How To: Reference For Quotation RFQ

Table of Contents

Step 0: Strategize & Chill

What is a Reference For Quotation or RFQ? Why is it important to my company?
After all, I just want to get a prototype done, get some funding & distributors, throw that hot potato to some manufacturer found on Alibaba and then profit $$$.

As Investopedia defines it: a request for quotation or RFQ is a process in which a company solicits selected suppliers and contractors to submit price quotes and bids for the chance to fulfill certain tasks or projects.

However, RFQs typically involves way more than just the price of a product or service. They also include all pricing-related information such as payment terms, annual business quantity per item, contract length, delivery schedule requirements but, most and foremost, they should outline the expected performance & quality level of the product or service delivered.

Engineering & manufacturing hardware electronics, we talk about the magic triangle: Price, Lead Time & Quality. You should strategize based on the specific magic triangle mix of your product and your RFQ process should reflect that.

This is a lot of work, it takes time but this is time tremendously well-invested. You should even see it as a way to speed up your time-to-market. In fact, by making information & expectations clear now, you will avoid loads of unnecessary back-and-forths or even failures during execution later.

As usual, but even more for manufacturing hardware, "anything that can go wrong, will go wrong" as per Murphy's Law.

Even for seemingly simple products and as much as you are clear about what you want in your mind, your design house or manufacturer will have a completely different understanding of what you want so being able to accurately explain what you're expecting is crucial. Here, the whole game pivots around reducing to nearly zero areas of potential confusions by objectivizing the RFQ processes.

You will find a checklist below organized around the 2 main steps of bringing a Product to his Market.

Step 1: Product Development Engineering

From 0 to 1, you have the next billion dollar idea and need to Engineer your new product offering to specs.

1.1 Critical Feature Table

Feature Name Feature Description
CRITICAL FUNCTIONS OF THE DEVICE You shall describe the Critical Functions of the Product you are willing to develop here.
KEY COMPONENTS & PARTS You shall make a list of the Key Components & Parts that will fulfill the Critical Functions you mentioned above. You need to describe the purpose of each of the Key Components in delivering on the Critical Functions. You also need to describe the expected Specs and Performance of the Key Components & Parts (can be eBOM components but also LCD, Camera, etc...).
INDUSTRIAL DESIGN You shall provide the desired Industrial Design of the Product you are willing to develop. 2D & 3D required here.
CMF REQUIREMENTS You shall provide the Color, Material & Finishing requirements of the provided Industrial Design here.
EMBEDDED SOFTWARE FEATURES You shall describe in details how the Embedded Software will deliver the Critical Functions of the Product. You also need to describe if the Product must run on a specified Operating System or Coding Language.
CERTIFICATION REQ You shall describe the Certifications the Product must be compliant with when it'll be put on the Market (can be egulatory but also functionality related = waterproofing, fire-proof, etc...).

1.2 Business Metrics Table

Business Metrics Business Metrics Description
SCOPE OF WORK You shall describe what you need our Team to do. We can deliver on all Electronic Design, Mechanical Design, Software Development, Prototyping, Mould Tooling & Product Validation but you might also want to do certain parts yourself. Clearly defining the Scope of Work will allow us to maintain a crystal-clear communication all along the Project Execution as well as making sure that NRE budgets have been fairly quoted.
PRICE KPI You shall provide your expected EXW Price as well as your projected MSRP Retail Price. We need to assess the expected EXW Price to Critical Functions/Quality Requirements ratio so as to make sure we can effectively deliver on your Pricing KPI.
PLANNING KPI You shall provide us with a detailed timeline requirement as to when you need to (1) receive the final EVT/DVT Prototypes and (2) receive the first batch of PVT/MP. We need to assess the timeline requirement to NRE budget ratio to make sure we can effectively deliver on your Planning KPI.
QUALITY KPI You shall describe the level of Quality expected for the Product. You also need to describe the critical Quality Items to be tested and how you want them to be tested. We can support defining that too.
CONTRACT PARTICULARS You shall list here any Contract Particulars or Requirements you may have regarding the Delivery of the Project, its Payment Terms, Incoterms, Warranty, etc...
BUSINESS VOLUME You shall help us (1) size the yearly business size in units and/or in revenue of the Project and (2) confirm a first Purchase Order size in units and/or in revenue.

Step 2: Contract Manufacturing

From 1 to 1000s, you already have part or whole of the engineering done & you now need to scale up Manufacturing. If your previous Product Development Engineering have been run & validated correctly, it should have output below important deliverables. Below list is given as a reference and its completeness is largely dependant on the product you're willing to ship.

2.1 Bill Of Materials or BOM

Mechanical Parts BOM

  1. Fabricated Plastics parts
  2. Metal parts
  3. Glass parts
  4. Wood parts
  5. etc...

Electrical Parts eBOM

  1. PCB Specs
  2. SMT Components
  3. DIP Components
  4. Spot Buy or Long Lead Time Contracts
  5. Alternative Components
  6. Conformal Coating ?

Purchased Parts BOM

  1. Off the shelf materials ?
  2. Battery spec sheet
  3. Speaker spec sheet
  4. Screen
  5. Charger
  6. Cable
  7. Screws
  8. Washers
  9. etc...

Packaging BOM

  1. Packaging Design files
  2. Stickers design files
  3. User Manual design files
  4. Format: .ai or .pdf preferred
  5. Dimensions & CMF
  6. Sample (if available)

2.2 Design Materials

PCBA Materials

  1. Product Function Table or User Manual
  2. Gerbers
  3. Schematics

3D renderings

  1. Mechanical Design Single Parts & Assembly 3Ds
  2. PCBA 3D Stack
  3. Format: .stp prefered

2D drawings

  1. Critical Dimensions
  2. Tolerances
  3. Format: .pdf or .dwg/.dxf preferred

CMF

  1. Color Pantone
  2. Material
  3. Finishing
  4. Reference Sample (if available)

2.3 Process Files

Business

  1. Scope of Work
  2. First PO Volume
  3. $ Target Price
  4. Target Markets
  5. Expected Time to Market
  6. Expected Yearly Volume
  7. Incoterms
  8. Terms of Supply

Manufacturing

  1. Assembly SOP
  2. Testings SOP & PASS/FAIL Standards
  3. Jigs design
  4. Labelling Req

Quality

  1. Product Validation Checklist
  2. iQC standards
  3. IPQC standards
  4. OQC standards
  5. Golden Sample (if available)

Logistics

  1. SKU List
  2. Packing Req
  3. Carton Markings
  4. Transport Label
  5. Packing List
  6. Invoice
  7. Preferred Means of Transport : Air, Sea, Rail
  8. Crowdfunding Fulfilment needed ?
  9. FCL / LCL shipment ?

A committed supply chain is the backbone of any hardware business and as much as drafting an efficient RFQ needs time and preparation, it's a key first-step in building a long-lasting partnership with your suppliers.