Logistics Minded

Logistics Tenders: an expert view from the “other side”

Let’s break the rules for one day. Today, I would like to share with you some insights from a Logistic Service Provider’s (LSP) perspective. The objective of this post is to shed some light on a few concepts that, contrary to what one would think, may lead call-for-tender Companies to receive better value proposals from bidders.

Logistics Tender processes are becoming increasingly common and the main trend for medium and big sized companies (even the small ones) is to select logistics services providers.

A tender process is a very powerful tool: among the main benefits, it allows to standardize the purchase process and it acts as a framework to regulate the relationship with the main LSPs. In addition, this process enables Companies to compare LSP’s services and rates, since the same information is provided to all of them in order to let them build their best proposal with the best ratio service quality/price.

The most common phases of a tender process (and the minimum to launch a professional tender) are the following:

  • Request for Information (RFI)
  • Request for Proposal (RFP)
  • Proposal Defend
  • Short list
  • Awarding and LOI

From the experience I acquired on the “other side” (I mean, the LSP) below you may find some tips that, if you haven’t had in mind, for sure will lead you to a better understanding with your potential providers. It will thus be easier for them to give a proper answer to your demands and, in return, you will get a better commercial proposal more adjusted to the real needs.

 

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Request for information phase

In a large number of occasions, companies send a RFI template before the RFP in order to make a first selection and reduce the number of participants to the most adequate. In general, revenue, footprint, number of sites and similar information is required to make its first filter. I agree with this approach but, in order to improve it, call-for-tender companies should meet personally the potential RFI receivers, for instance, the previous year to the tender launch date. This would allow both parts to really know the objective of the Tender and the specialization of the LSP.

Request for Proposal phase

The rule is easy here: the more data in terms of quality and quantity, the better. There is a way of thinking that firmly believes that a Company should share a minimum piece of data with the bidders, but the truth is that the best way to receive an accurate answer from the bidder is exactly the opposite. As the LSP will not be compelled to use assumptions, it will not be tempted to protect itself in order to avoid the uncertainty due to the lack of data and will deliver a precise value proposal and better rates. Furthermore, in 99% of cases there is a Non Disclosure Agreement to be signed, so there is another good reason to provide accurate data and information.

I have left for the end the “star tips”, very simple and logical but necessary:

  1. At the beginning of everything, the question to ask before Tender design… what is the objective? What are we looking for? If the objective is to find a low-cost solution, then orientate the RFI towards this kind of suppliers; if the objective is to find a disruptive or innovative solution, orientate the RFI towards suppliers that have the capacity to provide these solutions. The objective has to be aligned with the profile of the bidders; otherwise, the resolution could be unsatisfactory for both parties.

 

2. Be flexible

This point goes against one of the first statements at the beginning of this article. It’s true that one of the aims of the Tender is to standardize and normalize processes but it’s also true that you may lose creative ideas, solutions or tariff construction proposals if you are too strict and don’t admit any alternative proposal out of the templates or guidelines provided to answer the tender.

3. Honest feedback

Undoubtedly, every bidder’s objective is to be awarded by the call-for-tender Company, but only one or a small number of bidders can reach the objective. To those who after hard work, dedication and passion have to face reality, an honest feedback is the best gift they can receive. Most common feedback statement tends to be “the flexibility of the solution offered by other bidders was better” or “your experience within this sector is not enough”. For those who receive this message, it sounds like empty words so, instead of providing this unsatisfactory feedback, give LSP the opportunity to learn, improve and increase their possibilities to reach their objective in the future. If the solution was not flexible enough, be precise and let them know if it’s a problem of personnel, flows design, automatization proposed, etc. This is just an example but, by providing an honest feedback, you are helping to amend mistakes, improve their future proposals and services and that is exactly the point that you are chasing, best services and best partnerships.

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