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Request for Proposal
A Request for Proposal (referred to as RFP) is an invitation for suppliers, often through a bidding process, to submit a proposal on a specific commodity or service. A bidding process is one of the best methods for leveraging a company's negotiating ability and purchasing power with suppliers. The Request process brings structure to the procurement decision and allows the risks and benefits to be identified clearly upfront. The Request purchase process is lengthier than others, so it is used only where its many advantages outweigh any disadvantages and delays caused. The added benefit of input from a broad spectrum of functional experts ensures that the solution chosen will suit the company's requirements.
The RFP typically leaves all or part of the exact structure and format of the proposal response to the suppliers' discretion. The creativity and innovation that suppliers choose to build into their proposals may be used to judge supplier proposals against each other. Effective RFPs typically reflect the strategy and short/long-term business objectives, providing detailed insight upon which suppliers will be able to offer a matching perspective.
Similar requests include a Request for Quotation and a Request for Information.