Awarding Lanes, Reducing Costs & Finding the Best Carriers All Starts With a World-Class RFP
Let’s face it… conducting an RFP is your ticket to shipping success.
It’s much more than an opportunity to secure the cheapest lanes.
It’s an opportunity to find and select the right freight partners that will make your business run a whole lot smoother.
But the process can be tricky…
Do it right… and you’ll be able to manage your freight with confidence. Do it wrong… and you’re in for a steady diet of uncertainty and sleepless nights.
A poorly executed RFP creates more questions than it answers and it wastes time and financial resources for all parties involved.
A properly executed RFP receives innovative responses and provides the opportunity to compare supplier information to find the best alignment of services for the shipper and carrier.
But creating a world-class RFP doesn’t just simply happen with the snap of your fingers. It all starts with properly preparing for your RFP.
The 16 Planning Questions You Need to Ask:
Planning for your RFP isn’t a process to rush through. It requires stakeholder input, research, historical data, and most importantly, direct business objectives.
If you invest the time in building a world-class RFP process, you’ll reap the rewards. And it all starts with planning.
That’s why we created this 16 point planning questionnaire. These 16 questions will focus your preparation and frame your RFP for world-class success.
Here you go…
1. What do you hope to accomplish through this RFP?
Start with the end in mind. What are your business goals? Are you hoping to improve service, or improve cost structure? A thorough description of your business needs and scope of work will allow transportation providers to deliver customized solutions that best match your shipping needs.
By making participants aware of your needs and requirements upfront, you reduce the risk of awarding contracts to a transportation provider who may not be the right fit. Be sure to spell out the “why.”
2. What are your estimated cost-saving goals?
Do you have a target savings or target rate in mind? Before answering this, it’s important to know your current cost structures and pricing templates. This will provide you data to measure against as you receive proposals. Go back to your business goal… are you looking for the cheapest provider, do you have certain problem lanes you are solving for, or are you trying to establish a target RPM?
Keep in mind that the best cost-savings doesn’t necessarily mean you will get the best service… which could ultimately cost your business more in the end. Be smart about who you select when cost savings is the ultimate goal.
3. How will you measure success?
Do you have benchmarks in place? If not, it’s important you put some in place to ensure you are running a successful RFP process. But before you can measure anything, you will need data to measure and compare against.
Here are 7 pieces of data you should use to measure your success:
- Detailed lane data
- Expected freight volume & shipping frequency by lane
- Any special equipment requirements
- General terms and conditions
- Delivery appointment requirements, shipping and/or receiving hours, facility profiles
- Current cost structures & pricing templates
- Selection criteria and KPIs
Arrange the important questions, and look at your company’s historical data to set benchmarks. This will help determine if your RFP delivered the anticipated results.
4. What operational efficiency are you looking for?
Are you hoping to improve service-levels? Technical requirements? Financial requirements? As a shipper, you know every load, every minute, and every dollar counts. And a difficult part of your job is making sure that you get what you pay for from your transportation providers.
This is where metrics come in.
Setting Key Performance Indicators (KPIs) will help you tremendously to determine what efficiencies you are looking to improve with your RFP. And it’s important that you clearly define and spell them out for participants.
To help, we put together The Complete KPI Worksheet for Shippers. It will help you measure success and benchmark what matters.
We think of it as a simple, yet profound manual to help you determine which partners deliver the most value as it relates to service performance, rate management, and financial indicators.
5. What sort of technology requirements do you have? EDI? Real-time updates?
Do you need real-time tracking and analytics with FourKites or MacroPoint? Do you use EDI or direct connections for data exchange? What does your business require? What systems are you compatible with? What reporting do you require?
You will want to select partners who can interface with your system and track and trace the way you need them to.
6. Are you looking to add or reduce carriers?
This goes back to the leading question, what is the ultimate goal of your RFP? Typically, if you are looking for cost-savings, you’ll end up adding to the carrier pool.
If your end goal is accountability and stringent metrics, you’ll likely be reducing your partner list. Be clear and upfront about the intentions of your RFP as it will help you in the final selection process.
7. How many bid rounds will you have?
Is your RFP process one and done or will carriers have time to review and refine submissions? It’s important to discuss the deadlines for submissions and supply your participants with key dates throughout the process.
We recommend providing your bidders with these 9 dates so they can be prepared for every stage of your RFP.
8. Will it be an open bid or an invite-only? How will you choose who to invite (RFI)?
If you conduct an RFI (Request For Information) as a precursor, limit your RFP to qualified respondents. If you didn’t conduct an RFI, include a qualification questionnaire with your RFP, which will allow you to quickly screen for transportation providers that don’t meet your requirements.
9. Are you going with asset only or will you include non-asset-based brokers?
Are you going asset-only? And Why? Think about why you would want one over the other. Do you want to work with the carrier directly or do you want to work with a 3rd party that provides additional value?
Asset-based carriers can have their advantages, such as owning the equipment and having more control over costs, but non-asset based brokers can offer more customization and flexibility. The choice should ultimately come back to the goal of the RFP.
10. Are all lanes up for bid or are certain lanes reserved (asset-only, incumbent, etc.)?
Sometimes you have a really good thing going with your current transportation partners… and if it ain’t broke why fix it? Think about whether you want to put those lanes up for bid, or if you want to keep working with your incumbent.
Again, a lot of the time this just comes down to what your goal of the RFP is… save money, or have exceptional service.
11. Are you going to package or bundle lanes? How will you evaluate this?
Getting one-off pricing for each lane can lead to significant competition for your highly trafficked routes… and the more to choose from the better, right? Not always. It could also result in lanes being overpriced and underserviced.
A nice loop-around? Bundling lanes in your RFP. This basically allows you to say “yeah, we will give you these X lanes at this price… but only if awarded together with X lane at that price.”
Bundling lanes has numerous benefits to shippers including cost savings, ensuring excellent service and unlocking more data. But it takes a great deal of strategizing to determine which lanes need to be bundled together to ensure the desired outcomes are met.
For those hard-to-cover lanes, this might be something to think about.
12. Will incumbents be given special consideration?
Be honest and open about whether incumbents will be given special consideration. Will they be part of the first round of negotiations or will you host a one-bid round with key lane negotiations? Clearly state in your RFP how the process works for your incumbents.
Bidders are looking to partner with customers that take this into consideration… plus, they will appreciate the transparency. If you don’t mention these, you risk losing out on bids from companies who question the authenticity of the process and whether they stand a chance.
13. What’s your RFP Timeline? What are the key due dates?
When do you hope to have the RFP completed? As mentioned in #7, you need to have key dates in place throughout the RFP process. This allows you to stay on track and keeps your participants on schedule.
Some important dates include:
1. The bid opening date
2. Questions due date
3. Deadline for 1st rate submission
4. Feedback data
Get all full list with all 9 key RFP due dates here.
14. How will you communicate the release of your RFP?
You can send your RFP out in a number of ways. For example, through a web-based portal or through a consultant (if you’re working with one). You could also send it out via email or host a webinar where participants can get all the details and openly ask questions in one place.
Be sure to let participants know how to submit their RFPs. Describe the overall RFP bidding process. Include clear instructions on response submission requirements, response format, submission mechanisms and how to submit questions and feedback.
- Web-based TMS Submission
- Submission to 4PL/Consultants
15. Who will manage the responses when they come in?
To avoid confusion and ensure consistent communication across all participants, designate a single point of contact for questions.
16. How will you evaluate and award lanes?
Highlighting your evaluation criteria will make it easier for you to company and pick the best 3PL. Will responses be evaluated by the entire team or just a single individual?
It is recommended you read each proposal first, flagging those that are in violation of directions and/or those that don’t meet the requirements. Checking for compliance is an easy way to short-list responses to only qualified respondents.
Scoring can vary from company to company and range from simple to highly complicated. One approach is to weigh all sections that they add up to 100%. Within each section, assign points from 0-10 (where 0 is unacceptable and 10 is outstanding) to each criteria component according to the degree to which the proposed solution meets stated requirements. Compile the results.
When awarding bids, you need to set meetings to close the deal and sign contracts with the vendors of choice. If you include contracted terms and General Terms & Conditions with your RFP, this process should be simple. If you don’t, you will enter into final negotiations.
Keep in mind that It is considered good practice to notify both successful and unsuccessful participants once the RFP process is completed.
And there you have it… That’s how you plan for your RFP. Next step is to execute. Simple enough, right?
At FLS, we’ve been participating in RFPs for over 30 years. Along the way, we’ve seen some really brilliant ones… and we’ve also seen some really poor ones.
And that’s why we created The Ultimate RFP Checklist.
It’s the most comprehensive RFP guide ever created, designed to help you award lanes, reduce freight costs and find the best business partners and carriers.
It’s a step-by-step guide to creating a world-class shipping RFP.
You can use it to nail your next RFP and reduce those shipping headaches throughout the year. Snag your copy here: