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What is the difference between RFP and RFQ?

RFP stands for Request for Proposal, whereas RFQ stands for Request for Quote. While both are sent as a means to pick out the most suitable vendor, they are different documents used in different situations.

RFQs are concise documents that you use when you know the exact quantity and type of product you’re looking for. Organizations send RFQs to their shortlisted suppliers. As the vendors submit their bids, the procurement team generally goes for the one that enables the most savings.

On the other hand, you can use RFPs when you don’t know the exact type of goods you’ll require. Here, the company details the problem it needs help with and requests the vendor to suggest a solution based on certain criteria. RFPs also indicate to the vendors that they are ready to buy a product or service if it's fulfilling their needs. The replies to an RFP aren’t only compared based on the pricing of the vendor. Instead, they are assessed based on the project’s criteria, and the most suitable solution is selected.

Advanced procurement software now lets you convert your Purchase Requisitions to RFQs and facilitate the generation of RFPs, so template designing is no longer an ordeal.