Source and launch RFQ consultations

The search for flexibility, agility and performance has pushed manufacturing companies to outsource an increasingly important part of their production.

Outsourcing rates of 70% to 80% of production costs are no longer rare. In light of this trend, it is easy to understand why sourcing, which consists, among other things, in identifying and consulting the right external partners via a RFQ (Request For Quotation) is an essential dimension for the success of its projects!

Today, we speak of an ecosystem, an enlarged company, and the management of external resources to evoke this new dynamic, which, although a company's competitiveness is interdependent on its suppliers' choices. Choosing the best partners adapted to your needs is therefore a key step.

Source and launch RFQ consultations

Finding the right supplier at the right time and quickly often becomes more complicated than initially anticipated.

In the field of industrial production, sourcing consists in finding suppliers who meet the challenges of Cost / Quality / Délais often encountered in most sectors.

Concerning the so-called "direct" Purchases thus entering directly into the manufactured product, before being able to supply a part, an assembly or a product on the shelf (type engine, sensor, etc.) still it is necessary to have a purchase price. One of the most effective ways to obtain prices and compare them within a specific time frame of a project is to consult several sources in parallel. The practice of Request For Quotation (RFQ) is now known and natural in this many industrial setters. It seems that, depending on the maturity of the sector, this practice is more or less equipped and systematic.

Sourcing is a sourcing process that can best meet the needs of the client in terms of Quality, Cost, Time, Performance. To this traditional QCDP is added more and more the dimension of co-development and innovation.

Will be named Strategic Sourcing the process to create sustainable competitive advantages.

Sourcing generally includes 4 steps:

  • Establishment of its panel: identification and qualification of suppliers who can meet the needs
  • RFQ consultation: sending a Request For Quotation request and analysis of responses
  • Appointment of supplier
  • Relationship with the supplier: information sharing and circulation, QCD management, modification costing, product improvement, etc.improvement, etc.

The sourcing strategy will depend on several factors:

  • Industrial strategy and definition of the core business of the ordering company
  • Supplier Competitive Context
  • Targeted geographic areas
  • Need for co-development
  • Issue and complexity of the part or set to be sourced

The positioning of the product in the Kraljic matrix will have an impact on the sourcing strategy :

  • Having a multi-sourcing approach for highly specialized components for which there are in fact few offers disqualifies any opportunity to enter into a strategic partnership with a supplier including, for example, co-investments against assured production capacities

In contrast, a more automated approach can be implemented for low-risk components.

In the multiplicity-of-tasks that the buyer has to realize in an active way, he knows that finding the right supplier quickly at the right time is often more complicated than initially anticipated.

To find suppliers and to have reliable information concerning them there are multiple approaches: ask your colleagues, search on the Internet (often hazardous), address local sourcing offices (there are many in China for example) or rely on a platform like The Price Hub which pools sourcing efforts for its customers.

During a process of developing a new product, it is wise to work with project teams a Sourcing Plan.

Each commodity to be sourced and the Request For Quotation-RFQ schedule will be recorded, specifying the dates of the following operations: RFQ dispatch, reception, analysis time and supplier appointment.

For the most mature companies on their economic management of projects and on their predictive costing equipment, a Target Costing will be built upstream of the RFQ and the supplier offer will have to register and for those less mature or on new parts, the return of RFQ will be expected to obtain prices and compare them.

Depending on the type of parts, more or less strategic, requiring or not a co-development, the dates will be different and the mode chosen for the call for tenders may be different.

In fact, the approach may be more or less “aggressive” or on the contrary, collaborative, such as:

  • The reverse auction system is being transformed for a more reasoned practice of competitive bidding
  • Sectors with complex and technical parts are moving towards partnership relations with their suppliers enabling them to work transparently from the upstream phases on costs

In a competitive research approach (or for other reasons such as excessive dependence or bankruptcy for example), it is also possible to question a source during series life by using a call for tenders. This approach is often complex when it involves tool transfers, but it can prove decisive in improving its market share and restoring its margin level.

The RFQ consultation is a complete file containing the elements of specifications and/or the plan of the part, the volumes as well as other data to be studied by the supplier who will have to return to him his answer supported to the principal on formats if possible standardized in order to facilitate the stage of contradictory analysis of the offers received.

Thus this crucial process is also quite cumbersome to manage and can, by its time consuming aspect, hinder the analysis time necessary for the right supplier choice. It seems that, depending on the maturity of the sector, this process is more or less monitored, automated and equipped.

The "e-Sourcing" electronic consultation platforms developed by The Price Hub offer many advantages:

  • Access to more than 1,000 suppliers with details of their production capacity, know-how and expertise, from the machine park to financial elements, including dimensions, series and materials mastered
  • View suppliers on a world map
  • Invitation module from your own supplier panel
  • 5 predefined steps to describe your needs
  • Choice of the hearing and the level of confidentiality of the call for tenders
  • Automated proposal of relevant suppliers by a unique recommendation algorithm
  • Access to a graphical representation of supplier offers and comparative analysis export module

The bid analysis stage is a crucial step to ensure their robustness, the homogeneity of responses (incoterm, purchase scale, etc.), to understand them, challenge them and thus optimize its purchase price. Benchmarking and Should Cost modules from The Price Hub will support your analyses.

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