How Effective is Your RFP for Logistics Services?
May 27, 2020 | 3 min read
The rapid growth in e-commerce sales is driving much of the change across the logistics industry. Customers are switching to home delivery not only for food and small items but also for bulky and expensive items. They are demanding same-day deliveries and the facility to return goods. A result of this is that the supply market for transport and logistics services is developing rapidly, not only in road transport but rail, air and sea freight too. There is added stress within global supply chains which continually have to adapt to these new market conditions. All of this has driven innovations in the use of technology both in the sourcing process and in the physical delivery of services.
Sourcing of logistic services
How do you streamline the sourcing of logistics services in this situation? Sourcing and contracting with a third party logistics company (a 3PL) or trucking company should follow basic strategic sourcing principles. However, the process will include some nuances as it requires specific conditions to ensure success. There are many possible distribution and transport configurations as well as variations in products and packaging so sourcing strategies have to adapt. Engaging and contracting with a logistics company is not the same as buying widgets; you are sourcing expensive and complex services and putting down the foundations of a potentially long-term partnership. Calculating the cost of hundreds of variables accurately cannot be achieved manually without an easy-to-use software solution.
The market for logistics services
If you think you know who will provide the best solution for you before you issue your RFP, you are probably wrong. Take a bit more time on such a high-value contract and investigate what your options are, i.e. who can do this best. Issuing a Request for Information (RFI), also known as an Expression of Interest, can be used to establish both who wants this business and who has the capability. This document is a limited information pack telling potential providers what you are looking for, why you are looking for it and how your sourcing process will work.
Tips on what to include in an RFP for logistics
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Share current data about your current operations. Bidders need to know at least the last 12 months of activity, i.e. inventory levels, facility locations, number and size of deliveries and receipts and staffing levels. Accurate data helps bidders in their design process and allows them to focus on areas where they feel they can add value.
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Provide templates for the bidders to complete. This simplifies the analysis process and promotes fairness and transparency. It also avoids problems in comparing apples-with-apples when evaluating bids.
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Explain to the participants with a basic guide to how you plan to select the successful bidder, e.g. say that your evaluation will be based on price, the services offered, operational capacity, financial standing and customer support offered.
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Allow a generous RFP response time. Designing logistics operations can be a complex process, requiring highly detailed and advanced analysis. The more involved your logistics needs are, the more time you should allow. Be realistic about how long it will take them to design a solution for you. Include a supplier site visit to your facilities and offer as much supporting information as possible to all present. Make sure the bidding process is clearly explained and that the due date is clearly stated.
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Keep an open mind. Your RFP should allow leeway for suppliers to offer alternative solutions to your requirements even if you think you know what the solution should be. Logistics suppliers have various approaches to business and unique ways of operating.
ProcurePort provides world-class sourcing and procurement services to assist both large and mid-size companies with managing their spend and automating their RFP processes. We can manage and analyse large and detailed quotes and bids providing our clients with a speedy and accurate basis on which to make a contract award.
ProcurePort’s On Demand solutions are Cloud hosted in a SAS 70 Type II Environment to provide your organization with the highest level of data security and confidentiality.
