eRFx is the electronic way of obtaining supplier information and product quotes from shortlisted suppliers. The procurement software provides an easy-to-use interface using which you can Request Information (RFI), Request For Proposal (RFP), Request For Quotation (RFQ), or Request For Tender (RFT).
In the procurement arena, buyers want to collect information about sellers and their products before purchasing. Manually, the Request For x (RFx) is made using letters and emails. Do you remember how you sent an email requesting information about products to sellers and received fancy brochures in return? It wasn’t easy to extract the necessary information to compare different sellers. We are thankful for the eRFx system that completely automates this manual process and gets information in specific formats that make comparison easier. The procurement software is meant to streamline the entire procurement process from start to finish, and eRFx is also an important module.
eRFx Improve Supplier Sourcing
Supplier sourcing is complex because finding the right supplier that provides both cost and time benefits for the company is difficult. Understanding RFx and its types are crucial for better understanding the supplier sourcing process.
Request for Information (RFI) - RFI is sent to collect information about the suppliers, products, or services. It is usually the first RFx process to prequalify and shortlist suppliers.
Request for Proposal (RFP) - Once suppliers are prequalified, buyers need pricing data to evaluate the cost involved. The RFP invites the suppliers to bid, showing that the buyer is interested in using the suppliers’ products or services. The RFP includes instructions, proposal guidelines, and necessary forms to submit a proposal.
Request for Quotation (RFQ) - The RFQ is sent to suppliers who are shortlisted for procurement of certain products and services. The suppliers are asked to send their final quote based on the buyers’ needs. While suppliers send general pricing information along with RFP, they spend more time creating a custom quote for buyers to send in response to RFQ. The buyer makes critical procurement decisions based on suppliers’ quotes.
Request for Tender(RFT) - The chosen supplier is requested to provide an offer for products or services clearly explained by the buyer. A tender is a formal contract officially binding the buyer and supplier.
RFI usually has closed-ended questions, while RFP has free-text questions specific to required products and services. RFQ is non-binding, while RFT is a binding contract.
Why Your Procurement Solution Must Support eRFx?
While we have established that eRFx is beneficial for procurement management, we don’t recommend using separate electronic supplier sourcing software. The electronic procurement platform should be comprehensive, including eRFx provisions. Traditionally, businesses will stop looking for suppliers once suitable vendors are identified. In the digital world, global suppliers are just a click away, and your business will lose out on competitive pricing if supplier sourcing isn’t carried out periodically. The electronic RFx module will help you keep the suppliers ready for you at all times, minimizing procurement risk. According to the IJSR study, 60.4% of responders agreed that electronic supplier sourcing has sped up the process and improved efficiency.
Following are the benefits of the eRFx system:
* Accurate tendering – The electronic procurement platform obtains accurate suppliers’ information without manual intervention. This results in accurate tendering details, which are crucial to supplier decisions.
* Quick response time – Manual processing takes more time, mainly because deadlines can’t be enforced with suppliers. The eRFx system encourages suppliers to fill out the forms online, making establishing deadlines much easier. Swift responses drastically reduce procurement times.
* Increased visibility – Supplier information in the e-Auction platform is available for all the stakeholders, and this increased visibility improves efficiency. Data sharing between multiple departments is made easier, thus improving supplier sourcing decisions.
* Improved transparency – Transparent information sharing is one of the key benefits of online platforms because the suppliers can rise above the office hierarchy and offer products and services at competitive prices. The procurement team can easily avoid dark spending with accurate information readily available.
* Increase supplier competition – One of the key benefits of the e-Auction platform for supplier sourcing is increased supplier competition. This motivates the suppliers to become innovative, resulting in cost savings for your business.
* Central data storage for easy retrieval– All the supplier information is stored in a central data warehouse and can be retrieved whenever necessary. Therefore, compliance audits become much easier for businesses.
* Custom reporting – The procurement software provides custom reporting, which helps choose the most affordable supplier with the best quality services.
Procurement software With Quick Supplier Onboarding Simplifies eRFx
When looking for a procurement solution, always look for comprehensive software that facilitates overall procurement management. Procol is a customizable, all-inclusive software that has helped businesses to realize cost and time savings. Contact us for a free demo to know how to cut down the turnaround time of purchase from 48-72 hours to 30 minutes.