Outsourcing Basics

What is an Outsourcer?

An outsourcer is the company or organization that receives the RFQ from the client and then submits the details of the RFQ as an RFE to one or more suppliers. The outsourcer differs from the supplier in that the outsourcer acts as a middle-man between the client and the supplier. The client never has any contact with the supplier during the procurement process.

What is an RFQ

An RFQ is a request for a Quote. The client sends an RFQ to the outsourcer when they want to  initiate a new procurement project. A RFQ is not a RFE, the client is not asking for a number of different estimates, they just want a single quote. When an outsourcer receives an RFQ, the send out an RFE to their suppliers. Once they receive the estimates, they select the most suitable estimate and send it to the client in the form of a quote.

What is a Client?

The client (buyer) is the company or organization where an RFQ originates. The client is referred to as the buyer elsewhere in this guide.

What is a Quote?

When an outsourcer receives an RFQ from a client, they send out an RFE to their suppliers. Once they receive the estimates from their suppliers, they create a quote based on the most suitable estimate they received and send this quote to the client. However, an outsourcer does not have to send out any RFEs before they create a quote. They can create a quote directly from the Noosh system.

Outsourcing Overview

In today's ever changing business world, large corporations are constantly searching for ways to reduce production and manufacturing costs. Noosh have developed a way for you to enhance your outsourcing process by presenting the opportunity to outsource non-strategic areas of your operations to external service organizations that posses expertise in these non-strategic areas. The benefits of outsourcing a process include:

• A reduction of internal process related costs. The expenditure committed to outsourcing a process will be less than the cost of performing the process internally.
• Outsourcers possess a great deal of expertise in finding the most suitable supplier since they constantly operate in the supply environment.
• Outsourcers operate with effective and efficient procurement practices with respect to contracts, and open and closed bidding practices.
• Outsourcing enables the client corporation to devote more resources to core competency.

Outsourcers, on the other hand, use their expertise to maintain a profitable business by servicing one or more clients. Outsourcers generate profits through:

• Process improvements.
• Improvements in purchasing practices.
• Economies of scale.

The Outsourcing Process

1. The client initiates a new procurement project by contacting the outsourcer and detailing the items that they want procured. This can be done through Noosh or outside of Noosh (email, phone, fax, etc.).
2. Once the outsourcer receives the project details, they review the project details and create an RFE which is then sent to one or more suppliers.
3. The suppliers review the RFE and generate an estimate which is sent back to the outsourcer.
4. The outsourcer reviews all of the estimates and selects the one that they deem to be most suitable for the client. They present this estimate to the client in the form of a quote.
5. The client reviews the quote details and either accepts or rejects the quote. They then convey this information to the outsourcer.
6. If the quote is accepted, the outsourcer places an order with the supplier. If the client rejects the quote, the outsourcer can choose to edit it and resend it to the client for acceptance. This can continue until the client accepts the quote.