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Price inquiries in purchasing: definition, importance and digital transformation
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What is a price inquiry?
A request for quotation is a formal request to potential suppliers to submit a binding offer for specific products or services. It enables the purchasing department to make a structured price comparison and forms the basis for negotiations and the final supplier selection. In an international context, it is referred to as a "Request for Quotation" (RFQ) and is specifically aimed at determining whether a supplier can meet a certain purchase price.
Contents
Importance and function of the price inquiry in the procurement process
The request for quotation occupies a central position in the third phase of the five-stage procurement process - the ordering process. Once requirements have been determined and potential suppliers have been preselected, quotations are systematically obtained, with the price inquiry representing the formal instrument. It not only serves to determine prices, but also fulfills several strategic functions in purchasing:
Market price transparency
Price inquiries provide buyers with up-to-date and market-driven prices for the goods and services they require. This transparency is crucial for identifying excessive prices and procuring products at market conditions. The systematic recording of prices across different suppliers creates a solid database for future negotiations and budget planning.
Basis for cost calculations
Price inquiries provide the necessary information to carry out internal cost calculations and determine the cost price. Not only the pure purchase prices (EKP) are taken into account, but also the total procurement costs including logistics, insurance and possible rebates or discounts. This comprehensive approach is essential for accurate total cost accounting.
Basis for negotiations
The information obtained through price inquiries forms the basis for price negotiations with suppliers. Buyers can enter negotiations with well-founded data and thus achieve better conditions. Price analysis makes it possible to identify unrealistic price demands and argue with facts.
Supplier selection
Price inquiries are an important tool in the supplier selection process. They help to determine the optimal supplier in terms of reliability, readiness to deliver, quality and purchase price. Careful selection based on sound information is crucial, especially for new or strategically important procurement processes.
Difference between price request and quotation request
In practice, the terms request for quotation and request for proposal are often used interchangeably, but there are nuanced differences between them:
A request for quotation (RFQ) focuses primarily on the price component and specifically asks whether a supplier can meet a certain purchase price. It is used in particular when the technical specifications are already clearly defined and the price is the main decision criterion.
A request for proposal (RFP), on the other hand, is more comprehensive and aims to provide a complete offer that includes technical solution proposals, delivery conditions, quality aspects and other performance characteristics in addition to the price. It is typically used when more complex products or services are to be procured and the supplier is to contribute its expertise.
Structure and components of a professional price inquiry
A professional request for quotation should be clearly structured and contain all the relevant information that a supplier needs to submit a well-founded quotation. The following elements are essential:
1. formal information
- Unique identification (request number)
- Date and request deadline
- Contact details of the requesting company
- Contact for queries
2. product specifications
- Detailed description of the goods or services required
- Technical specifications and quality requirements
- Quantity required
- Product numbers or references to norms/standards
3. terms of delivery
- Desired delivery date or period
- Place of delivery and Incoterms
- Packaging and transportation requirements
- Desired batch sizes or partial deliveries
4. price requirements
- Expected price structure (unit prices, graduated prices, discounts)
- Currency
- Period of validity of the offer
- Terms of payment
5. additional requirements
- Proof of quality or certificates
- Sustainability or compliance requirements
- Services (maintenance, support, etc.)
- Other contractual conditions
Practical example: Price inquiry in the automotive supplier sector
An automotive supplier needs 10,000 pieces of specialized metal housings for a new production line. The purchasing department sends a detailed price request to three qualified suppliers containing the following specific elements:
Product specification:
- Technical drawings with exact dimensions and tolerances of the metal housings
- Material specification: Aluminum alloy EN AW-6082 T6
- Surface treatment: Eloxal E6/EV1, layer thickness 10-15 μm
- Quality requirements: PPAP Level 3, ISO 9001:2015
Quantities and delivery schedule:
- Total quantity: 10,000 pieces
- Delivery schedule: 2,000 units per quarter over 15 months
- Quantity tolerance: ±10% per delivery
Pricing:
- Base price per piece
- Graduated prices for 1,000, 5,000 and 10,000 pieces
- Tool costs (one-off)
- Logistics costs and packaging
- Fixed price for 24 months
Terms of delivery:
- Incoterms: DDP Production site
- Delivery time: First delivery 12 weeks after order at the latest
- JIT delivery for follow-up orders with 3 weeks lead time
Additional requirements:
- Material certificates according to EN 10204 3.1
- Proof of environmental management system in accordance with ISO 14001
- Traceability of each batch
After receiving the offers, the purchaser carries out a systematic evaluation, taking into account not only price but also quality, delivery reliability and technical competence. The evaluation shows the following results:
Supplier A:
- Unit price: 18,75 €
- Tool costs: 12,500 €
- Delivery time: 10 weeks
- Quality rating: very good
- Total costs (TCO): € 199,500
Supplier B:
- Unit price: 17,90 €
- Tool costs: € 15,800
- Delivery time: 14 weeks
- Quality rating: good
- Total costs (TCO): € 194,800
Supplier C:
- Unit price: 20,10 €
- Tool costs: € 9,750
- Delivery time: 8 weeks
- Quality rating: very good
- Total costs (TCO): € 210,750
Although supplier B offers the lowest unit price, after a total cost of ownership analysis and taking all factors into account, the buyer chooses supplier A because it offers the best combination of price, quality and delivery reliability.
The role of digitization in price inquiries
Digitalization has fundamentally changed the price inquiry process and offers enormous potential for efficiency gains and cost savings. By using digital platforms and e-procurement systems, companies can optimize the entire process from inquiry to evaluation.
Increased efficiency through digital price inquiries
Studies show that digitalized procurement processes can reduce costs per order from an average of 115 euros (manual) to 67 euros (digital) - a saving of over 40%. This increase in efficiency is the result of various factors:
- Automation of routine tasks: The creation and sending of price inquiries can be standardized and automated via digital platforms. Templates for different product groups or services enable quick and error-free creation.
- Improved data quality: The digital recording of all price inquiries and offers creates a structured database that can be used for analyses and comparisons. This provides a sound basis for decision-making and prevents loss of information.
- Faster communication: Digital platforms speed up communication with suppliers. Instead of sending price inquiries by email and collecting quotes manually, all interactions can take place via a centralized system.
- Transparency and traceability: The status of every price inquiry can be tracked in real time. Buyers have an overview of outstanding inquiries and offers already received at all times.
Integration into the digital procurement process
The digital price inquiry is an essential component of modern e-procurement and can be seamlessly integrated into the entire digital procurement process. The connection to other systems and processes is particularly valuable:
- Connection to ERP systems: Integration with enterprise resource planning systems allows price requests to be generated directly from demand management. Incoming offers automatically flow into the supplier evaluation and ordering processes.
- Link to supplier management systems: The automatic updating of supplier data and evaluations based on price inquiries and offer quality improves supplier selection.
- Data-based decision support: Modern systems offer analysis functions that compare prices across different time periods, suppliers and product groups. This enables in-depth price analyses and the identification of potential savings.
Future trends in digital price inquiries
The digitalization of price inquiries is constantly evolving. By 2027, i.e. in less than two years, companies are aiming for an average digitization rate in purchasing of 70%, with an average annual investment of EUR 1.2 million in the digitization of procurement. The following trends are emerging:
- Artificial intelligence and predictive analytics: AI systems can analyze historical price data and suggest optimal times for price inquiries. They can also recognize anomalies in offers and identify potential savings opportunities.
- Automated bid evaluation: Advanced systems can automatically evaluate and compare incoming bids and make recommendations. This significantly reduces manual effort and minimizes errors during analysis.
- Blockchain for transparent price request processes: Blockchain technology can further improve the transparency and traceability of price inquiries and offers. This is particularly relevant for industries with high compliance requirements.
- Integration of sustainability criteria: More and more companies are integrating sustainability aspects into their price inquiries. Digital systems can standardize these criteria and simplify evaluation.
Success factors for effective price inquiries
To get the maximum benefit from price inquiries, buyers should consider the following success factors:
- Precisespecifications: Precise and clear specifications are the basis of every successful price inquiry. The more precisely the requirements are defined, the more comparable the offers received will be. Unclear specifications lead to queries, delays and possibly offers that do not cover the actual requirements.
- Strategic supplier selection: Not every potential supplier should receive a price request. Prior qualification and strategic selection of the suppliers to be contacted increases the quality of the offers and reduces the time and effort required for evaluation. The inquiry factor - the ratio of orders to inquiries - should be as high as possible to ensure efficient use of resources.
- Reasonable deadlines: Setting realistic deadlines for tender preparation is crucial. Deadlines that are too short can lead to superficial offers, while deadlines that are too long can unnecessarily delay the procurement process. The optimum deadline depends on the complexity of the requested service and the market situation.
- Systematic evaluation of bids: The bids received should be evaluated according to standardized criteria. In addition to price, quality, delivery time, payment terms and other relevant factors should also be taken into account. A structured evaluation matrix facilitates the comparison and leads to well-founded decisions.
- Continuous process improvement: The experience gained from price inquiries carried out should be systematically evaluated in order to continuously improve the process. This includes analyzing the response rate, the quality of the offers and the savings achieved.
Conclusion: Strategic importance of price inquiries in modern purchasing
The price inquiry is much more than a formal step in the procurement process - it is a strategic tool that can generate considerable competitive advantages when used professionally. As the basis for well-founded purchasing decisions, it enables transparency regarding market prices, creates scope for negotiation and makes a significant contribution to cost optimization. In times of volatile markets and complex supply chains, the ability to conduct effective price inquiries is becoming a core competence in strategic purchasing.
Digitalization has further enhanced the potential of the price inquiry process by automating processes, improving data quality and opening up new analysis possibilities. With cost savings of up to 40% per order process, the digital transformation of the price enquiry process offers enormous savings potential that modern purchasing organizations cannot ignore. Forward-looking companies should therefore invest in the digitalization of their price enquiry processes and continuously develop them further.
For purchasing managers and procurement experts, this means that price inquiries should not be viewed as an isolated process step, but rather as an integral part of a comprehensive procurement strategy that is optimally supported by digital tools. This is the only way to exploit the full potential of this fundamental tool in modern procurement and achieve sustainable competitive advantages.
