Road Freight Tenders blog – TenderTool
In the first quarter of the year, many shippers review their current (road) transportation contracts. But how do you know it is time to issue a road freight RFP? And what are the current best E-Sourcing practices?
Transportation is of vital importance to many companies. But the way tender processes are built often leave much to desire for. In many cases, this is because shippers extremely emphasize their own internal RFP process, without taking suppliers into account that must follow their process.
This comes as no surprise. In general, all logistics procurement professionals will agree that Freight RFP’s are time-absorbing, complex and analytical wrecking balls. After all, freight tendering is a core activity that requires many hours of full dedication.
In this blog, I highlight factors that indicate it is time to plan a freight tender for road transport. After that, we have listed 4 important points for shippers to consider when they go to the market with a transportation RFP.
When is time to organize a road freight RFP?
It is impossible to come up with an universal answer deciding when it is time to set up a road freight tender / RFP. However, there are general shipping factors that can help. Let’s take a look at factors indicating it is time for a road transportation RFP:
1. Current rates are nearing expiration
2. Spot market usage has substantially increased
3. Business is significantly growing
4. Need for rationalizing your carrier base and build more opportunities/relationships with fewer carriers
5. Network Changes – New Customer Requirements – New Product Launches are planned
6. Known market conditions, risks, or recent changes in capacity availability (loss of incumbent carrier(s) capacity)
4 steps to improve your FTL freight tenders
1. Before you send out the RFP, communicate it with your internal organization. Why? Because the freight rates you are going to nominate eventually, will have a major impact on your budget for the year. Not just for one department, but for many. Make sure everyone can track the impact of the tender real-time, at all times.
2. Next to internal communication, think about steps to streamline communication with suppliers. Give a clear explanation what the tender is about, what the objectives are. Moreover, get personal with you carriers and give them useful feedback. Keep in mind: Carriers only participate in about 50% of the freight tenders they receive. The easier you make it for you suppliers, the more rewarding your FTL freight RFP will be.
3. Thoroughly analyze freight rate proposals. Many shippers find trouble in analyzing and streamlining multiple supplier proposals, they only focus on key lanes and weight breaks that represent the majority of the scope. The big issue is that carriers actually know this and act upon it. What happens next is an alluring offer with discounts on major lanes. Meanwhile, the ‘less attractive lanes’ are ignored, negatively influencing your savings. Implement a solution to analyze the tender as a whole. Look for solutions that allow you to source on cost, service, scorecard and custom levels.
TenderTool Tip: Don’t forget to benchmark your freight rates 6 months after your road tender is completed. Because freight conditions change, volumes change, it is hardly possible to keep track if you actually reduces transportation costs.
4. Validate your freight invoices! How else are you going to ensure your achieved savings? Most companies do not audit their invoices. And procurement only cares about the “assumed savings”. Get in touch with a freight audit provider and secure your savings!
About TenderTool – E-sourcing the cloud
TenderTool was founded in 2016 and is rapidly becoming the standard in road, ocean, distribution, and air tendering. With our end-to-end solution, fully dedicated to the transportation industry, we automate Excel related exercises around tendering. Furthermore, we improve communication flows. We also offer a full reporting and analysis suite for instant tender intelligence. Visit our freight procurement page to learn more about our unrivaled capabilities.
If you would like to see a demo of our solution, please leave your details in the form below and we contact you as soon as possible.
Pieter Kinds (41) is CEO of TenderTool, a cloud-based logistics sourcing platform.