E-RF(x) (Electronic Request for Information/Quotation/Proposal)

A RF(x) process allows the decision making process to be determined by a variety of attributes, involving not only price, but quality, lead time, contract terms, supplier reputation, incumbent switching costs, among others. Consequently, e-marketplaces are currently being developed to partially automate the RF(x) process by creating an e-RF(x) platform, an example would be Procuri.com which provides online platforms and tools to automate the sourcing process and add value through the novelty driver.

Although the market for online Business-to-Business auctions is big (estimated at $746 billion in 2004 by Beil and Wein (2003)17, the price-only auctions that dominate the current e-commerce landscape is still decided by the range of products that can be auctioned over the Internet, meaning that in order to run an e-auction, the products need to be specified.

Depending on the composer preferences and goals, RF(x) processes can be less or more structured than auctions. Changing the scoring rule during the course of a traditional auction would be perceived as unfair, this practice is not uncommon in RF(x) processes. The scoring rule may be changed throughout the course of an RF(x) process for a variety of reasons, for example if the buyer learns from supplier presentations that the importance of certain attributes has been misestimated. Therefore, several commercial e-RF(x) software packages allow changes in the scoring rule throughout the course of the process. Not only can the scoring rule change over time, but neither the suppliers’ bids nor the buyer’s scoring rule needs to be binding. Nonetheless, the RF(x) process maintains a certain degree of structure, so the buyer can control the information to be answered by the suppliers, according to his needs and strategy.

The following sections define e-RF(x) and describe each one of the components and their benefit and applicability.

3.8.1 Definition

An e-RF(x) can either be an e-Request for Information (RFI), e-Request for Quotation (RFQ) or e-Request for Proposal (RFP) and is basically an electronic and web based method for qualifying and receiving quotes from suppliers.

17 _{An inverse-optimization-based auction mechanism to support a multiattribute RFQ process – Beil, Damian}

3.8.2 E-RFI

Some of the main functionalities of the e-RFI are to:

• Create questionnaires and questions and allow online supplier responses; • Assign weights and scoring criteria at the question and questionnaire level;

• Response formats may be text, numerical, Boolean, multiple choice, or attachments;

• Automated scoring option and manual scoring for text based responses; • Reuse existing questions and templates and export score sheet to MS Excel; • Review responses as the supplier inputs them for instant feedback possibilities; • Track suppliers progress during the whole process.

When constructing a RFI generally the following should be considered:

• Specify overall and detailed technical questions. It is important to focus on the project you are working with and what would be relevant for the award decision; • Consider answer options, as for example yes/no, drop down boxes, text. For most

effective use of the autoscoring functionalities, strive at having as many closed questions as possible;

• What kind of data it should be important to be received from the suppliers in order to better structure the questionnaire.

It is important to consider attributing weight and value for questions and identifying preferred answers.

3.8.3 E-RFQ

Some of the main functionalities of the e-RFQ are:

• Collect price and qualitative information at the line item level;

• Allow item price to be a customized formula of multiple bid fields (develop Total Cost of Ownership);

• Support online and offline bidding;

• Allow selective supplier invitation at the RF(x) (RFQ/e-auction); • Easy to reuse/edit existing RFQ templates;

• Develop RFQ’s in Excel and upload them into the system; • Monitor supplier bidding in real time.

When constructing an e-RFQ is important to keep in mind some aspects such as:

• Consider an overall structure, as for example base components, configurations, options. How can it be most structured and effectively built up according to lot and item structure;

• What can the suppliers quote on – how far should the costs be broken down to keep it in a supplier-friendly format. It is important when defining the cost breakdown options to keep the focus on the project, and ask the following:

What do I want to use this outcome for? Will it be relevant to the analysis process? How can it be used?

If the cost breakdown is overdone, suppliers might leave a lot of blanks and consolidating fields themselves, which is also the reason why the previous questions should be asked.

• It is essential to specify what is wanted and needed on each item asked supplier to quote on to get an “apple to apple” comparison.

An e-RFP is a combination of the e-RFI and e-RFQ module.

3.8.4 Benefits of an e-RFQ

Some of the main benefits of using an e-RFQ instead of the normal tender process are that instead of managing various mail and folders, the sourcing tool can be used as a central data repository, bringing some advantages to the users such as:

• Easy world wide data collection and project management secures a common standardized format;

• Data re-usability and templates are available downstream in the process; • Market intelligence is built up for each commodity group that is sourced; • Cross-functional collaboration is easier between key people due to the

web-based format;

• Advanced data analysis and scenario capabilities.

3.8.5 Applicability of an e-RFQ

An RFQ is suitable for most sourcing projects but there are a couple of situations where it is particularly beneficial:

• The price structure is complex but is able to be defined; • The number of suppliers is substantial;

• The buyer is under time pressure;

• Stakeholders are geographically spread.

The only situation where it should be reconsidered using an e-RFQ is if the products/services sourced are not easily specified/quantified.