D365: Request for quotations (RFQ). Process RFQ overview

In this blog post I am going to review one type of procurement solicitation that is available within Microsoft dynamics 365 for Finance and Operations – Requests for quotations (RFQ).

In general, RFQ is used when the company wants to receive competitive offers from several vendors for the goods they might purchase. As the result, company invite suppliers into a bidding process to bid on specific products or services, it is some kind of putting out goods to tender or requesting for proposal.

And now it’s time to step up to the plate and follow the process presented below:

I would like to bring to the table details on creating an RFQ, sending it to vendors, and evaluating bids returned by vendors.

The first step in the RFQ process is to set up prerequisites. The following prerequisites are required for this functionality.

Let’s break each setting down…

Procurement and sourcing parameters for requests for quotations

Navigate to the Procurement and sourcing > Setup > Procurement and sourcing parameters > Request for quotation tab.

On this form you are able to set the values that are defaulted in the requests for quotations when RFQ created, but can be overridden if needed.

Scoring methods for requests for quotations

A scoring method is a set of criteria that can be used to compare bids that are sent in reply to a request for quotation (RFQ).  Defined criteria will be established in the RFQ to objectively evaluate the proposals from outside vendors.

For example, you might want to rate a vendor on quality of goods or you want to compare bids based on price.

Navigate to the Procurement and sourcing > Setup > Request for quotation > Scoring method.

Click New.

Set Name and Description.

Click Save.

Under Scoring criteria section click New.

Set Name, Description, Range from and Range to.

Repeat above steps in order to add additional criteria.

In previous versions we had an ability to specify what kind of RFQ (Sealed-bid or Open-bid RFQ) with scoring criteria we were going to use. For this purpose, we could set Bid type and assign to the solicitation type. We could set 2 bid types:

Open (prices, quantities, and amount will be visible all the time during Requests for quotation process).

Sealed (prices, quantities and amounts that are coming from vendor replies will be hidden until expiration date of RFQ comes).

It seems that this ability was removed and no longer available in D365.

Solicitation types for requests for quotations

Navigate to the Procurement and sourcing > Setup > Request for quotation > Solicitation type.

Create new type by clicking New button.

In the Name field, type a value.

In the Description field, type a value.

In the Scoring method field, select the scoring method that you want to use for this solicitation type.

Click Save.

RFQ with scoring criteria

RFQ can be created from several places:

• Planned orders
• Purchase requisition
• Request for quotation (manual entry)

For our example, we are going to create request for quotation manually.

Navigate to the Procurement and sourcing > Requests for quotations > All requests for quotations.

Click New on the Action pane.

New request for quotation form will be opened.

Purchase order type is defaulted from Procurement and sourcing parameters.

Solicitation type is defaulted from Procurement and sourcing parameters.

Expiration date is calculated as Current system date and time + Day offset from Procurement and sourcing parameters.

Expiration time is defaulted from Procurement and sourcing parameters.

The following purchase types are available:

Purchase order: a document that confirms the offer to buy products, or the acceptance of an offer to sell products in exchange for payment. Purchase order will be created after accepting a bid.

Purchase requisition: this type is automatically selected if you create an RFQ directly from a purchase requisition. If you manually select this option, you’ll get an error:

Purchase agreement: an agreement to purchase a specific quantity or value of product over time. If you select this option, you must select the date range that applies to the purchase agreement. Purchase order will be created after accepting a bid.

Depends on the outcome of the RFQ, corresponding Purchase type should be selected. the bottom line will be affected by this type.

Set the following values:

Purchase type = Purchase order.

Document type = Training room upgrade.

Solicitation type = RFQ-RM.

Requesting department = IT department.

Set Delivery date = 2 days later than current date time.

Make sure that Requester is defined.

Click OK.

Notice that Mode of delivery and Delivery terms are defaulted from Procurement and sourcing parameters.

Check the scoring criteria to the items by clicking Scoring criteria button on the Action pane in the Score section. These scoring criteria will be used for evaluation of replies.

The scoring criteria that are shown are the ones from the scoring method that you associated with the solicitation type.

There is ability to add new scoring criteria which differ from what was added from solicitation type by clicking New button.

There is ability to delete any scoring criteria which unnecessary for particular RFQ by clicking Delete button.

There is ability to add scoring criteria from another scoring method by clicking on Copy criteria button.

Go back to RFQ.

Add goods that you want vendors to bid on to the RFQ.

Click Add line button.

Create as many line as many you desire.

Notice that it’s also possible to select Category instead of selecting specific item.

Click Header to change form from the Lines view to the Header view.

Expand the Vendor section.

There is a functionality of “Auto-add vendors”. Auto-add vendors function is searching vendors from procurement categories specified in the RFQ line and adding found vendors into Vendor section automatically for you.

Click Auto-add vendors.

If there are no vendors approved for the categories included in the lines you will see an warning message but you still can add vendors manually.

Below you can find an information where you need to set category(s) on the vendor. Go to the Vendor, switch to the General tab and select Categories button.

Keep in mind that if you want to auto-add vendors, you have to add exact category to the vendor that is set on RFQ line.

For instance, you have the following hierarchy:

Office machines is parent node.

Printers is child node.

If RFQ line has the Printers category, and on vendor only Office machines is set as approved category then AX will not find a vendor even if Office machines is parent node. But if Printers category is added to the vendor as well, AX will now find the vendor.

Since we have added 1 vendor through Auto-add function, add additional vendors manually by clicking Add button.

In the Vendor account field, enter or select a value.

Click Add.

In the Vendor account field, enter or select a value.

There is a functionality of adding 1 or more questionnaires by going to the Questionnaires tab. Vendor will reply on these questionnaires and it will be considered for evaluation.

Click Add button.

Select questionnaire and click arrow button and then OK.

Go to Amendments tab and notice that it’s blank. We will add amendment after sending RFQ.

After you’ve specified all information about your RFQ, send RFQ to vendors by clicking Send button on the Action pane.

On the Sending request form click OK.

Wait until it’s completed.

Notice that status is changed from ‘Created’ to ‘Sent’. Request for quotations are created per each vendor.

If you need to change RFQ after you have sent it to vendors, you can do it by clicking Create in the Amendment section. Before sending RFQ to vendors this button is read-only.

Status of RFQ will be changed to Under amendment. Go to the Amendments tab. Notice that new line is created.

Click Edit button.

Set Name = Amend1

Set Description = Additional conditions for printer.

Click Attachments.

Click New button -> Note.

Set Description.

Set Restriction to External.

After adding an amendment record, click Finalize.

Wizard will be opened.

Click Next.

Click Next.

Click Finish.

RFQ has been re-sent.

In previous versions you had ability to publish RFQ to Vendor portal by clicking Publish to vendor portal button. On the vendor portal, vendors that directly invited could bid on the Open RFQ list page. This ability was deprecated in Microsoft Dynamics 365 for Finance and Operations.

Bidding on an open RFQ

Since Vendor portal is deprecated, we are going to manually create replies (you may invite vendors into Microsoft Dynamics 365 for Finance and Operations for bidding since it’s web based now).

Navigate to the Procurement and sourcing > Requests for quotations > All requests for quotations.

Click Header in order to go to the list of vendors.

Click on the RFQ link.

Or click Enter reply on the RFQ after selecting vendor on the vendor fast tab the same Request for quotation reply form will be opened.

Once Request for quotation reply is opened, click Copy data to reply.

Quantity and Unit will be populated.

Set unit of price.

Switch to the header view, expand Questionnaires.

Click Complete questionnaire.

Notice that status is Not started.

Click Forward at the bottom of the web page.

Click Forward at the bottom of the web page.

Click End.

Notice that after questionnaire completion status has been changed to Completed.

Now if you go back to the RFQ you will notice that status is changed to Received.

Score bids and compare

Open RFQ.

Open Vendor fast tab.

Click RFQ link, Request for quotation reply page will be opened.

Expand the Bid scoring section.

Start scoring by entering Score value in the Score field.

Tool tip for each field will give an advice of allowed ranges.

Total score on the top will be displayed.

Go to another vendor reply.

Start scoring.

Go to another vendor reply.

Start scoring.

Now we are ready to compare.

Compare replies form is used where you can view all replies in order to facilitate comparation and assessment of the bids.

This form is called form button – Compare replies.

Compare request for quotation replies form will be opened.

Let’s move to comparing and ranking the bids.

Enter Rank for example 3 for the first vendor and 1 for the second and 2 for the last.

You can use Show filter to find the suitable proposal. Show filter contains the following options:

• Lowest net amount by line
• Lowest total price
• All

Select lines by setting Mark checkbox and click Accept. Prior to accepting or rejecting a bid make sure that all questionnaires have been completed.

Accepting request for quotation form will be displayed.

Click OK.

Accept second reply.

Click OK.

Once you accept reply, message will be displayed and new purchase order will be created.

Reject other replies.

Click OK.

You can click General in the Compare replies form in order to find created purchase order.

Or you can go directly to the Purchase order and review created order.

That’s all!