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The four types of negotiations are Requests for Information (RFIs), Requests for Quotes (RFQs), and auctions. See the table below to help you determine which type of negotiation to create.
Requests for Information (RFIs)
RFI's are used to qualify suppliers and their goods and services for subsequent procurement activities. RFIs are used more for gathering information on goods and service provided by a supplier than to lock in particular price information. Therefore, RFIs typically do not make reference to line price or quantity. RFIs identify important item criteria on which the buyer needs information. The supplier responds by answering the buyer's questions. The buyer uses supplier responses to identify the group of suppliers who should be included in the subsequent negotiation. RFIs can be (and typically are) taken to multiple rounds until the buyer has enough information to identify supplier(s) with which to deal. At the conclusion of the RFI cycle, the information contained in the RFI can be copied into an RFQ or buyer's auction.
Requests for quotes (RFQs) RFQs enable buyers to collect quotes from suppliers for complex and hard-to-define items or services, such as made-to-order manufacturing or construction projects. The RFQ process is generally the longest of the negotiation processes. Once suppliers have submitted an initial round of proposals (quotes), the buyer has the power to fine-tune the RFQ and initiate detailed negotiations, as necessary. This process may go through multiple rounds of negotiations and quotes. RFQs can be blind (buyer can see the quotes during the RFQ, but suppliers cannot) or sealed (neither buyer nor suppliers can see the quotes until the RFQ is closed and the quotes are unsealed), so suppliers can never see each other's quotes while the negotiation is in progress.
Auctions enable buyers to solicit bids for goods and services that are clearly defined, such as office furniture and memory chips. Buyers can discover new suppliers or buyers and get competitive pricing or improved service. Buyers can tailor each auction to control who can see bids during the auction, whether multiple rounds of bidding are possible, and whether partial bids are allowed. Many different items can be included in an auction.
If permitted by the buyer, suppliers can view all bids submitted while the auction is open. This information generates competition and encourages suppliers to submit their best possible price. Once the auction is completed, suppliers are immediately notified of the auction results via online notifications.
Comparison of the negotiation types:
| Negotiation Type | RFI | RFQ | Auction |
| Characteristics | RFIs allow buyers to solicit information from suppliers on the goods and services the suppliers provide. This allows buyers to qualify a group of suppliers and identify the suppliers to be included later in the negotiation | RFQs allow buyers to collect quotes from suppliers for complex items and services. Suppliers submit a single quote per round. Buyers review the quotes, may amend the supplier list, and submit the RFQ for subsequent rounds of negotiating. The RFQ process is typically longer than an auction. | Auctions allow buyers to solicit bids for items and services that are clearly defined, for example, office furniture and memory chips. Auctions are usually short in duration and require a fast bidding process leading to a quick award. |
| Response Document | Response | Quote | Bid |
| Style(s) | Open, Blind, Sealed | Blind, Sealed | Open, Blind, Sealed |
| Multiple Rounds Supported(?) | Yes | Yes RFQ,s by nature usually lead to multiple rounds. | Yes, if enabled through bid controls. |
| Can Include Multiple Items? | Yes | Yes | Yes |
| Other |
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