Uncertainty is the new normal, and it applies to more than just port or shipping delays. Introducing 2022’s key variable: inflation. Welcome to the new normal, where nothing feels normal at all. A 2022 Supplier Information Study shows that inflation is the number one issue on the minds of procurement professionals right now, and they’re being forced to take action. In fact, 100% of the sourcing leaders surveyed are actively taking action to lessen the impact of inflation on their companies. Most of those leaders are looking for a larger and more diversified supplier base.
Because of the direct impact on the bottom line, top executives aren’t tightening their belts. Instead, they’re reviewing procurement processes with the hopes of streamlining efficiency and reaping long-term gains by introducing new technology to replace manual functions conducted by email, fax, and phone calls.
Specifically, the request for quote (RFQ) process is receiving attention from many leaders because most procurement teams are stuck in tedious clerical work, sending individual RFQs to each supplier, collecting responses from them, and comparing these responses in various formats. With no streamlined solution in place, onboarding new suppliers is a hassle that could take weeks or months to complete and require dozens of hours of clerical work.
A modern RFQ solution takes away all of this manual work so buyers can focus on making the most informed purchasing decisions. With one click, buyers send RFQs to unlimited suppliers, providing a quick route to onboarding new suppliers. Buyers using an RFQ solution can better manage their pricing activity, get more quotes, better prices, and save time for both themselves and their company.
What is an RFQ?
A request for quote is one step in a process for ordering parts or materials. It’s a way for companies to screen potential vendors for the best prices and payment terms. An RFQ is generally used once the company has a clear idea of what specific part or material they need from the vendor. In these cases, companies often choose a supplier based on the price of bulk orders. RFQs put the company in change. Buyers make decisions about what to buy, how much, and when. An RFQ is a great way to screen potential new vendors and ultimately add new ones to the roster.
Do I Need an RFQ Solution?
Under the old systems, buyers have no ability to collaborate with internal team members or communicate seamlessly with suppliers. Who sent the fax? Did someone receive it? Did Jan see the sticky note that Tom left her? Did the email go to the spam folder?
An automated RFQ solution streamlines the communication process with both internal stakeholders and suppliers. Buyers can now easily tell suppliers what they need and when they need it delivered, and eliminate human errors. Proposal comparisons take minutes vs. hours—some companies have seen a 50% time savings throughout their RFQ process.
How Does an RFQ Solution Mitigate Inflation?
A 2015 study by The Hackett Group revealed that for every $1 million in supplier diversity, an average of $3.6 million is added to the bottom line. A streamlined RFQ process makes it much simpler and quicker to send a request, compare responses, and make informed decisions about who to work with, what to buy, and when.
The simplest way to build efficient processes is to adopt an automated RFQ solution. You’ll improve flexibility and offset cost increases due to inflation. Building a diverse supplier base will help ensure you’re getting the best material prices and significantly reduce the impact of disruptions due to late or inaccurate shipments.
Get in touch with our team today to learn more about how SourceDay’s RFQ collaboration solution can help you review bids from multiple vendors and award business by line item.