4 Ways Freight Forwarders Can Prepare for RFQs

RFQs are an interesting thing – how so depends on your perspective. As a freight forwarder issuing a bid, they are actually a chance for you to be the customer for once. Instead of dealing with shipper problems and customer service issues, you are in the position of having something other logistics services providers and carriers want – new business.

Despite having that leverage, it’s still incumbent on you to properly manage each RFQ event. Bids are only ever as successful as the quality of the planning put into the bids themselves. This responsibility lies with you and requires a lot of planning and preparation – here are our tips to help.

Clearly Explain the Business

Any supplier you invite to a bid needs to know what they are bidding on. This is obvious enough and a simple concept. Yet a common mistake issuers make is providing an incomplete picture of the business. With so much of shipping RFQs revolving around cost and volume data, providing a complete shipping history over a long period of time is the bare minimum responders will need. Don’t be one of those issuers who force vendors to extrapolate or annualize volumes based on limited data sets.

Plus, you want the participants to have a clear vision of your business beyond just volumes. Most shippers have product and industry specific requirements – from unloading to special handling to lead times. Providing carrier partners this information upfront is a must.

Keep It Simple

In addition to a clear vision of what they are bidding on, you want participants to be able to provide accurate responses with a reasonable amount of effort. Over complicating the requirements for a carrier will make it difficult for them to respond with their best offers and can sometimes prevent them from responding at all.

This is understandable because responding to bids is a big investment in time for logistics services providers, with no guarantee of earning them any new business. Many quality carriers will refuse to participate in bids they think are poorly or unfairly built. If this is happening to you, take note.

Establish a Process

Once the responses start coming in is where the real work begins. A well-structured bid, and organized tender process is necessary for you to have a process for receiving and analyzing the responses in a constructive way.

In the end, it’s in your interest to pick the best qualified suppliers and optimize costs – which includes all the less quantifiable factors like service and technology. Creating a process to consider and compare each part of the bid and all the responses in an “apples to apples” way is important.

Find the Right Suppliers

Inviting as many suppliers as possible just because you can is a waste of your time (not to mention the carriers’). The business you are bidding out is not right for every company. Like preparing and structuring the bid properly in the first place, finding and inviting the correct types of carriers is vital. The right carriers provide the best service and rates – which is what you want from your bid in the first place. The best (and smartest) carriers can tell when a bid will be a waste of their time. Letting them know what to expect during the bid will give them confidence in your company. This includes setting expectations for how you’ll provide feedback and if there’ll there be a round two, for example.

Successful bids build successful carrier partnerships and it’s always important for forwarders and shippers to have diversity in their carrier portfolio. By all means keep them on their toes and negotiate hard – but a well-run RFQ needs to show potential suppliers you have your act together too. Smart companies will always recognize you’ll be good to work with and will try extra hard to win your business.

7 Tips to Make Tender Responses Easier for Freight Forwarders and NVOCCs

As a freight forwarder, NVOCC, or ocean carrier, you know tenders are the lifeblood of your business. You also know the competition you face is intense in an industry where what you do is viewed more like a commodity every day.

At the same time, your company’s success depends on tenders for a big part of its growth. The result is likely constant pressure to respond to more bids, faster. And, adding to the challenge is the increasingly global nature of supply chains.

To be smart, and win more new business from RFQs, companies need to be well thought out with their approach to tender management. Here are 7 tips help make responding to tenders faster and easier.

Consistency is Key

One big challenge with tenders is that no two issuing companies follow a consistent tender format. This makes it hard for you, as a participant, to be efficient with your own process of responding to bids. However, taking steps to keep the process as consistent as possible can help – like assigning specific responsibilities or sections to the same people for each bid.

Automate What You Can

While 99% of bids are different, there is always some overlap in the information you need to provide with every bid response. Establishing and maintaining templates that include boilerplate text or certain types of rates and surcharges is a good start – even if they need to be edited a little bit for a specific situation.

Centrally Manage Rates and Contracts

The most important part of most bids is, of course, the rates. Having a method for tender response teams to be able to easily access and calculate rates goes a long way in improving the process. A centralized system accessible from everywhere – that also keeps rates up to date – is key.

Coordinate Between Offices

Supply chains are more global than ever. This means tenders will almost always include multi-modal shipments that involve many different countries and currencies. This requires the sharing of rates and other information between offices around the world. Having a process to bring that information together seamlessly is a big time saver.

Guard against errors

Rate calculation mistakes seem bound to happen given the challenges we’ve just described. Leveraging a platform to ensure your rates and contracts are up to date and calculated accurately is of obvious importance. The cost impact of over or under bidding a lane on an RFQ can be severe.

Be Selective

Many forwarders and carriers make the mistake of chasing every possible opportunity that comes along. Given the cost, time, and risk involved with tenders this can be a mistake. Taking the time to pre-qualify the bids you participate in will save a lot of effort in the long run.

Know Yourself

Along similar lines, it’s important for your company to be honest with themselves about what you are good at. Knowing this helps focus attention on new business that is good for your company and where you can really be competitive. This enable you to make the best use of your resources.

Participating in tenders is significant to freight forwarders and carriers – they represent a lot of opportunity. But a “more is better” approach is a mistake. Companies that take the time to create a consistent approach to tender management spend less time and resources responding to RFQs, while at the same time winning more business.

Take The Pain Out of RFQs and Tender Management

There are plenty of opinions on whether or not RFQs are a good thing for freight forwarders and carriers – or if they should participate in them at all. However, in the end most come to the conclusion that bids are a necessary part of growing their business.

This means taking an honest look at why the costs involved, and resources necessary to participate in RFQ’s are important. One shouldn’t think about tenders as just a cost of doing business. Each RFQ a company participates in should be considered seriously to make sure it’s the right fit and is given the proper effort.

When it’s all said and done, forwarders and carriers simply need to be smart with their tender management process.

Responding to bids takes a lot of effort, creating costs and challenges that extend beyond just using employee’s time. There are many reasons RFQs create so much work, but often it’s a lack of tools and a good process that make them so difficult.

For one, the companies that issue tenders are rarely looking to do any favors for the participants with their bids. The most obvious example of this is how no two companies use a standard format for RFQs. This, of course, makes it hard to standardize how responders complete their bids and create inefficiencies for everyone involved in the process.

Adding to complexity is the global nature of most companies’ supply chains. As a result, there will typically be a mix of modes and countries involved in any tender. This forces most responders to require input from multiple offices and 3rd parties located around the world to complete a bid. Coordinating the rate information for thousands of lanes and countless countries makes it nightmare to manage.

Every RFQ also comes with significant risk. Accidentally underbidding or making a rating error on a lane can “win” you volume you don’t actually want. This is a fast way to turn new business into a money losing proposition and makes the importance of having command of your rates self-evident.

These challenges are not just about how much effort it takes to participate in bids, both also have a direct connection to the amount of business you will win from RFQs.

Being the first to bid can matter when it comes to RFQs. Early responders often get quicker feedback on rates and have the opportunity to sharpen their pencil before other providers have submitted theirs. Having a strategy for how subsequent bidding rounds are managed is vital as well. Bid processes supported by a centralized rate management process and tender management technology are built to overcome all of these challenges.

Bids are tough, risky, and a huge drain on resources for every LSP. But, they are a reality and necessary part of doing business. As a freight forwarder or carrier, it’s your job to be smart with the tenders you participate in and have a process in place to be efficient when you do.

How to Win at Tender Management

Freight tenders are an integral part of the global supply chain and a process that shippers, carriers, and freight forwarders all take very seriously.

Depending on the circumstances, some bids may be extremely complicated, whereas others will be basic. The logistics network and requirements of large multinational shippers or global freight forwarders can include thousands of lanes and multiple modes.

Clearly, running such tenders is no small task. So how does the entire process work?

Let’s for example, use a large CPG company that may export its various brands to dozens of companies located around the world.

If you’re a carrier or freight forwarder, you can immediately appreciate the amount of potential work this entails. Now, imagine the perspective of the CPG company and the challenge of securing the best rates and service in all those various lanes. This illustrates why the role of tender management is so difficult, yet essential.

For many logistics services providers (LSP), these types of global tenders are a big part of their company’s revenues. Many bids commit volume to the LSP for up to three years, which basically means a lot of guaranteed revenue for the LSP during that period. 

As an LSP, getting invited to tenders and putting your best foot forward is clearly important. In other words, planning and being prepared helps. Here are the typical steps the large shippers go through when preparing and awarding volume by way of a freight tender.

Develop the Vendor Invitation List – You can’t win if you do not participate, so investing the time to find and make yourself known to the companies that issue large tenders is the first priority. Then, make sure to watch out for tender notices.

Request for Information – Companies issuing bids will often take steps to pre-qualify vendors based on criteria unrelated to just freight rates and transit time. This will be your chance to promote your company in other ways – such as by talking about your specific experience and technology. After this step, qualified suppliers will receive the formal RFQ.

Tender Completion – Qualified bidders will be invited to submit more detailed information, such as lane specific pricing and service times. With large RFQs, this is where things get difficult. The effort to rate potentially thousands of lanes can take days or weeks with no guarantee of winning any of the business. A tool like Spring Board from Catapult is a simple technology that makes responding to tenders fast.

Carrier Selection – Suppliers who have been short listed will receive notices from the company stating which lanes have been awarded to them or if they’ve been invited for a second round of discussions. Subsequent to that, winners are told what business they’ve secured and perhaps where they fell short.

The tender process is intensive and demanding for both the issuer and the participating vendors. With so much riding on the outcome, this process is taken seriously on both sides. A well-executed tender will ensure a shipper negotiates the best possible rates and service, while the suppliers gain valuable new business they can service profitably at fair rates.