RFI vs. RFP: Which Should You Use? [Comparison]

What is the difference between RFP and RFI? How should you use RFI and RFP to clearly understand your project's requirements? We'll walk you through it in this article.

1. What are RFI and RFP

Procurement and information-request documents are packed with jargon and abbreviations. So before digging into what sets each document apart, let's cover a few key definitions.

1.1 What is RFX

RFX stands for Request for ____ (fill in the blank). It's an umbrella term for the survey-style requests a buyer issues to vendors. In other words, RFX covers abbreviations like RFI (request for information), RFQ (request for quotation), and RFP (request for proposal).

1.2 What is RFI

RFI stands for Request for Information. It's a set of questions used to ask vendors about their products or services. In most cases, an RFI gathers general information, market details, and solution ideas for planning purposes.

Benefits of RFI (Request for Information)

Spending time drafting an RFI can feel like a burden, but in the long run, it can save both time and cost as a kind of damage control. Kicking off an RFI process comes with several benefits.

• You get a chance to understand the market and see which suppliers are seriously engaged with your business
• You can get an overview of competing products
• You can gather product information to help set realistic requirements for an RFP/RFQ
• You can shortlist vendor candidates you'd like to invite to the RFP or RFQ
• However, starting an RFI process also has downsides

Downsides of RFI (Request for Information)

A major downside of starting an RFI process is that suppliers may view a prospective customer as not being very serious, and in that case, may respond with little thought — simply sending standard pricing and brochures (information easily found online anyway) — without paying attention to the customer's specific needs.

Another downside is that if suppliers can't confirm the buyer's genuine commitment, they may not send any information at all. Writing a structured response takes time and money, so it's understandable that some suppliers won't want to do it without an obligation to.

Also, what counts as "genuine commitment" varies by business and is hard to define. That's why some companies prefer to skip the RFI and go straight to the RFP or RFQ.

Running an RFI also lengthens the purchasing process, since you need to factor in the time it takes to review responses. On the other hand, skipping the RFI may make some suppliers feel they're at a disadvantage compared to others.

So if you have enough time for information gathering, it's a good idea to kick off the RFI process before the RFP process. If not, you can go ahead and move straight to sending out the RFP.

1.3 What is RFP

RFP stands for Request for Proposal. It's a detailed questionnaire a buyer uses to gather information that's critical to its decision from potential vendors. An RFP is one of the tools most commonly used to evaluate vendors and document the justification for a selection.

Benefits of RFP (Request for Proposal)

There are several reasons you might want to launch an RFP process.

• To let suppliers know you intend to purchase a specific product or service
• To receive formal submissions from selected suppliers so proposals can be compared
• To demonstrate you're running a formal and fair process without favoring any particular supplier
• That said, there are also a few downsides

Downsides of RFP (Request for Proposal)

A major downside of RFPs is that they can discourage strong vendor prospects who consider RFPs too risky or low-yield from participating.

Another downside is that while an RFP process significantly cuts down the time needed to gather suppliers, it can be seen as a system that weakens competition, since it invites only a limited number of bidders.

Last but not least, RFPs cost money and time, and they can create bureaucracy. Even so, the benefits outweigh the drawbacks.

2. Similarities between RFI and RFP

First, AJ points out the similarities between RFI and RFP, noting that confusing the two is understandable. AJ raises the following points.

• Each request is initiated by a buyer and can be sent to multiple sellers.
• Each request is initiated by a buyer and can be sent to multiple sellers.
• Neither RFI nor RFP involves a formal commitment. What happens next is entirely up to the buyer's discretion.

3. Differences between RFI and RFP

You're not the only one who finds this terminology confusing — in fact, some issuing organizations even use the wrong terms in their solicitations. A good way to think about the difference between RFI and RFP is that each one signals a different level of purchase readiness, with RFI signaling the earliest stage and RFQ signaling the most advanced stage.

• RFI - This is a request for information, and it signals that a government agency is likely exploring the market for a solution but isn't ready to buy right away. After reading the RFI responses, the contracting agency gets a better sense of the available solutions to its business problem and the competing vendors who could support it. It also gets a good understanding of which vendors have the deepest insight and market knowledge in this area.
• RFP - This is a request for proposal, and it signals that the issuer is looking for vendors but needs more detailed information before buying, and is open to new approaches and ideas. In an RFP, the buyer asks vendors about pricing and their proposed approach if they win the contract. An RFP also lets you confirm the deadlines and timeline the winning bidder will need to meet.

4. When should you use RFI and RFP?

Once you understand the difference between RFI and RFP, deciding which one to use becomes very simple. In fact, the first step is to clarify what you're trying to accomplish.

Let's start by answering the following questions:

• Do you know what questions to ask vendors?
• Do you already have specific questions for vendors, or just general ones?
• Do you already have a preferred vendor list (shortlist)?
• Do you need to run a formal RFP process to solicit bids?
• Are you working with a repeat vendor or a new one?
• Is it clear what you're looking for, or do you want vendors to propose ideas?

You'll also need to have internal discussions to answer these questions. Look into other RFP-related questions you should ask your team, in order to avoid future failures.

Which should you choose — RFI or RFP?

Which one to choose really comes down to recognizing what stage you're at. If you want an overview of suppliers, or want to check whether a solution to your problem even exists, RFI may be the right fit. If you're closer to purchasing but are still looking for ideas, RFP would be the better choice.

5. In closing

Running these processes properly takes time, dedication, and skill. Otherwise, you may end up wasting time without finding a way to solve your problem. Whichever process you choose, always keep in mind why you're doing it and what outcome you expect.