or services in the Quotation instance and in the Qualifications scenario they are looking for specifics to determine whether you as the Supplier might qualify to complete a requirement the Buyer has identified.

The RFQ for Qualifications might be to determine whether you are able to complete special artwork for a public environment like say a public library for example. In this instance, the Buyer might offer the Supplier a small stipend like $500-1000 to create some form of facsimile of what they would provide as artwork for this public space. From the samples of artwork provided by potential bidders the Buyer would then consider an award.

In general, when talking RFQ’s most vendors would assume you are looking for a price quotation for either goods or services. A RFQ is a great way to get the current pulse or cost in the marketplace for the item(s) you seek. By issuing a RFQ, the vendor understands they have a shot at winning your purchase order or supply contract so they are often motivated to provide the best terms in an effort to gain your business. Not a guarantee however it is an assumption…read on. Read the rest of this entry

Bid ProceduresHow you are governed in respect to bid procedures for any RFQ, Tender or RFP you issue will vary depending on whose dollars you are spending. If you are a purchasing professional working for a public organization and spending tax payer dollars, you are likely using a different set of guidelines then a buyer representing a privately owned organization. Each private or independently owned company’s bid procedures might differ depending on their size and spend.

In addition to their bid list, public purchasing agencies are often mandated by statute or regulation to advertise their bids in local newspapers  whereas private corporations usually draw bidders from an internal bid list only.

In a formal bid system, regardless of ownership structure or bidding guidelines, the bidder typically will be provided:

  1. Instructions to bidders – explains how, when, and where the response to the bid must be submitted;
  2. Specifications – a detailed specification which the item required must meet. This is often technical by nature and the RFQ might include pages of quality guidelines, engineering drawings and strict compliance requirements;
  3. Conditions – a set of legal, special and general conditions which must be met by the successful bidder;
  4. Bid Form – which your bidders will use to provide their cost and any other commercial terms.

For the opening and award component of your tender, this again will vary for the public purchaser when you compare practices to the private or corporate purchaser. The public purchaser is often required to open all bids in a public arena and will be required to disclose bid sums. Basically, they open the tender in front of anyone in attendance and post the sum to a white board. Many of the bidders will take part in the process just to see competitors bids. The private buyer is not required to follow this process and often has more flexibility when it comes to evaluating and awarding the bid.

The public buyer will have to justify and defend a selection if the lowest bidder is not awarded the tender. If the bidder meets all the criteria posted in the tender, RFP or RFQ and they are low bid often this is all that is required to be awarded the contract. For the selection criteria, more weight is put on unit cost whereas a private company might put more emphasis on service, warranty and quality.The public purchaser is under more scrutiny and the award process is much more transparent.

All out-going procurement documentation along with the bidding procedures are typically managed by the purchasing department. They are the keepers of the bid list or vendors in good standing, the issue and closing date of the bid and all other commercial aspects of the bid.

Part 1 – Buyers Guide to Cost Savings

As a Buyer or Purchasing Professional you should be evaluating your spend. What does this involve and how does it benefit my organization to complete a spend analysis? Basically, you are reviewing how your organization spends its operating budget or what makes up costs. To do this, one could run a historical report from your purchasing software system. It might allow you to drill down and report the top 20 or 30 vendors and how much money your company spent with them in the last 12 months. Better yet if it could provide the commodity or description of the spend then you are off to the races. If Purchasing cannot directly pull this data from a software program, your next best option is to approach the accounting department. They should be able to give you a list of the top vendors A/P sends payment to.

Once you have your list of the top 20% of your vendors in relation to how much money you spend with them annually we are fairly certain you are going to see that this list likely represents close to 80% of your operating budget. Yes the 80/20 rule will apply.  Why focus on the top 20%, well there are only so many hours in the day and as a buyer you need to focus your efforts on where you are going to make the biggest impact. Spending hours on toilet paper contracts to save $10.00 might not be the best way of utilizing your time.

Cost conscious business owners will Read the rest of this entry