Transport RFP Management challenges - Part 2

For most companies executing a transport RFP project is not a routine activity. It is a highly time consuming activity, but a necessity nonetheless. The RFP is an investment in improving logistics operations resulting in savings, improved services or both.

In this series of two articles we look at the 6 biggest challenges on managing transport RFP projects as reported by companies. In this second article we take you through the remaining 3 challenges.

Top challenges in executing a RFP

As we saw in the first part of this tow-part article, research amongst clients shows us that the following parts of a RFP project are seen as most challenging:

 

4 - Gathering high quality historical shipment / cost data

Without the availability of detailed historical shipment and cost data a RFP is likely to fail. Good, clean, detailed and harmonized data is required to setup an analysis base line and create shipment profiles for the participating carriers to bid on. Lack of detailed shipment data in a RFP leads invariably to carriers building in “safety margins” in their quotes. Every detail that is not clear is a potential risk for them. Good data leads almost perdefinition to the maximum bid results.

Gathering, cleaning and harmonizing data is seen as a difficult and time consuming activity by most companies. The most common historical shipment and cost data sources that are used are listed in the chart below. For a good RFP you need to collect shipment level detail data for at least a period of one year. The data needs to be clearly split by mode, detailed service type and service level for each shipment. It should also contain a full break down of the shipment cost in base freight, fuel surcharges and other accessorial charges.

For companies that don't have a TMS or Freight Audit & Payment provider at hand, contacting your carrier base it the next best thing. Carriers often have excellent detailed and accurate shipment and cost data available. They should be more than willing to share this with you as it is also in their best interest to represent your shipment profile as true and detailed as possible in a RFP. The biggest risk for incumbent carriers in a RFP is a bad representation of the shipping pattern. It could lead to new carriers low bidding on an assumption. This will negatively influence the (often higher) bid of the incumbent carrier who knows all the ins and outs of the actual shipping pattern.

 

 

5 - Complex response analysis

The moment most transport & supply chain people look forward to in a RFP process, is the moment they can see the results of their work. It also signals the moment most transport & supply chain people dread most, because the analysis process needs to start. The analysis is often seen as the most cumbersome part of the RFP project.
For companies that have not issued a RFI and that have not ensured that the responses from the participants can be easily quantified and compared it is a nightmare to come to an apples-for-apples comparison. The same applies to companies that do not standardize (and lock) their bid sheets and have integrated them up front with their analysis tools. They are guaranteed to run into analysis issues after receiving the responses from the participating carriers.
Enforcing standardization and harmonization to the participating carriers is paramount for a successful result analysis. The standardization needs to take into account the historical data as well. A Tender Manager needs to lay down the standard and not allow free format responses. Make sure however that the standards that you enforce are industry standards (don't ask for prices per cubic meter in a parcel tender - "don't laugh, we've seen it happen").

6 - Lack of in house RFP Management expertise

The quality and related result of a RFP exercise often is a one to one relation to the available expertise on the subject. Companies that have little or no experience with managing complex RFP projects often struggle to create a high quality RFP. And they fail to reap the maximum results from the RFP. This is a shame as the investment in time and money is often higher than for companies that have in-house expertise or have outsourced it to a specialist company.

A failed RFP is costly in:

• Missed savings opportunities – RFP’s that are unclear, incomplete, inconsistent or unprofessional result in carriers building in safety margins in their quotations,

• Lack of improvement of services – Unclear requirement settings do not allow carriers to provide their best solutions, resulting in lack of service improvements,

• Strained relations with participating carriers – RFP’s that are not managed in a professional way and lack a level playing field for all participants or have limited communication could lead to strained relationships. A result might be that carriers will not participate when invited a next time.

If you don’t have the expertise in house and do not plan to build the expertise, your best option is to outsource the management of your RFP’s to an external expert. This does not mean there is no more work to do for you, but at least you are guaranteed to reach the maximum result on your investment. 

Expertise, planning, time and support tools are key factors in a RFP project to reach the best result. Any percentage point of missed savings potential goes straight off the bottom line. When you take up a RFP project make sure you have all the key elements in place to create maximum return on your investment of time and money.

 

 

 

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Transport RFP Management challenges - Part 1

 

For most companies executing a transport RFP project is not a routine activity. It is a highly time consuming activity, but a necessity nonetheless. The RFP is an investment in improving logistics operations resulting in savings, improved services or both.

 

In this series of two articles we look at the 6 biggest challenges on managing transport RFP projects as reported by companies. In this first article we take you through the first 3 challenges.

How to deal with these challenges?

 

Unfortunately there are no easy ways or shortcuts to face the most common challenges in executing a RFP project. It is just hard work. But there are certainly ways to ensure a RFP project is managed in an efficient and professional way

 

1 – Maximising Savings

 

This challenge is often directly related to the inability to come to an apples-for-apples comparison in the analysis. If you don’t know what the result is how can you come to a conclusion and recommendation? But even if you are able to come to clear conclusions and recommendations, it is of high importance to keep monitoring the achievements.
Most companies are happy with the savings results they achieve on paper from a RFP project. But many companies are not able to tell us two months later if the results actually materialized in the day-to-day operations. Without a savings achievement monitoring process (or tool) in place you can never be sure what the real result was.

 

2 - Highly time consuming exercise and lack of staff resources

 

An average RFP Project takes around 3 to 4 months from start (data gathering) to finish (awarding and contracting). As most transport and supply chain staff have to perform such a project next to their regular day-to-day activities it is seen as a highly time consuming and disruptive exercise.

 

RFP’s should be in integrated part of every supply chain organization’s strategic agenda. Unfortunately, too often RFP’s are executed at the last moment as an afterthought. Every supply chain operation makes an annual cost budgets. This budget should also include expense for executing one or more RFP’s each year. By making it part of the strategic planning it ensures that preparation steps for the RFP are taken on a timely basis, which will reduce the overall time consumption in the long run and will result in improvement of the quality of the RFP (and consequently the results). Planning results in better allocation of resources for RFP execution is an investment that will see a definite return.

 

 

3 - Unavailability of specialist tools or technology

For most companies tendering is not a routine exercise and as a result most companies do not have specialist RFP technology and/or tools available. In most case this leads to extensive use of the good old Excel sheets. It is estimated that about 30% of companies use Excel to create their own analysis tools. And another 30% of companies does not even use any tools at all for analysis.
Using a robust and standardized RFP process enhances the speed with which a RFP can be managed and the quality of the results. Many companies decide to outsource their RFP Management activities to specialist companies that have a set of tested tools. The trend in the market is to bring complex RFP processes more and more online whereby the use of professional internet portals are preferred.

 

 

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How Google could impact logistics - Part 2

In this series of 2 articles we will look at two technology development projects currently going on at the tech giant Google. We look at the developments of "Google Glass" and "Google Driverless Car" and review how these could potentially impact logistics processes in the future. In this article we review Google Driverless Car.

Google Driverless Car

Another Google X research lab project is even more disruptive than Google Glass, Google’s Driverless Car technology. In a recent Forbes publication, contributor Chunka Mui wrote a series of very interesting articles about this subject and the massive impact on many area’s (an absolute must read).

In the articles Mui states that people have a tendency to underestimate the impact of new technology. We have all seen how the music industry misjudged the impact of online music, how the arrival of the iPad impacts the PC industry (when was the last time you bought a bulky desktop?) and how a company like Kodak missed the mark on digital cameras. With its Driverless Car development Google is creating a piece of technology that could have far reaching impact. For the logistics industry it could well mean a complete rethinking of logistics and transport operations of the future. It could also signal one of the biggest cost restructuring opportunities in logistics.

The Driverless Car developments are still in early stages, but the speed in which it is evolving is impressive. The states of California and Nevada recently handed Google is first license for driverless vehicles, which opens the way of expanding the testing in real life situations.

What’s next: Google Driverless Truck?

The current focus of Google is on cars, but we can easily imagine this technology to be expanded to trucks in the future. Google’s aim is to reduce wasted commute time, improve fuel efficiency and relieve traffic congestion by allowing cars to go faster and operate closer together or choose more efficient routing. A spin off effect is to improve road safety and reduce accidents. Note: According to the US National Highway Traffic Safety Administration about 9% of annual traffic accidents involve large trucks.

At this moment truck manufacturers are already busy testing and implementing adaptive breaking technology, with the aim to reduce accidents. Once Driverless Car technology is ready for implementation in trucks it will have a far reaching effect on logistics. It most likely does not mean that there will be no more drivers in the cabin (someone still needs to put in the fuel on long hauls I guess) but the tasks of the driver will change.

Mass adoption of driverless cars (and trucks) will most likely take a few decades and there are many practical and resistance hurdles to jump still. In a future world however, where there is mass adoption of driverless cars and trucks the impact on logistics could be massive. After the initial investment, cost benefits will start to show for logistics operators in more efficient driving and utilization of vehicles, reduced fuel costs, lower insurance and longer hours of operation (no driver time limitations). We can imagine that initial pilot projects will involve the “easier” long haul routes, but who knows the next best thing might be that your UPS or FedEx delivery vans are robot operated.

We are clearly in an age where internet and robotics technology are rapidly evolving and are more and more impacting our daily lives. The logistics industry is certainly not slow in adopting. Last year Foxconn announced its plans to install 1 million robots in its factories to make its logistics operations more efficient. The continuous evolution of technology means that logistics operators need to stay on top of their game and follow and adapt/adopt quickly to stay in the race. Nobody wants to be the next dinosaur.

 

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How Google could impact logistics - Part 1

In this series of 2 articles we will look at two technology development projects currently going on at the tech giant Google. We look at the developments of "Google Glass" and "Google Driverless Car" and review how these could potentially impact logistics processes in the future. In this article we review Google Glass.

What is Google Glass?

Google Glass is in a far advanced stage of development by the Google X research lab, which is headed by Google founder Sergey Brin. In recent interviews Brin told reporters that he hoped the device will be ready to hit the market some time in 2013.

Now don't throw away your contact lenses yet. Google glasses are used like eyeglasses, but they are not eyeglasses. It is more a “Sci-Fi type” communication devise consisting of a very small screen that is positioned in front of your right eye, a tiny camera and wireless technology that is in constant contact with your cell phone.  It is in effect a wearable computer/phone without keyboard or swipe function. It is aimed to provide the user a hands-free augmented reality experience.

 

Where could Google Glass be used in logistics operations?

So, how could this type of technology development impact logistics? It will not be used for the purpose Google is developing it for right now, which seems to be more geared towards social media use. But future modifications will most likely see these types of devices being used in the logistics world. There are at least a few examples we can think of. But most imminent are picking & packing operations. By hooking up Google Glass type devises to WMS technology, the way information is processed in warehouse operations could change.

Today's pick & pack operations are pretty sophisticated already. The most common set up is that a group of pickers collect the items in the warehouse and deliver these to a group of packers who consolidate them into individual client orders. In most warehouses pickers get their pick orders fed (remote or via a loading station) to a (handheld) scanning device. The devise most of the time contains the location of the item and the number of items for the order. The packers usually get their information via terminals at the packing station and scan items to an order with handheld barcode scanners.

It is likely that in the future these handheld scanners and information devises will be replaced by an enhanced form of the Google Glass. On the eye screen orders, picking quantities, picking locations and special instructions are displayed which are fed directly from the WMS via WiFi connection. Scanning of the items will take place via the build-in camera in the glasses, which immediately updates the products stock levels in the WMS. If the picker has any queries he or she can either directly contact the planning office and talk to the planners via the build-in microphone or connect to the instructions database and display information. For packers the same concept will apply.

The benefits are that operations can move faster as pickers and packers have both hands available. Furthermore information can be used in a more dynamic way, it is no longer a one way push of information, but also active information gathering by the people on the floor will be possible. The physical operation can be augmented by having the pickers & packers actively searching for additional information on for instance; box sizes to be used, special handling instructions, VAS activities, etc.

The technology is still in its infant stage but we have seen that the speed of technology development and adoption goes in a rapid pace these days. The interesting thing is that Google creates most of its technology in an open source environment, which allows for engineers across the globe to tinker with these new devices and implement new ideas. It will only be a matter of time before we will be able to see the first demonstrations of adapted “Glass technologies” on logistics trade fairs.

In the next article we will look into the development of Google's Driverless Car and how this could impact future logistics operations.

 

 

 

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3 Money saving Routing Guide strategies

The easiest way to meet your transport budget for 2013 is to eliminate overspending and make sure you are not incurring unnecessary freight expenses. The most common causes of overspending? Shipping goods with non-contracted carriers shipping with the wrong carrier or using unauthorized service levels. How does this happen? It could be your vendors, your clients or even your own staff. Not on purpose but because they do not have the right information.

Here are 3 Routing Guide strategies that will help you save money this year by ensuring compliance and gaining better control over your shipping process and costs.

Manage inbound vendor routing compliance

If suppliers operate under INCO terms that require them to make use of your contracted carriers for inbound shipments, then you need to manage routing compliance. You have spent a lot of time and effort in setting up the most cost efficient carrier network. A supplier that does not ship its goods with your designated carriers will cost you money.

The solution to manage routing compliance is to implement a Routing Guide. Commonly, these are PDF based versions that are emailed out to vendors across the globe or placed on corporate websites. Any changes require reworking the document and emailing the updated PDF or Excel sheet to all vendors. This is a labor intensive process and you run the risk of your suppliers having outdated information. By creating and maintaining your Routing Guide on-line you ensure all your suppliers have access to the most up-to-date shipping instructions all the time. Any changes or updates are made centrally and on-line eliminating the need to re-distribute de Routing Guide after each update. Providing your suppliers a login to the Routing Guide also eliminates the need to maintain email addresses.

Implementing online Routing Guide software is a strategy that ensures the highest vendor routing compliance at a low cost. It will avoid you having to account for overspending expenses on your budget due to incorrect carrier usage. 

Up to date sales managers cost less

Many sales managers are confronted with not knowing the shipment costs or other vital transport details during a sale to a potential client. Not having up to date shipping cost information can cost them a sale. Or it can cut into your profit margin by selling with too low a transportation cost as part of the deal.

An online Routing Guide tool can help your sales people have access to all relevant shipping information at all times. Information like who is the carrier, shipping frequencies and costs can all be at their fingertips via an up-to-date online Routing Guide. No more need to make an urgent phone call to the shipping department during a sale. Via your website they can have access to the on-line Routing Guide giving them all relevant information.

Increasing your sales force's selling success by implementing an on-line Routing Guide saves you money.

Guide customer return flows (B2B and B2C)

Customer returns are a high cost factor in today’s transport environment. Uncontrolled returns by business clients and end users are a nightmare for every logistics operation. 

Controlling your customer return flows is one of the ways to keep the costs in check. This means that the people who return goods need to have a clear and up to date return instructions available at all times: how to package returns, what documentation to provide, who to contact but most importantly, which carrier to use based on their location. A Routing Guide solution can help you with this. By providing your customers access to a Routing Guide you allow them to find the correct carrier for their returns. But you can also give them access to the correct instruction and documentation. You could even rebrand the Routing Guide to make it look like part of your website and customer service environment.

You can create an efficient and cost effective returns network but a Routing Guide will ensure your customers use it as intended.

Implementing an on-line Routing Guide is easy. And remember the last time when an inbound shipment was sent using an outbound account? Or when a low priority shipment was sent using an express service level? And remember what the cost was? Even avoiding one of those errors will often already pay for a Routing Guide. If you are interested in learning more about the savings possibilities a Routing Guide can offer you, contact us at info@xzisu.com


 

Xzisu is a global transport & logistics tender/RFP management specialist. With a proven track record of service excellence Xzisu uses its industry knowledge, combined with technology to manage complex tender processes .

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