RFQ, comparison and order control
You will be able to: Run a request for quotation and compare landed rates; Explain the award rules and the tolerance checks on order and invoice rates; Describe framework agreements and the approved vendor list.
- Read not done yet
- Self-check: not taken not done yet
- Lesson complete not done yet
Use a request for quotation when an order is big enough to compare vendors. You choose how to group the lines (one per line, by item, or by node), tick the suppliers (the approved vendor list is suggested), set the date quotes are due, and send it. Each reply is entered per supplier: unit price, lead time, brand, validity, payment and delivery terms, and for imports the freight and duty.
Entering the same supplier again is a new round; the earlier round stays as history. Alternatives are marked and not compared. After you close for quotes and press Evaluate, the comparison shows every supplier side by side per line: the landed rate, the difference to the BOQ rate and the last paid rate, with a weighted score from the criteria of price, lead time, vendor rating and payment terms.
| Supplier | Unit price | Freight per bag | Landed rate | Total for 900 bags |
|---|---|---|---|---|
| A | 18.50 | 0.00 | 18.50 | 16,650 |
| B | 17.80 | 1.10 | 18.90 | 17,010 |
| C | 17.20 | 0.60 | 17.80 | 16,020 |
Supplier C has the lowest unit price and the lowest landed rate. Supplier B looks second on price but is the dearest once freight is added. Compare landed rates, not list prices.
Awarding
You type the quantity to award under each supplier, and a line can be split. Giving a line to a supplier that is not the lowest landed price needs a written reason. An approver then approves the award, or rejects it with a reason, which opens the request again. The orders are created from the award at the quoted rates. Here C can supply only 600 bags this month, so 600 go to C at 17.80 and 300 to A at 18.50: 10,680 + 5,550 = AED 16,230. The budget rate is AED 19.00, so the BOQ amount is 17,100 and the saving at award is AED 870.
Two tolerances
- On the order: a rate more than the tolerance above the budget needs an approver. With a 5% tolerance on the budget rate of 19.00, a quote above 19.95 stops until the approver ticks Approve prices above tolerance.
- On the supplier invoice: a line priced above the order rate by more than the tolerance needs a user with the procurement approval right to confirm and give a reason. Invoiced at 19.20 against 18.50, the line is 3.78% over, AED 630 on 900 bags.
A framework agreement fixes rates with a supplier for a period and a ceiling. While it is active, orders to that supplier take its rate and each order counts against the ceiling. The Price variation report lists rates paid against the budget rate by item, supplier, node and period, so adverse and favourable differences are both visible.
Walk it through
- Compute landed rates for three quotes of your own and choose the award.
- State the written reason you would give for a split award.
- In the demo, open RFQ and cost comparison and find the Quotations and Vendors tabs.
Public demo company, sign in as admin / demoAdmin123. Data refreshes nightly.
- Compare landed rates, not unit prices.
- A non-lowest award needs a written reason and an approver.
- Order and invoice rates are both checked against a tolerance.
Check yourself
4 questions on this lesson. Not timed, not the exam, and you can try again. Score 60% or more, and read the lesson, to complete it.