CHAPTER 2

How can RFIs be used for supplier qualification?

Finding the right suppliers can be a lengthy process. Requests for information (RFIs) can help make the supplier qualification and market research process more efficient by standardizing the information-gathering process.

What is an RFI?

An RFI is a research tool used by procurement professionals to gather information about suppliers and their corresponding market. It is usually used to create a shortlist of suppliers to whom you will issue an RFP or RFQ, as you are able to see which suppliers may or may not be able to meet your needs before inviting them to bid. However, individuals in public procurement should be aware of local laws that may limit the usage of RFIs for creating official supplier shortlists.

An RFI may be issued to new suppliers as part of a registration or onboarding process, or it may be issued suppliers in your existing supply base about whom you need more information about the products or services they are able to provide.

Using RFIs for Supplier Qualification

When RFIs are used for supplier qualification, the focus is typically on gathering qualitative data rather than pricing. The goal is to be able to compare suppliers and decide which ones you would like to participate in future RFPs or RFQs. Therefore, all suppliers should be asked the same questions and ideally, responses should be provided in the same format, making it easier to compare the data afterwards.

A questionnaire can be a useful way to organize the questions you’d like to have answered. E-sourcing solutions often provide templates or allow you to create your own, ensuring all suppliers get the same set of questions. Furthermore, you can ask suppliers to upload additional documents or certificates in order to support their responses.

Topics to Cover and Documents to Request

During the supplier qualification process, you want to find out which suppliers are able to provide you with the goods or services you need under the best conditions possible. You want to reduce the risk of non-performance and hopefully find a supplier that will act as a responsible partner in carrying out daily tasks.

While some supplier information may be gathered in-person during a site visit or supplier interview, here are some of the areas to cover and documents to request in a basic RFI:

  • Management
    • Company background (such as length of time on the market and experience with similar projects)
    • Major shareholders
  • Financial Sustainability
    • Financial information (revenue last 3 years, risk rating, etc.)
    • ISO 9001 or any other ISO certificate
    • Insurance coverage
  • Processes/Products/Services
    • List of items/services needed (to see which ones the supplier is capable of providing)
    • Technical and production capabilities (such as surge capacity ability)
    • Quality handbook or any other internal quality document
  • Innovation (Research & Development)
    • Patents
    • R&D team size and budget
  • References
    • Case studies or contact information for previous customers

The RFI is also an opportunity for suppliers to share their knowledge with you. By giving them an area to add additional information, you may find out there are better products available than the ones specified, for example.

Consider CSR Efforts during the RFI Process

A well-aligned procurement function has a lot to offer beyond cost savings. One area Procurement can assist with is corporate social responsibility (CSR) efforts. Supplier selection plays a large role in CSR efforts as it shows whether an organization takes the CSR mission to heart and incorporates it throughout the supply chain or whether they are merely paying lip service to CSR.

The RFI can be used to determine whether certain suppliers would be a good fit value-wise for your organization. For example, you might ask about a supplier’s waste and recycling programs or their labor practices. Asking these types of questions not only help Procurement align with the overall organizational objectives, but they also help avoid supply chain risks down the line.

Supplier Questionnaires as a Qualification Starting Point

Below is an example of the environmental portion of a supplier questionnaire from a fictional company looking for potential lumber suppliers. It asks for documentation or certification of operations adhering to environmental management standards along with current practices to minimize negative environmental impacts and past history related to possible infractions. Suppliers have responded with a simple yes or no and attached additional information or evidence as necessary.

table-questionnaire

The color coding is for evaluation purposes — red meaning a negative answer that could potentially lead to disqualification and green meaning a positive answer. Seldom will suppliers be all in the red or all in the green, which is why we talk about prioritization in the conclusion of this chapter.

Also, take a look at the final answer given by the first supplier regarding a previous infraction for importing lumber harvested from protected forests. In an ideal world, suppliers would be upfront and honest about every aspect of their business. However, we most definitely do not live in an ideal world. Therefore, supplier questionnaires should be used as a starting point for supplier qualification, not as the only source of information.

Follow-up due diligence is necessary. The questionnaire may help you narrow down your field, but once you do, you’ll need to get your hands dirty. Perform site visits and in-person interviews. Speak with previous customers, and look for background information online. Treat all suppliers like you want them to succeed — don’t assume they’re lying to you — but let them know that this is standard procedure for all potential suppliers.

A Final Note on Prioritization and Transparency

Before sending out an RFI, you’ll also want to meet with your stakeholders and establish which specifications are a priority. Are you looking for speed? Are you in need of additional technical expertise? Are you looking for stability or are you interested in partnering with an innovative newcomer? Are you open to suggestions from suppliers or must they be able to follow rigid specifications? Communicate your priorities to your suppliers so that they can take them into consideration when responding. Clear prioritization will also make selecting suppliers to participate in the following RFP easier.

RFIs are a great tool for gathering information; however, you need to be mindful of the motives behind the need for this data. Are you qualifying suppliers before running an RFP? Or are you looking to add to your existing supply base but don’t have a current project in the pipeline? Suppliers should be aware of how you’re going to use the information they provide as it may affect the answers they give. A transparent RFI process will help build strong supplier relationships in the long run.

Don’t forget to share this guide with your colleagues!

CHAPTER LIST

The RFP Process: A Buyer’s Guide to Best Practices