Sourcing is finding and choosing suppliers. For anything big, buyers run a sourcing event: a structured way of asking several suppliers the same question so their answers can be compared fairly.
An RFI (request for information) is the first look. You don't ask for prices yet; you ask what suppliers can do: their size, experience, certificates, where they make things. It narrows a long list down to a few worth inviting.
An RFQ (request for quotation) is for when you know exactly what you want, down to the specification and quantity, and mostly want prices: "quote for 10,000 M8 bolts, zinc plated, delivered to our plant in March". An RFP (request for proposal) is for when you know the problem but not the answer, so suppliers propose how they'd solve it as well as the price: a new warehouse system, a marketing campaign, a cleaning contract.
Public bodies usually have to run open tenders by law, advertised so any qualified supplier can bid, and judged against criteria published in advance. Companies have more freedom, but the same rules of fairness help: everyone gets the same information and the same deadline, and bids are scored the same way.
A reverse auction is an online event where invited suppliers bid the price down against each other in real time, and the lowest bid at the end usually wins. It works for simple, well-specified items with plenty of suppliers. For complex or strategic items it can damage relationships and push suppliers to cut corners.
You need 50,000 identical cardboard boxes to an exact specification. What do you send?
| Sourcing | Finding and choosing suppliers. |
|---|---|
| RFI | Request for information: what can you do? |
| RFQ | Request for quotation: price for this exact thing. |
| RFP | Request for proposal: how would you solve this? |
| Tender | A formal, often public, invitation to bid. |
| Reverse auction | Suppliers bid the price down live. |