With the New Year comes the hope of new opportunities – we make promises to change our eating habits, visit the gym more frequently, spend more time at home, and many more resolutions to strive to be a better person. So why not take this same practice and apply it to better manage your transportation in 2014?
One New Year’s resolution on our list is to ‘Get My RFP in Better Shape’. Transportation sourcing can be a significant challenge for many companies. Typically, the procurement process to identify potential new carriers requires a major investment of time and resources. The transportation team must develop a request for proposal (RFP), follow up on carrier responses, evaluate multiple award scenarios, and implement new carriers into the mix. We typically see that many companies do not have a dedicated resource to manage the freight procurement process, so they have to use key personnel from other areas to complete the sourcing event. This is disruptive to current operations, and prevents the development of functional expertise to drive continuous improvement in the transportation network.
In order to tackle this resolution, our Procurement Experts pulled together the Top 5 ways to get your RFP in better shape:
Start with clean data
By accurately preparing and presenting your data, companies can save a lot of time and hassle during the RFP process. Before starting the procurement process, take time to review all your support documents and contracts to confirm everything is inline and updated.
Know who is involved
Bids should be presented differently depending on the number of decision makers involved. Be transparent in your process to ensure the best outcome.
Realize savings, not price wars
Don’t always award the lowest price, you might be cheating yourself out of value. Use an operational eye to set yourself up for long term success. Better value will beat out lower cost in the race.
Understand your business and what mode fits best
While one mode may be more cost effective, is it the best way to move goods for your company? Having a firm grasp on what mode fits best will help reduce costs and gain efficiencies.
Proactively approach capacity constraints
Carrier capacity can become an issue, but determine if it is due to current carrier’s inefficiencies or if more carriers are required to meet demand. If more carriers are needed, go outside of your network but maintain relationships with current carriers.
Lack of carrier profile data, vetted capabilities and industry benchmarks are also common issues for many companies. Without comparative data points and tools, companies do not know if carriers are costing too much or if lanes are inefficient. An intern armed with Excel just doesn’t cut it. It takes transportation procurement skills, knowledge of existing carrier capabilities, insight into carrier coverage, and supply chain expertise to optimize a company’s transportation investment. For companies that have those tools, or can find them, their RFP is going to be in good shape. So, how in shape are you this year?
Tim Dalton is Procurement Manager at LeanLogistics, where he oversees all Full-Service and DIY Procurement project. Tim has a BSBA from Central Michigan University where he majored in Logistics and Marketing and an MBA from Western Michigan University.
A version of this post was originally published on LeanLogistics’ blog.