What is the difference between Enquiry, Reverse Auction, and Forward Auction?

Modified on Fri, 16 Jan at 12:24 PM

Each event type is a distinct procurement method designed for a specific purpose:

1. Enquiry (RFQ - Request for Quotation)

Purpose: To gather information, preliminary pricing, and vendor proposals.
Process: It is a non-binding process. There is no real-time bidding.
Outcome: The buyer collects and evaluates submissions and typically awards the business offline after a thorough review.

2. Reverse Auction

Purpose: To achieve the lowest possible price from a pool of qualified suppliers.
Process: This is a live, competitive bidding event where multiple suppliers bid for a contract.
Outcome: Prices decrease as suppliers compete. This is an effective tool for cost reduction.

3. Forward Auction

Purpose: To achieve the highest possible price for an item or service.
Process: This is a live, competitive bidding event where multiple buyers bid against each other.
Outcome: Prices increase as buyers compete to win the item. This is commonly used for selling surplus goods or liquidating assets.

Aspect	Enquiry (RFQ)	Reverse Auction	Forward Auction
Primary purpose	Collect info, preliminary pricing, proposals	Achieve lowest price from qualified suppliers	Achieve highest price for item/service
Bidding style	Submission & evaluation	Live competitive bidding among suppliers	Live competitive bidding among buyers
Price movement	None	Prices go down as suppliers underbid each other	Prices go up as buyers outbid each other
Typical usage	Initial sourcing/market discovery	Cost reduction, competitive sourcing of inputs/services	Sale of surplus, scrap, assets, high‑demand items
Award decision	Evaluation-Based	Often awarded to lowest bidder + qualification rules	Often awarded to highest bidder + qualification rules