An optimized freight transportation RFP can mean the difference between a successful, harmonious shipper-carrier relationship and re-bidding your lanes.
As a shipper, you’re probably aware of request for proposal (RFP) documents. Not to be confused with a request for information (RFI) or a request for quotation (RFQ), an RFP is a formal request for truckers and other freight carriers to submit proposals to meet your shipping needs. The current supply chain capacity crunch and the related logistics congestion have created an atmosphere where carriers can be much more selective about the freight they move. It’s more important than ever before to become a shipper of choice and make sure carriers are attracted to your “good freight.”
You distribute an RFP to current and prospective carriers, and any interested carriers will bid on lanes. You can review carrier proposals and select the right ones that fit your business needs. Once you accept a carrier’s bid, they’ll honor their promised price and volume for the duration of the contract. Not only do freight transportation RFPs ensure rates are compatible with market conditions, but they also improve the performance, reliability, predictability and cost-effectiveness of your supply chain.
Putting together a clear, quality RFP is essential. Finding the perfect transportation provider can be difficult, but taking the time to list specific details about your business and what you need from a carrier can help. Essentially, RFPs ensure you and your carrier are on the same page, which can lead to a stronger, more trusting shipper-carrier relationship, a more predictable supply chain, and more accurate carrier estimates.
Optimizing freight transportation RFPs
Now that you know what RFPs are and why they’re important, let’s talk about the five most important factors when optimizing RFPs.
1. Know your business plan
Your business plan is the foundation on which your RFP and future contracts are built. Taking the time to establish your goals and necessary scope of work with a cross-functional team of stakeholders is essential. For example, if you have time-sensitive freight or use a just-in-time model, you’ll need an efficient, punctual carrier. Plus, you’ll need to use your goals to guide your key performance indicators (KPIs) and ensure you aren’t wasting time collecting unnecessary data.
2. Include the right details
Providing plenty of details on your freight in your RFP will help your transportation providers give an accurate quote. Vague information can lead to inaccurate estimates and frustration down the road if your carrier can’t meet your expectations.
You’ll want to include your average weight per load, expected shipping frequency and freight volume by lane, cargo value, lane ZIP codes, lead time, commodity types, and any equipment requirements. Also, specify your KPIs to ensure carriers know what you expect of them. Include logistical information, such as the bid opening date and the dates for information conference calls, first and second rate submissions, feedback, final negotiations, and award notices.
3. Ask the right questions
By asking the right questions, you can ensure you and your potential carrier are great fits. Some questions you might consider asking include:
- How do you enforce compliance with electronic logging device (ELD) mandates?
- How do you ensure business continuity and data redundancy?
- Do you have any current clients we could speak to?
- How do you work with electronic data interchange (EDI)?
- What areas do you cover?
- How large is your fleet?
4. Know which requirements are mandatory
Wading through bidders’ proposals can be a time-consuming process, but you can save yourself some hassle by having a list of mandatory requirements. If a carrier doesn’t meet every mandatory requirement, you can quickly disqualify them from consideration.
Some mandatory requirements might include specific licenses or certifications, cargo insurance, liability insurance, or API or EDI technologies. Keep your business plans and goals in mind when deciding which requirements are absolutely essential, and make sure to clearly define every requirement in your RFP.
5. Communicate clearly
When looking for a new carrier, you’ll need to clearly communicate, from the words you use in your RFP to the things you share during informational conference calls. But your work isn’t complete after you’ve chosen your provider.
To start your shipper-carrier relationship off on the right foot, send them a welcome letter detailing which KPIs are most important to you, how many rounds they can expect, and accurate target rates.
How supply chain technology informs your RFPs
Embracing automation, visibility, data-sharing and other new digital technologies is essential to creating successful RFPs. When you know what’s happening across your supply chain, you can provide detailed information in your RFPs and solicit more accurate estimates from carriers in return. Plus, these digital trends make creating data and dashboards easier than ever, which accelerates bid processing and prevents supply chain delays.