Request for Information
A Request for Information (RFI) is a type of business process in which the company is collecting written information about the capabilities of other companies. Typically, it follows the customer-supplier chain and is written in a format that can be used to compare multiple suppliers.
Using RFI can be very beneficial to your business as it can help you make a decision on what to do next based on the information that has been provided to you by the suppliers. Therefore, RFI is an excellent tool for finding the right suppliers when it is combined with a request for proposal (RFP), and a request for quotation (RFQ). RFI is also widely used in developing a business strategy, selecting the pool of the right suppliers for your RFPs and RFQs as well as simply preparing for more complicated processes of creation of those types of requests. The entire RFI process can be executed online with the option of collecting information and conversations in specific databases. The easiest and the most efficient way of delivering RFIs is via email.
Remember, that an RFI is a solicitation that can be sent to a broad base of potential suppliers to gather essential information as a prepping process for an RFP or an RFQ. It is also helpful in developing a business strategy and building a database for later negotiations about:
• Suppliers, including facilities, finances, products, and services;
• The state of the market;
• Dynamics of the market;
• Trends and factors that drive change in the market;
• Pricing strategies;
• Competition in the supplier market;
• Range of products or services offered by a particular supplier;
• Focus and plans that are provided by the supplier.
RFI is the least formal way of inquiring information of any kind, and it bonds you with less commitment on what you are planning to do at the end of it. Inquiring details on specific supplier does not necessarily put you in the place of having this supplier hired for your project. While asking for an RFI, you don’t have to share your own company’s details or much information about the project you are about to complete. With RFI, you instead put a lot of focus on the vendor’s ability to aid in your project that you have in mind.
With the RFP, on the other hand, you can specify the scope of work that needs to be performed and allows for the vendor to get to know your project and suggest how they will apply their resources to aid you. It also includes the pricing information about the products or services that will be provided. Therefore, it also requires you to share information about your project with the vendor.
In RFP, you must be specific about YOUR company. In most cases, RFP is the process that follows RFI in case you have decided to follow through with choosing a certain supplier for your project. Provide sufficient detail in your RFP and remember always to keep it formal.
The main advantage of the RFI is that this form requires a minimal amount of knowledge about the type of work that the supplier will do in the end. It also releases the vendor from bidding or having to provide any kind of financial information as per products or supplies.
RFI is also very useful for small projects with low impact. There is no need for the suppliers to send lots of descriptions and documentation, which means you can quickly make your decision with less paperwork to process. It is helpful to get to know companies in a concise time and create your pool of bidders who you would later invite in the RFP or RFQ process. An RFI is an excellent tool for introducing two business partners to each other.
However, the primary disadvantage of using RFIs is that the supplier may not send information to a company unless he sees the real commitment to future cooperation. Writing a structured response to your request can be time and money consuming and result in the absence of any obligation. Besides, RFIs typically contain a collection of basic facts and statements about the company that you can easily find online, all by yourself. Companies do not want to commit and typically wouldn’t create a special RFI just for you. If you would like to gain a sufficient knowledge about certain companies, try inviting them to compete in the RFP or RFQ process instead.
RFI gives potential bidders a signal about the competition that will ensue for a product or service. It lets the vendors know that you are a potential client seeking formal and structured information, while it also shows that you respect their time by only requesting the essential information. Keeping that in mind, you can also enhance the process by following the best practices.
Follow an already established format. Gather all the information in a formal and organized manner that will help you compare multiple companies at the same time.
Be specific about the information you inquire.If your request is accurate and clear, it gives the supplier the ability to respond to it precisely and make more sense to you in the end. The vaguer you are with your request, the harder it will be for the supplier to understand what you are looking for.
Ask for only the appropriate information in your request. Limit the information you request to the following points:
• Vendor’s capability to deliver the product or service
• Other info like personnel or facilities that can be provided during the project execution
• Financial statements
• Goals that the supplier might have for this partnership
• It is also a good practice to research the quality of the services provided by the supplier company on your own.
Try not to request pricing information. Request for information is an introductory stage in the process of attracting companies to cooperate. There is another type of request that asks for a price for services, which is a Request for Quotation. It usually follows the request for information and allows you to inquire additional details about services and products specific supplier can offer. Also, do not request information about methodology in the RFI form. You can use the Request for Proposal to do just that.
Build relationships. Be polite and considerate. Keep the right goal in your mind. Remember that the most important thing for you is to establish a valuable relationship with your supplier who may later become your business partner. The success of the partnership is proportional to the level of consideration you put into communicating clearly and politely. Begin with adequately organized initial requests and timely responses and remember, there is no place for prejudice against any of your suppliers while cooperating with them.
Be aware of the costs. You must remember that the suppliers face some costs in order to provide the information to you. The more information you ask for during the RFI process, the more time they spend on compiling the report, which adds costs to their business. In the end, they will add those expenses to their final pricing models.
Be aware of the time. It takes time to compile and respond to your request for information. Yes, it does take less time to respond to an RFI than it does to an RFP or an RFQ. However, in general, expect to receive a response within one week as it is the minimum time required for the supplier to respond and deliver a clear and concise information. As a standard, allow for a two weeks turnaround in case the volume of data is significant. Never rush the process as it will be considered inappropriate, but also don’t allow suppliers to get back to you months later.
There are two different ways of approaching the request for information process. Which one you choose depends on whether you are making an RFI or somebody else is requesting one from you. The term itself can be applied to both parties in the business. However, the processes have some minor differences. Below, we will be elaborating on how to improve each of those procedures, no matter if you are the one who is asking, or you are the one who is being asked.
Request for information can serve as a primary stage in carrying out extensive projects. Those have a lot more variables and issues that need to be resolved before the proposals can be made and can only be addressed by submitting a formal request for information.
The process should not take a long time for you, instead, try completing it fast without any delays. If an RFI is sent to you, your potential customer is considering you as his supplier. Try responding promptly and impress your customer with the effort you put into your reply. Be organized in your process, and it will pay off.
In case you might not be confident that you would be able to deliver the tasks or products listed in the RFI or if you prefer not to carry it out, politely decline it. Resource conflicts with the customer can negatively affect your business and confuse your customer. A negative but timely reply can still show you in a positive light to the customer and leave a good impression. It will also give you a chance to be contacted for the future projects.
Check whether the RFI that you have been offered has just enough details for you to respond. Check whether it satisfies and answers the following questions and conditions.
• Can you compete in the bid? Do you have enough resources available to offer a satisfying solution?
• Can you win the bid? What is the thing you can provide that will make you stand out from other competitors?
• Do you want to win it? Research your customer. Contact their previous suppliers to figure out more information about them and their ways of doing business.
In case the RFI remains very unclear, you can offer the customer some additional services:
• Pursue other projects offered by the customer
• Help the customer to make a better RFI
• Offer paid consulting services to put together a new RFI for the customer.
Before your project has started, it is always a good idea to request information about the suppliers. Start an RFI process if there is a specific need for:
• Project specification, or modification of individual product and service requests
• Clarification of a specific task that requires a certain product or service
• Clarification on a situation in which the product or service wasn’t delivered as stated
• Correction of criteria that were used to purchase certain products or services
Try asking the supplier whether they have a standard RFI form that can be followed and used by you. Forms and templates can be used for you to include the proper type of information to get a specific and useful response.
Carefully review the answer that you have received from the supplier. Make sure it is both clear and tangible. If you have any questions, get back to them, ask appropriate questions to get a better picture. Update your info on the budgeting and schedule and further plan the execution of your project.
If you don’t have any other questions for the client, it is the time to further your process and follow up with RFP or RFQ.
An RFI can be used as a powerful tool in attracting potential suppliers to your projects as well as building valuable business connections that will serve you best in the long run. It is simple to compile and has a natural format to follow, yet remaining very professional and to the point. A well-composed request for information can present you as a company that cares about professionalism and wants to incorporate the best business practices in its operation.