- A bid comparison only works when every quote answers the same specification, in the same units, with the same delivery terms and the same payment terms.
- Unit price misleads. Compare total landed cost: material, freight, duties on imported parts, sales tax where it applies, payment terms and the cost of a late delivery.
- Set the criteria and their weights before the bid due date, not after you have seen who is cheapest.
- Sending the RFQ, chasing replies and normalizing quotes can be automated. The buyer picks the winner.
RFI, RFQ or RFP?
The three documents get used interchangeably, and that is the first source of quotes that cannot be compared. Each one asks for something different.
| Document | What it asks for | When to use it |
|---|---|---|
| RFI (request for information) | Capabilities, references, certifications, capacity. | When you do not know the market well or want to build a longer bidder list before a sourcing event. |
| RFQ (request for quotation) | Price, lead time and terms for a closed specification. | Well-defined parts and services: fasteners, PPE, steel, freight lanes, standard maintenance. |
| RFP (request for proposal) | A complete solution with its price. | Projects where the supplier has to propose how the work gets done, such as a line retrofit or an outsourced service. |
What should the RFQ include?
The tighter the request, the easier the comparison. Most bad bid tabulations trace back to an RFQ that left something open and let each bidder fill it in differently. A complete RFQ for parts or materials includes:
- Technical specification: part number or drawing and revision, material and grade, applicable standard (ASTM, SAE, ISO), tolerances, finish, and any certificate that must ship with the parts.
- Quantities and units of measure, including the quantity per release, an estimated annual usage, and whether you will accept partial shipments.
- Ship-to location, required delivery date, and the shipping term to quote against: FOB destination for domestic suppliers, or a named Incoterm for imports.
- The payment terms you propose, such as net 30, and whether you will consider alternatives like 2/10 net 30.
- Response format: one template with the same columns for every bidder, so you are not retyping fifteen PDFs into a spreadsheet.
- Bid due date, quote validity you need (30, 60 or 90 days), and a named contact for questions. Share every clarification with all bidders.
How do you get quotes that line up?
Even with a template, suppliers quote the way they are used to. One prices per case of 100 and another per each. One includes freight to your dock and another quotes FOB origin. One gives lead time in calendar days, another in weeks after receipt of order. One quotes net 30 and another wants payment on shipment. Before you compare anything, every quote has to be restated in the same unit, the same shipping term and the same payment terms. If a quote is missing a number, ask for it. Never fill the gap with a guess, because the guess always favors the bidder you already like.
The sequence that produces a clean bid tabulation looks like this:
Close the specification before you send anything
Part number or drawing revision, material grade, standard (ASTM, SAE, ISO), tolerances, finish, and any certificate that has to ship with the parts, such as a mill test report or certificate of conformance. If two bidders can read the spec differently, the quotes will not be comparable.
Fix the quantity, the delivery point and the terms
State the quantity per release and the estimated annual volume, the ship-to address, and the shipping term you want quoted: FOB destination for domestic suppliers, or a named Incoterm such as DAP or DDP for imports. Propose payment terms (net 30, net 45) and say whether you accept alternatives.
Send one response template to every bidder
A sheet with the same columns for everyone: unit price, unit of measure, MOQ, lead time in weeks after receipt of order, freight included or not, payment terms, quote validity, and country of origin. Bidders can attach their own format, but they fill yours.
Set the bid due date and chase it
Give enough time for a real quote, usually one to two weeks for catalog parts and longer for made-to-print work. Remind bidders a few days before the due date and once after it. Treat a late quote the way your policy says, and apply the rule to everyone.
Normalize before you compare
Convert every quote to the same unit, the same shipping term and the same payment terms. Where a quote is silent on freight, duties or validity, ask the bidder. Do not fill the gap with an assumption.
How do you calculate total landed cost?
Landed cost is everything you will pay to have the material on your dock or job site. For a domestic supplier that is material plus freight, and possibly sales tax if the parts are not for resale or exempt manufacturing use. For an import it adds ocean or air freight, insurance, customs duties and any tariff in force for that tariff classification and country of origin, plus brokerage. An example with two quotes for 2,000 stainless hex bolts:
| Line | Supplier A (Ohio) | Supplier B (import) |
|---|---|---|
| Unit price | $1.24 | $0.98 |
| Material (2,000 pcs) | $2,480 | $1,960 |
| Freight | Included, FOB destination | $310 ocean + drayage |
| Duties and tariffs | None | $412 at the current rate for this HTS code |
| Brokerage | None | $95 |
| Lead time | 2 weeks ARO | 9 weeks ARO |
| Payment terms | Net 30 | 50% deposit, balance at shipment |
| Total landed cost | $2,480 | $2,777 |
Supplier B is 21 percent cheaper per unit and ends up 12 percent more expensive landed, with a seven-week longer lead time and a deposit that ties up cash before the parts exist. If the nine-week lead time means expediting from somewhere else or a line waiting on fasteners, the real gap is wider than the table shows. The duty line also moves: tariff rates change, so a landed-cost comparison on imports carries a date and should be rerun before a long-term award.
Payment terms have a cost too. A supplier offering 2/10 net 30 is offering a 2 percent discount for paying 20 days early, which works out to an annualized return well above most companies' cost of capital. If your AP process can actually pay in ten days, that discount belongs in the comparison. If it cannot, it does not.
Which criteria, and how much does each weigh?
Set the criteria and their weights in the RFQ file before the bid due date, so the scoring cannot drift toward the bidder somebody already prefers. A starting split for recurring direct materials is below. Adjust it per category: a safety-critical casting weighs quality differently than packaging tape.
| Criterion | Indicative weight | How to measure it |
|---|---|---|
| Total landed cost | 50% | Normalized landed cost from the table above, same quantity and terms for every bidder. |
| Lead time and reliability | 20% | Weeks after receipt of order, and on-time delivery on prior orders if the supplier is already in your system. |
| Quality and compliance | 20% | Supplier qualification current, required certifications on file, quality incidents and returns history. |
| Commercial terms | 10% | Payment terms, MOQ, quote validity, warranty, price adjustment clause if the award is multi-year. |
Score each bidder on each criterion, multiply by the weight, and let the total rank them. When the ranking surprises you, that is information: either the weights are wrong for this category or your instinct about a supplier is. Decide which, and write it down.
How do you document the award?
An award has to be explainable to someone who was not in the room: your manager, an internal or customer auditor, or the supplier who lost. One page does it. Who was invited and why, who responded, how each quote was normalized, the score by criterion, the total landed cost, and the decision. If you did not pick the lowest landed cost, say why in a sentence: lead time, single-source risk, quality history. File the award memo with the quotes and the bid tabulation, and reference it on the purchase order so anyone matching the invoice later can find it.
Mistakes that skew the award
- Comparing unit prices before converting every quote to the same unit of measure, shipping term and payment terms.
- Accepting an incomplete quote and filling in freight, duties or lead time with assumptions.
- Ignoring duties and tariffs on an imported part, or using a rate that has since changed.
- Setting the criteria weights after seeing the quotes.
- Inviting a supplier who has not been qualified and finding out at award that they cannot be set up in the ERP.
- Not telling the losing bidders, then wondering why they quote slowly next time.
Which part can be automated?
Most of the time in an RFQ goes to work that needs no judgment: sending the request, reminding bidders who have not replied, asking for the missing number, and restating each quote in the same format. Leo, Traza's sourcing agent, does that work. He shortlists qualified suppliers, sends the RFQ, chases responses, puts every quote into one normalized comparison with landed cost, and recommends an award with the reasoning attached. The buyer reviews the comparison and makes the award. Leo then sends the award and regret notices and drafts the purchase order.
When the award becomes a contract, two terms decide what you pay later: how the price can move and when the agreement renews. See price adjustment clauses and supplier contract renewals and auto-renewal notice.
Frequently asked questions
What is the difference between an RFI, an RFQ and an RFP?
An RFI asks for information to learn the market and build a bidder list. An RFQ asks for price, lead time and terms on something already fully specified. An RFP asks the supplier to propose a solution and price it. For parts and materials with a closed specification, an RFQ is the right tool.
How many suppliers should you invite to quote?
It depends on your procurement policy and the dollar value. Three competitive quotes is the common floor, and many policies require it above a threshold. Inviting far more than that lengthens the process without improving the result, and suppliers notice when they are one of fifteen.
What is total landed cost?
What the material actually costs once it is on your dock or job site: unit price times quantity, plus freight, insurance, customs duties and tariffs on imported parts, brokerage fees, and sales or use tax where it applies. That is the number to compare across bidders, not the price at the supplier's plant.
What is the difference between FOB origin and FOB destination?
In US domestic shipping, FOB origin means title and risk pass to you when the carrier picks up at the supplier, so you arrange and pay freight and carry the risk in transit. FOB destination means the supplier owns the goods and the risk until they reach your dock. A quote that is FOB origin is not comparable to one that is FOB destination until you add freight and account for the risk.
Should you notify the suppliers that did not win?
Yes, briefly and with a reason. It closes the process, keeps the relationship intact and makes the supplier more likely to quote well next time. It is also the courtesy you would want if you were the one quoting.
Can a bid comparison be automated?
The mechanical part, yes: sending the RFQ, reminding bidders who have not replied, asking for missing data, converting every quote to the same units and terms, and calculating landed cost. The award decision stays with the buyer, who sees the normalized comparison and the reasoning before choosing.
Keep reading
Sources
This article is for information and is not legal advice. Practices and references are for the United States; check what applies to your contracts and your state.