Successful transport RFP response teams – Part 1

Why are certain bid response teams more successful then others? What do these teams do to get a higher success rate than others? We identified 10 things that successful response teams do to win more business. In this series of two articles we share some of our observations about the characteristics that successful transport RFP response teams have. In this first article we review the first 5 and in the next article we will review the remaining 5.

Getting invited to respond to a transport RFP can bring pressure to a sales team. Pressure to deliver a competitive proposal in a short period. Many RFP response teams have been burning the midnight oil to get their responses out on time. All this hard work does not bring a guarantee to win the business though. And is that not what it is all about, winning the (new) business and have a high success rate?

So, why are some RFP response teams more successful than others? What traits do they have that give them a higher success rate? Having a successful RFP response team means your business can grow and become more profitable. Based on our experience we will share some of our observations on how the successrate of tender responses can be increased. Here are the first 5 of their top 10 characteristics:

1) Preparation and planning

A well prepared team understands that the clock starts ticking the moment a RFP lands on their desk. Their preparations don’t start at that moment though. These have started well in advance. A tender RFP team should not be formed when a RFP invitation is received, it should already be in place. The roles and responsibilities of the team members are clear. The team consists of subject matter experts which should at least include one “writer” that has experience in creating professional RFP responses.

A number of RFP response components are always the same (e.g. your company profile, your service description, your competitive advantages); these can be prepared in advance and applied  to any RFP response. Of course you need to customise part to the individual RFP (e.g. focusing on the service that are requested in the RFP) but having the basic framework prepared will save a lot of time.

Winning teams are equipped with the right tools. They have access to company data, modelling tools, the latest MS-Office software (it will scare you to learn how often people are not able to open a document because they work on old software versions) and Desktop Publishing software to create professional response documents. Of course, fast internet access is a must for online tenders and research. 

A team that is prepared in advance will hit the ground running and does not loose valuable response time. Great responses are not created in a last minute do or die effort. They are based on preparation thus allowing more time to be spent on the RFP specific part of the response (e.g. pricing and services)

2) Understand what you are bidding for

Most professional RFP response teams don’t shoot at everything that is thrown their way. They run a received RFP methodically through a standard checklist to verify if it meets their minimum criteria for putting in the effort of creating a response. Once it is established that the RFP is interesting for them, they perform a detailed study on the received documentation.

Successful RFP response documents demonstrate clearly that the bidder understands what they are bidding for. They demonstrate where the offered business will fit in their current business model and how they can deliver maximum value to the client. RFP response teams that truly understand the business opportunity they are bidding for also reflect this in their quotation. Their pricing is not necessarily low, but it excludes the “safety buffers” that others build into their quotes when they are unsure of what to expect. If the issued RFP does not contain sufficient detail to determine what the business opportunity is, it is the responsibility of a professional RFP response team to ask the right questions to get the answers on the table. Don’t bid for something you don’t fully understand, it will only provide nasty surprises for both parties in the end.
 

3) Understand why you are invited and who the competition is

Successful RFP response teams understand why their company was invited to participate in a RFP. If you don’t really know why you were invited for a RFP, don’t bother spending time on creating a response. It is clear that you don’t have a fit with the client and the requirements. It must make  sense to you why you have been invited and how you can bring value to your potential client.

Insecure or under-prepared RFP response teams often go back to the RFP issuer to ask who the competition is. Prepared teams know this without having to ask. Based on the scope of the tender and their knowledge of the marketplace, they understand who their main competitors are and don’t have to ask or guess. Knowing who your competitors in the RFP process are is important because you need to show differentiation from them (also see point 5).
 

4) Follow the guidelines and complete all requested information

Most (not all!) RFP documents give a clear set of guidelines on what is expected by the RFP issuing party. These guidelines (rules) should be treated as absolutely non-negotiable by the RFP response team. A deadline is a deadline. Missing a deadline or asking the RFP issuing party to extend the deadline especially for you puts your company in a bad spot from the start. It shows you haven’t done your planning right. If you cannot get the planning for a RFP response right, how do you perform in day to day practice with your deliveries? Make sure if don’t negatively influence your changes by something like this. Keep in mind that the RFP issuing party also has a time plan which is based on receiving responses at a certain moment. If not everything is in on time, they cannot start their analysis which will mess up their time table.

Having said that, the given timeline for a response has to be realistic and achievable for the parties responding. For example, asking providers to quote for a global airfreight tender within one week is unprofessional and will not lead to competitive responses. However, deciding whether your are able to provide a credible RFP response within the given deadline needs to be part of the initial scoping (point 2). If, based on that scoping, you have decided to accept the invitation you have also committed to the deadlines.

Nothing can lower your chances of winning a RFP as much as submitting an incomplete response. The RFP issuing party needs to make an apples-for-apples comparison. This can only be done by having all the requested information in the RFP responses. Many RFP analysis teams will not take the time to contact you about missing details, but will ignore your submission altogether. If you were requested to submit information (e.g. quotes) in a prescribed format, don’t change it. The prescribed format has a purpose. If you change it, you will most likely make it impossible to upload your submission to an analysis tool and ruin your chances of winning any business. If the required format does not completely fit your mould you have to adapt to this. The RFP format that was requested often only serves the purpose of allowing the RFP issuer to equally compare data, a final format will be agreed upon in the negotiations.

A winning RFP response team always submits a complete and timely proposal to the issuing party.
 

5) Differentiate from the competition and mitigate risk of change

Winning RFP response teams don’t just hand in a list of their services, they make clear what their unique selling points are. They clearly demonstrate what their edge is over the competition. Being able to do this means you need to have a clear understanding of the marketplace you operate in and who your competitors in the RFP process will be (also see point 3).

Especially if you are not the incumbent you need to make it clear how you intend to limit the risk of change. Risk of change is a factor in the RFP process that can make or break your proposal. It is difficult to quantify as it often is linked to maintaining un-interupted service, switching IT systems, changing service levels and changing client interaction. Your quotes and services may be superb, but if you are not able to convincingly mitigate the risks of change you risk not being selected because the client feels uncomfortably with the risk.  

 

In the next article we will review the remaining 5 traits of successful RFP response teams.

Outsourcing Freight Audit - things to look out for

An established industry in North America, a fast growing industry in Europe and an emerging industry in Asia. Freight Audit and Payment is a fast growing outsourced service. But which vendor to select and trust with the audit and payment of your logistics service providers? Do you just go for the cheapest or are there other things to consider?

While freight audit as such may not be a mission critical activity – not paying your carriers on time as a result of badly managed freight can affect your logistics. So when considering outsourcing your freight audit and payment activities it pays to consider the following aspects.

1. Regional or Global Requirements

Not all providers have global capabilities.  A number of them will project a global footprint but it is not just about having an office in the region you are looking at. Make sure to truly evaluate if your provider can handle various currencies, various languages, local legal, tax and finance requirements.

 

2. Just Audit?

Are you just looking for an audit? Or do you also require complex GL coding? Matching? Rate claim handling? Payment? Data Mining? Freight audit providers continue to expand their service offerings to include e.g. shipment order entry and tracking – but they may not be specialists at those additional services. So you need to decide which part you outsource with them and which part you keep in house or outsource somewhere else. Make sure to know what you need (now and in the future) and that your provider can truly cover your needs.

3. Payment

Payment can bring complexities (and costs) with various currencies as well as regional and local financial and tax requirements. Sometimes it may be wiser to outsource the audit but keep the payment in house. Some freight audit and payment providers have an interest in also taking over the payment part of the process. That can allow them to subsidize their service through the interest accumulated between the moment you pay the provider and the moment the provider funds the carrier. That interest is known as ‘float’. There is nothing wrong with float as long as it is transparent to all parties. Off course with the current level of interest rates being less then 1% the incentive for a float based model has largely disappeared.  That also has the added benefit of keeping control over your funds.

4. Information and Reporting

As the emphasis in the freight audit industry has shifted from pure audit to information gathering and reporting, it is essential to truly test and evaluate your provider’s coding and reporting capabilities. Is the reporting on line? Does it allow to slice and dice data, can you feed data into your own systems. Freight audit can potentially create a wealth of detailed logistics and financial information. But can your vendor untap it for you in all its details? And against what cost?

5. Additional Costs

Beware that your price per audit transaction may not cover everything. Allocations? Payments? Rate updates? Reports? Implementation? Will these add to your overall costs? And you need to make a distinction between the transactional fees and the one time fees such as implementation and set up. Freight audit pricing can be notoriously complex. Make sure to account for all the costs and calculate them back to a price per transaction. Better yet, let your prospective providers quote in fixed pricing format so you truly compare apples with apples.

6. Implementation

Selecting a provider is the first step, not the last! How will they implement? What resources will they commit? Can they convert carriers to EDI? What are the timelines? Depending on the provider and what system and process they offer the impact of implementation can vary. In some cases implementing the solution may mean truly integrating your financial and operational systems. In other cases it can be as simple as diverting the carrier invoices to your provider and receiving a data feed after audit. On whichever side of the implementation spectrum you may end up – make sure your provider has enough resources to ensure a timely implementation – but also ensure your own organization and carriers are ready to spend time and effort to get off to a good start.

7. Beware of just price!

Just going for the lowest price per transaction may not always be the best way. The freight audit market is a competitive market where the emphasis is on price to win business. This can be at the expense of quality. Cheap may be expensive on the longer term through missed deadlines, re-implementations, or incorrect audit.

Outsourcing freight audit to a specialist can bring benefits - savings between 1% and 5% over freight spend are regularly achieved - it pays to take the time to go through a comprehensive selection process to make sure the vendor you select really delivers the benefits you expect.

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 .

www.globalroutingguide.com

www.xzisu.com

 

Why carriers deserve (better) RFP feedback

 

The number one complaint from carriers, who participated in a transport RFP, is that they do not get much feedback or any feedback at all from the party who issued the RFP. Carriers that are invited to participate in RFP project often spend a lot of time and effort on understanding the requirements and creating a professional response. It is disappointing to most when all they get is a one-line email in which they are thanked for their efforts and simply told they did not make the cut. Carriers deserve better. It is in the best interest of both all parties in an RFP (shipper and carriers) to have a good feedback loop, we’ll explain why.

 

It is good business practice

A RFP project is usually an intensive activity which has taken many weeks to prepare by the shipper. The invited carriers in general get two to three weeks to create responses. They bring in a tender team that puts in a lot of effort to create a competitive proposal. It is just good business practice to provide the professional partner you are looking for with professional feedback. Every RFP project should include as a standard an effort from the shipper in which each individual participating carrier receives detailed feedback on why he did or did not win the business.

Good feedback brings improvements

Carriers that are invited to a RFP project are invited for a reason; they might be potential partners for the future. When responses are received from carriers they should get details on where they were strong and weak. The more details they get the better they can study their offering and improve on segments where they are weak. This could mean that the next time such a carrier is invited he has improved his services or pricing and is an interesting and competitive party.

You might need the carrier a next time

RFP’s are a reoccurring exercise for which most of the time you invite the same “usual suspects”. Invited participants that have had a good experience with a company’s RFP, will be glad to give it another shot the next time they are invited. If you are professional, they will go the extra mile for you. When carriers have a feeling that they do not stand a chance in a RFP or feel that they are not taken seriously, they will either refuse to participate, or hand in an uncompetitive  response.

 

What should good feedback include?

For each bid step in the RFP project you are performing an analysis anyway, you might as well use this analysis as a basis to give feedback to the carriers you invited.

Both the "winners and losers" of each bid step should receive detailed feedback on their responses. Feedback should consist of an anonymized and indexed comparison against the other invited participants. The service driven components (such as the RFI) give the participants a good understanding of their strengths and weaknesses. If possible you should also give them a comparison against your requirements list. This shows them not only how they stack up against the competition, but also why they are or are not a good partner for you.

On the pricing side giving feedback is a more sensitive issue of course. But also here an anonymized and indexed comparison should be possible. Use graphs to illustrate where a carrier was strong or weak. This does not have to mean exact percentages up or down should be shown.

Giving professional feedback on a transport RFP is often highly appreciated by participants, even if they do not win any business. The insights they get from it help them understand and improve weaknesses in their offering. Furthermore it will strengthen the potential partner base for any future RFP.

 

 Follow Xzisu at LinkedIn

Do robotics, cheap energy & politics mean a supply chain change?

Availability of cheap labour, cost of energy and the availability of mature global transport networks have driven decisions on how and where supply chains were structured over the past two decades. It has amongst others caused the closing of factories in Western Europe and the US and shifting manufacturing capacity to Eastern Europe and Asia. It has had (and still has) a high impact on blue collar jobs in the West. And it has thickened transport flows from Asia to Europe and the US via sea and air.

Supply chain is a numbers game; costs determine how, where and when activities happen. A few things are brewing at the moment. The combination of three developments might see a continental supply chains shift again in the next years to come. Let’s look which mix of developments could cause this change.

1)      Robotics innovations

In the military, surgery and manufacturing robots are getting utilized in ever larger numbers. Universities open or expand specialist departments studying and educating on robotics. Across the world start-up companies jump on the bandwagon to develop the next ground breaking machine.  Robotics is seen by many investors as the next frontier in technological innovation. We’re not just talking about the home robot that mows your front lawn, but highly sophisticated robots that can take over more and more complex and detailed human tasks. Developments in robotics are evolving fast and serious investments start to poor in. Corporations are picking up on the trend too, last year Foxconn announced that it will implement 1 million robots to replace human workers in its Chinese factories. Such a robot cost between $ 20.000 and $ 25.000 to produce.  

If robotics developments result in robots being cheaper than factory workers in China, Vietnam or Malaysia, then the need for Western companies to use partners in Asia, Mexico or Eastern Europe because of cheap labour goes away. If robots also evolve in being able to take over detailed assembly tasks at a higher speed and quality level than human workers, what arguments can be made to stick with foreign factories to produce products for the Western world? Keep this point in mind we’ll come back to it later in the article.

 

"Robots - They even take over our rock music"

 

2)      Availability of uninterrupted cheap energy

British Petroleum’s CEO, Bob Dudley forecasted in January of this year that the United States may be close to self-sufficiency in energy by 2030 because of the shale gas revolution that is going on in North America. In its global energy outlook report BP announced that unconventional oil and natural gas reserves are expected to have major implications on the energy sector growth. Dudley said "We expect the shale revolution will help make the United States just short of self-sufficiency in energy by 2030, while China and India become increasingly import-dependent. In fact I think the shale revolution will turn out to be the greatest technology development in our industry in the last decade or two." BP’s claims are supported by the International Energy Agency, concluding  that, by 2020, the United States will displace Saudi Arabia — albeit temporarily — as the world’s largest oil producer.

This development means that the US will in the near future be having undisturbed access to relatively cheap energy and is no longer influenced by possible conflicts in the Middle East. For Western Europe the picture looks less good at the moment. Without a real central policy on energy, except for an unambitious “ambition” to draw 20% of its energy from renewable sources, and a lack of real investment in energy innovation, Europe will keep dependency on Russian gas and Middle East oil. If it is lucky it may piggy back on the US and import energy from them, which at least would give a more stable energy source for the future.

Now add this to the robotics development and see what we have so far; no dependence on foreign cheap labour and robotics innovation coupled with uninterrupted  energy supplies makes robotized domestic manufacturing attractive. Let’s take the next development into account and bring it all together.

 

3)      “Bring our jobs back”

The current on-going Western European political / financial crisis and the slumbering aftermath of the US banking crisis have led to high un-employment on both sides. Southern Europe is currently hit with mass un-employment, with figures over 25% of its population without work (youth un-employment – under 25 years - in some regions reaching a staggering 55%). In the US the middle class and blue collar working class are hit hardest by the last crisis and they are still suffering with a un-employment rate hovering around 8%.

The call to politicians to stimulate the economies and create jobs is getting louder and louder by the day. Especially jobs that left the continents and moved to Asia are badly required back. One of President Obama’s main campaign points in the last election round was about job creation. In recent elections in European countries (e.g. France), it was all about jobs, jobs and more jobs. Politicians feel the backlash of globalization on their country’s economies. Everybody wants cheap products, but without jobs to pay for mortgages and consumption, economies risk to come to a full standstill.

The cost of labour in the US and Western Europe have already been reduced over the past 7 years. High un-employment automatically means that people take pay cuts and do more work for less money. There is clearly political pressure on corporations to have them bring back manufacturing to the West. Apple and GE are amongst the first to bring back manufacturing to the US. It is still a drop in the ocean, but it could well mean the start of a larger movement.

 

1 + 2 + 3 = supply chain shift

So, let’s add up these three developments. Robotics innovations could rapidly lead for manufacturing location decisions to be less driven by availability of cheap labour. Couple this to the availability of un-interrupted cheap energy in the US and political willingness to “support or subsidise” the bringing back of factories to Western Europe and the US. As stated earlier, supply chain is a numbers game. The mix of ingredients that is brewing at the moment could make it easy for Western corporation boards to decide to make radical changes to their supply chain structures in the near term.  

As a result it is very likely that we will start seeing an increase in near consumer point manufacturing. No longer will a single factory produce for the world, but regional factories produce for targeted regions. For Western companies that deal with highly sensitive / innovative products and manufacturing processes an added benefit is that they are no longer depending on “partners” that see copyright as the right to copy in countries weak enforcement on laws in this area. Robots will be a big driver in bringing back manufacturing to the West, but further evolution is still needed. Not everything can be taken over by them (yet), but as they get more and more “sensitive” we see that complex assembly and manufacturing by robots becomes more and more reality.

If near consumer point manufacturing increases a demand for logistics real estate will most likely cause a boom in the US and Western Europe. This is also where politicians come in again in supporting the move by subsidising a decision to start a factory in this state or that country, hoping it will bring many jobs.  

It is also the question if Maersk and MSC-CGM are betting right on building their E-Type class (18000 + TEU) ships. Do they still need these if transport flows from Asia to Europe and the US become thinner? Near consumer point manufacturing will also lead to shorter cycle times and further development in the possibilities for consumers to customize and individualize their products. Rapid prototyping, 3D printing developments and regional manufacturing can lead to greater flexibility and more direct consumer influence on the manufacturing process.

 

What about the jobs?

Last but not least, will jobs be coming back to the West?  The prospects do look challenging in this respect. A factory that comes back to the US but is largely robotized will first of all require less human workers, but second it does not require blue collar workers. Robotized factories need highly skilled engineers that can keep a factory running. The corporate board members that bring back robotized factories supported by subsidising politicians who believe it will generate jobs need to understand that this move requires an investment in education. There is a great lack of skilled engineer is the West (both in US and Western Europe). Job creation can only take place if corporations can find skilled workers in the countries they move to. The world is so small these days that skilled workers are quickly brought in from India or China if the Western politics does not step up to the plate and start to seriously invest in education.

What do you think will happen?

Some people who read this article may think that it will be a long time before we see any of this happening. People always seem to underestimate the speed of technological development and the disruptive impact it may have. We all remember how quick the arrival of online music sharing and iTunes almost wiped out the music industry. The first iPad was introduced in April 2010 it already made us forget desktop PC’s.  The shale gas developments and robotics innovations may not be seen by us because it is outside our daily view, but it is happening. Supply chains are also an unseen force operating at the forefront of new developments. Keep an eye out for it and let us know what you think about these developments.

 Follow Xzisu at LinkedIn