Manual vs. Digital Freight Procurement – what’s the difference? Part 1

31.08.2020

 

Quite often, when talking about freight procurement, the terms manual and/or digital are mentioned.  But what do they mean?

Let’s first have a look into manual procurement.

Manual procurement doesn’t mean that one shares handwritten RFQs by snail mail.

However, there is much manual work involved, which can become an ordeal sooner or later in the process. Most of us at TenderEasy have extensive experience in freight procurement done “the old way,” which is why we can confidently speak about the difference and benefits of a digital freight procurement solution.

Here are a few characteristics you will recognize if you have run a manual freight RFQ before:

  • The RFQ and its documents are shared via e-mail, the rate sheet is in Excel (don’t get me wrong here, I love Excel – but not for freight procurement) and communication happens via phone or e-mail.

  • A manual approach will often lead to some creativity among the LSPs. For example, there is almost always at least one supplier that manages to crack the rate sheet protection to accommodate space for additional comments or cost.

  • It can even happen that the LSPs share their rate sheet format – and in case you were wondering:  yes, we have seen submissions in pdf rate files.

  • Not to mention that the status of the process is not visible to you or your colleagues.

 

So far, so good, but is it that much of a pain to have this kind of process?

Well, the challenges are often similar among buyers that source manually: a proper and fair bid comparison is hardly possible when the requested format is not respected. After all, you want to compare apples with apples (or even Braeburn with Braeburn), but this is hardly possible when you have received a fruit salad.

When it comes to running scenarios or making service-related adjustments, you will quickly discover the limitations of manual procurement. To create the types of analysis you need (based on price, service, geography, capacity, etc.), the excel formulas will be quite long, complicated, and hard to maintain. This especially since you want to apply the LSP input to your historical shipment profile, to reach a result that is the right one for your unique volumes and needs.

Even if there is this specialist in your company that has set up the manual solution, and is an expert when it comes to the application of formulas: what if this person decides to leave and takes all the knowledge with him or her?

These are just some of the challenges of manual procurement. To sum it up: to have a solid base for your analysis, you need to invest a lot of time when taking the manual path – and sometimes, all these efforts might not even be enough.

So, what at first may seem like a quite convenient and user-friendly option, it can turn into more or less a nightmare. The more complex your tender is in terms of number of lanes, invited suppliers, cost, and service items requested, depending on the qualitative insights you want to gain, the more complicated the process gets.

Is there a solution for this situation? Luckily, there is – stay tuned for part 2 of this blog series!

 

Written by
Annukka Jäger

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