Local businesses bidding for tenders have to swim through a murky sea of alphabet soup. If only it tasted so good. RFI, RFT, RFP, RFQ — what does it all mean?? Is all this some bizarre code? It’s really not as complex as it might seem, and there is no shame in not knowing about these things. Today is your chance to learn.
All of the letters mentioned above stand for different steps in the procurement and purchasing process used by large buyers. These letters all represent different, standardized steps in the bidding process. That is very good news. This means, once you learn these things, they will work for the entire universe of buyers using these procedures. Suppliers who understand these terms – what they mean and the standard documents involved – are in a MUCH better position to bid for, and win, large contracts. Let’s briefly examine each one:
RFI – Request for Information
This is an open enquiry sent out by buyers that aims to gather information about the capabilities of a variety of suppliers. RFIs normally follow a standard format to assist with cross-comparisons among suppliers. RFIs are sent to a broad base of potential suppliers. This prepares suppliers (it makes them aware of the potential for a new tender). Buyers also use the RFI to gather information on available suppliers in order to begin building a database of potential suppliers. Buyers need to know certain things. They want to know about facilities, finances, general attitudes, capabilities and intentions. This is not crazy. The buyer is seeking to make a major purchase. Imagine you were going to buy a house, you would likely take some time to thoroughly survey the market, as well as several potential sellers before you narrowed your choices down. An RFI is merely a buyer’s effort to understand the market and to prepare suppliers in the market. The dynamics, the trends and major factors, the nature of local competition, the entire array of product offerings – this is the information an RFI is designed to gather.
RFQ – Request for Quotation
Basically, this is an opportunity for potential suppliers to competitively cost the final bid. (An RFQ is also generally the same thing as an IFB – “invitation for bid.”) RFQs are most appropriate and useful when the products or services being sought are quite standardized and commoditized. The buyer is aiming to make the suppliers’ quotations comparable. An RFQ details all the necessary parameters: quantities, quality, term of contract, part descriptions and specifications, personnel skills, etc. – anything and everything. RFQs are highly specific. Buyers need to be able to evaluate between the same or similar items/service. The more specific the RFQ, the more accurate will be supplier bids.
RFT – Request for Tender
An RFT is a buyer’s open invitation for suppliers to respond to a defined need, as opposed to a request being sent to potential suppliers. Potential suppliers are invited to submit formalized offers to supply goods or services against a detailed tender. In the public sector, government ministries are often expected to use structured and transparent RFTs in order to minimize the chance of corruption and nepotism. The entire process is designed to produce competitive and comparable bids that buyer procurement teams can evaluate in a transparent and impartial manner.
RFP – Request for Proposal
Sometimes this follows from a prior RFI, an RFP is designed to seek specific data, offerings and quotations. RFPs accomplish similar things to an RFT, but RFPs are commonly used by the private sector. Just like RFTs, an RFP is more than about price. It is a buyer’s way of assessing price, quality and capabilities.
So, let’s do a quick recap: The tenders process and everything related to it is designed to increase transparency, reduce corruption and align needs & abilities. It’s about more than just price and cost-effectiveness. It’s about aligning quality and matching buyer/supplier perspectives. Buyers want to be able to trust and appreciate a supplier’s capacity, technical skills and commitment to delivering a particular good or service within an appropriate time-frame.
The terminology can be bewildering to the uninitiated, but once you begin to understand it, you come to realize how beneficial these procedures are for both buyers and suppliers. This was article was quick synopsis. There is much more that can be said about each topic, about strategy and how to effectively leverage each stage in the tender process for your company’s advantage. This is why one of the most powerful SME training sessions we offer in Yangon covers the procurement process. Local business managers and owners learn (for free!) about all the things just discussed in greater detail and can receive documentation templates, as well as participate in discussion on aspects of procurement more specific to Myanmar.
Lastly, we also invite buyers and suppliers to use our local tender distribution website, a resource we are proud to say has quickly become one of the best places to find information about tenders in Myanmar.
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