How to: Reference for Quotation

Step 1: Strategy & Planning.

What is a Reference For Quotation or RFQ? Why is it important to my company?

After all, you 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 2: 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...).

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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.

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Step 3: 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

Fabricated Plastics parts
Metal parts
Glass parts
Wood parts
etc...

Electrical Parts eBOM

PCB Specs
SMT Components
DIP Components
Spot Buy or Long Lead Time Contracts
Alternative Components
Conformal Coating ?

Purchased Parts BOM

‍‍Off the shelf materials ?
Battery spec sheet
Speaker spec sheet
Screen
Charger
Cable
Screws
Washers
etc...

Packaging BOM

Packaging Design files
Stickers design files
User Manual design files
Format: .ai or .pdf preferred
Dimensions & CMF
Sample (if available)

2.2 Design Materials

PCBA Materials

Product Function Table or User Manual
Gerbers
Schematics

‍3D renderings

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

2D drawings

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

CMF

Color Pantone
Material
Finishing
Reference Sample (if available)

2.3 Process Files

Business

Scope of Work
First PO Volume
$ Target Price
Target Markets
Expected Time to Market
Expected Yearly Volume
Incoterms
Terms of Supply

Manufacturing

Assembly SOP
Testings SOP & PASS/FAIL Standards
Jigs design
Labelling Req

Quality

Product Validation Checklist
iQC standards
IPQC standards
OQC standards
Golden Sample (if available)

Logistics

SKU List
Packing Req
Carton Markings
Transport Label
Packing List
Invoice
Preferred Means of Transport : Air, Sea, Rail
Crowdfunding Fulfilment needed ?
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.

Supernova