Photonic Sourcing

Photonic-Sourcing Glossary

• Procurement

  The acquisition of appropriate goods and/or services at the best possible total cost of ownership to meet the needs of the purchaser in terms of quality and quantity, time, and location.

• RFI - Request for Information

  An open inquiry that spans the market seeking broad data and understanding.

• RFQ - Request for Quotation

  An opportunity for potential suppliers to competitively cost the final chosen solution(s).

• RFT - Request for Tender

  An opportunity for potential suppliers to submit an offer to supply goods or services against a detailed tender.

• RFP - Request for Proposal

  A business requirements-based request for a specific solution,sometimes based on a prior RFI.

• Request for Information (RFI)

  A formal request for information on appropriate solutions for acquisition of goods or services to meet a specific requirement.

• Tender

  A formal proposal to buy at a specified price.

• Procurement

  The process by which the acquisition of appropriate goods and/or services is fulfilled at the best possible total cost of ownership to meet the needs of the purchaser in terms of quality and quantity, time, and location.

  The procurement life cycle usually consists of seven steps:

  1. Information gathering: If the potential customer does not already have an established relationship with sales/ marketing functions of suppliers of needed products and services (P/S), it is necessary to search for suppliers who can satisfy the requirements.
  2. Supplier contact: When one or more suitable suppliers have been identified, requests for quotation, requests for proposals, requests for information or requests for tender may be advertised, or direct contact may be made with the suppliers.
  3. Background review: References for product/service quality are consulted, and any requirements for follow-up services including installation, maintenance, and warranty are investigated. Samples of the P/S being considered may be examined or trials undertaken.
  4. Negotiation: Negotiations are undertaken, and price, availability, and customization possibilities are established. Delivery schedules are negotiated, and a contract to acquire the P/S is completed.
  5. Fulfillment: Supplier preparation, expediting, shipment, delivery, and payment for the P/S are completed, based on contract terms. Installation and training may also be included.
  6. Consumption, maintenance, and disposal: During this phase, the company evaluates the performance of the P/S and any accompanying service support.
  7. Renewal: When the P/S proposal has been completed, the contract expires, or the product or service is to be re-ordered, company experience with the P/S is reviewed. If the P/S is to be re-ordered, the company determines whether to consider other suppliers or to continue with the same supplier.

• Request for Information (RFI)

  As the name suggests, RFI's gather information to help decide what step to take next. A RFI is a solicitation sent to a broad base of potential suppliers for the purpose of conditioning, gathering information, preparing for an RFP or RFQ, developing strategy, or building a database about:

  • Suppliers, their products/services, capabilities, etc.
  • General assessment of the supply market
  • Trends and factors driving change
  • Alternative pricing strategies
  • Supplier competition
  • Supplier business, facilities and product plans

  RFIs may include a detailed list of products/services for which pricing is requested. The pricing should be used for comparative purposes, not as the basis for buying decisions. Through analysis of RFI responses, strategic options, lower cost alternatives, and cost reduction opportunities may be identified.

• Request for Proposal (RFP)

  An RFP is a solicitation sent to potential suppliers with whom a relationship or partnership is being considered. Typically, the RFP leaves all or part of the precise structure and format of the response to the discretion of the suppliers, as a result, the creativity and innovation that suppliers choose to build into their proposals may be used to distinguish one from another.

  Effective RFPs typically reflect the strategy and short/long-term business objectives, providing detailed insight upon which suppliers will be able to offer a perspective. While specific data, offerings and quotations may be sought, questions about the following will make up a significant portion of both an RFT and RFP:

  • Specific items on which the suppliers are proposing
  • Business requirements
  • Performance measures
  • Instructions on how to reply
  • Due date
  • Feedback evaluation process
  • Description of the selection process
  • Communication requirements
  • Contact person and information

• Request for Quotation (RFQ)

  RFQ's are best suited to products and services that are as standardized and as commoditized as possible in order for a buyer to make the best qualified comparisons between suppliers. It is usually designed as a request with a list of specific details, along with a description of all relevant parameters of the intended purchase, such as:

  • Part descriptions/specifications or numbers
  • Quantities/Volumes
  • Description or drawings
  • Personnel skills or competencies
  • Quality levels
  • Delivery requirements
  • Term of contract
  • Terms and conditions
  • Other value added requirements or terms
  • Contract Draft

  Price per item or per unit of service is usually the bottom-line with RFQs. Supplier decisions are typically made following a comparison and analysis of the RFQ responses.RFQs are typically used as supporting documentation for sealed bids (either single-round or multi-round) and may be a logical pre-cursor to an electronic reverse auction.

• Request for Tender (RFT)

  An RFT is an open invitation for suppliers to respond to a defined need as opposed to a request being sent to potential suppliers. The RFT usually requests information required from a RFI. This will usually cover not only product and service offerings, but will also include information about the business. RFTs should only be used when the buyer is clear on their requirements, and, from the supplier's end, when they are clear on the range of possible solutions that might fit the buyer's needs.