There are many different ways for a supplier to answer a Request for Quote. The lowest price may not always be the most complete analysis of the overall process. A higher than expected price however, may actually be the most comprehensive and accurate quote for a full range of services. It may also be the one that best fits your long-term needs.
After confirming that a non-disclosure agreement is in place, the typical RFQ always includes the product part number(s), annual usage estimates, CAD drawing & material/part/packaging specs, whether the product requires a clean room, and whether the project just involves medical injection molding or if it also includes assembly, decorating and/or specialty packaging prior to final boxing.
So after firming up your project requirements, you offer RFQ’s to some of your manufacturing partners as well as some other prospective associates. Before long, the quotes arrive and they are analyzed for compliance with your original terms.
Perhaps you find two competitors who seem to be close in their quotes for services. Now it is time to drill down further to see if you can find the best solution for your needs. At this point you want to ensure that their technical capabilities & expertise match your project requirements and that you have found a true partner to help move you forward.
Finally, a source is chosen to provide the product, and your team has chosen the supplier based on the lowest price. All seems well for some time. The sample submissions meet your specifications, the product testing shows full compliance with your needs, and all applicable government regulations are met. You are ready to move forward with production.
Components roll into your facility and are ready for their final processes before the product is shipped to your customers. Everything works as projected and it appears that everyone is happy. This seems to be the case until your company begins receiving invoices from the supplier, and then the smiles begin to fade. There is a discrepancy between the quote and the invoices.
Obviously there is some concern. The explanation is that while the quote for the component is accurate, the invoice includes such things as development costs, tooling or molding charges, a “price increase” for raw material post-quote, or even the purchase of new equipment for the supplier. What happened?
While this may be a case of “bait and switch”, it’s also possible that it’s the result of not comparing apples to apples. It turns out that the supplier chosen had an original quote that was for the actual component only, EXCLUSIVE of other costs. The potential partner that was rejected as being too high is contacted and now recognized for having included all of their expected costs up front in the quote. That explains the difference and unfortunately you are now stuck in a contract that costs your company much more than anticipated.
How can this situation be avoided? Some suppliers will tell you it’s simply the cost of doing business and that you should anticipate “extra” costs if you are not specific enough in your RFQ. But you can’t seem to shake the feeling that it is really the supplier who may have acted a bit unethically.
Trust, honesty and transparency are vitally important in partnerships. It is even more important when your business includes life-saving or life-sustaining technology in the medical device industry. Injection molded medical devices and device components are becoming more and more prevalent in hospitals,doctor’s offices and for in-home use. From disinfectant-compatible housings to implantable components, the technology advances rapidly.
Along those same lines, your RFQ needs to keep pace with rapid industry changes. Not only should the requirements be detailed as early on as possible, but they also need to include expectations of each process, from development through to production. Only then can you be sure that you are making accurate comparisons and avoiding unpleasant surprises.