The keys to a successful RFP.
October 26, 2018
The fourth quarter is the peak of RFP/RFQ season. Before you dive into the process, there are several questions you should ask yourself.
First of all, what is an RFP?
Most people think of a Request for Proposal (RFP) or Request for Quotation (RFQ) as an exercise to ensure they’re getting the most competitive pricing for their shipping. RFPs and RFQs can be so much more than just cost exercises. They’re also an opportunity to improve supply chain bottlenecks, improve carrier performance and identify a number of other benefits to help your company.
What are your goals?
Are you solely focused on evaluating costs, or are you also looking for opportunities to upgrade the quality of service you receive from carriers? Before issuing an RFP, take the time to think about what will define a successful RFP. Remember that savings can come in many forms; even if you can’t find lower carrier rates, you might consider the RFP a success if you identify ways to lower staffing or warehousing costs.
What are your current successes and challenges?
If you’re having trouble defining goals, you might consider completing a freight audit first. A freight audit can help optimize your supply chain, identifying your current successes and areas for improvement.
What’s your overall carrier strategy?
Your carrier strategy will affect who you ask to complete the RFP. Do you need national carriers, or can you work with regional carriers? Do you need a dry van carrier, or can you open it up to reefer or flatbed carriers, too? Do you plan to supplement with your own equipment? All of these play a role in determining who should bid your freight in the first place.
How good is your data?
Freight brokers and logistics providers look at your past shipments to make assumptions about your future shipments. To do this, they’ll need access to as much of your data as possible. If you always ship with Freightquote, we can pull this information together for you, or you might have it easily accessible from a transportation management system (TMS). In worst case scenarios, an RFP can even be completed based on the bills of lading stashed away in a dark corner of your storage.
The accuracy of an RFP depends on the quality of the information you provide carriers. If you don’t have quality data, consider implementing a TMS or adopting other shipping practices that will retain that data so future RFPs will be more successful.
What other details are known?
Historical shipping data is a great place to start, but it’s equally important to outline what you know about future shipments. A lot of factors go into pricing freight, so letting carriers know what they can expect helps ensure accurate quotes. If a carrier is responding to an RFP blindly, then it’s a waste of time of all the parties involved since actual pricing may vary greatly from the quote. Some of the biggest factors usually include:
• Overall scope/volume and consistency of shipments
• Appointment times vs. open pick/delivery windows
• Typical wait times/demurrage
• Weekday or weekend pickups/deliveries
• Typical shipment attributes: weight, dimensions, commodity type, how it’s packaged, value, etc.
• Lead time (how much advanced notice)
• Seasonality of shipments
What are your expectations from the carrier?
Communication is essential to successful carrier/shipper relationships. Putting your expectations in writing can help solve disputes later and strengthen partnerships. A good RFP might outline KPIs (key performance indicators) so carriers know exactly the criteria they’ll be evaluated against. An RFP can also outline expectations regarding accountability, including what happens in the event of a late delivery, or whether a carrier has to provide guaranteed capacity. Likewise, providing a carrier with what they can expect from you – like lead times – can help them know what value to place on your freight.
Can you use a helping hand?
While you can quote directly with carriers, you may have even better luck working with a freight service provider. Freightquote has access to thousands of carriers, and our expert representatives can help identify the right carriers for your unique situation. In many instances, we have freight service agreements in place with carriers to help ensure capacity and rates.