When setting up a freight tender, there are a few factors that are necessary in order to arrive at a reasonable and reliable conclusion. Chief of these is the ability to perform an analysis that is based on facts and rooted in the unique characteristics of your own company. This is the first of a few practical tips we will publish on the subject.
Let’s say you are about to release a tender to a number of potential suppliers.
You have put together a neat format in which to ask for rates. All your lanes are there, surcharges accounted for and all.
Now your offers have come in. Time to evaluate. Looking at your offers side by side, it’s obvious that Supplier A has submitted the best bid for almost every lane, so it’s an easy choice. Right?
If you’re just looking at the rates as such, it might be tempting to draw such a conclusion. But to really be sure that you’re doing the right thing, you need to also know where you’ll be shipping what quantities and to what service requirements. It sounds obvious but is often overlooked.
As an example, looking at the rate sheet below, it would be very easy to go to Supplier A and shake on it. But if you know your shipping profile, and that it might skew towards the higher weight brackets, then it’s possible that the best bid in terms of overall cost could be Supplier C.
This might seem obvious, but a lot of times, there is no data readily available to show you what your shipment profile looks like. Not to mention the time it would take to first produce the data and then apply it to your calculations (surprisingly often, the LSP’s themselves have a hard time reporting what they have delivered over the last year).
Hence, it is often an overlooked aspect of the freight tender evaluation – one that is of utmost importance for a relevant analysis.
And if you feel like you don’t have the time or possibility to produce reliable data – be aware that an educated estimation is much better than no insight at all!
Obviously, there are other factors to be aware of, and in further blog posts, we will develop our thoughts on the importance of reliable data and knowledge of your historic and future shipping structure when entering a freight tender.
If you find this blog interesting, you might also want to have a look at our previous series of blogs on how to manage it like a pro and how to optimize the freight tender results.