The 2:00 Minute Warning

Over the past several weeks, I’ve had the opportunity to attend some great logistics and supply chain industry conferences. During dinners or just informal conversations, I've gathered with friends of mine who also happen to run some of the largest LTL and TL carriers in North America.

Interestingly, as we were talking about the current transportation marketplace, there was one topic that kept coming up— the quality of the RFPs that shippers give to carriers as part of their sourcing events. One carrier executive made a telling observation: the RFPs they get from shippers are not very good. In fact, he said, “they stink!”

When I asked what’s wrong with the RFPs, he was ready with some important points.

He noted that for most shippers, there is the “waste factor” in their transportation and logistics operations. Whether it is taking an excessive amount of time to load/unload carriers, inaccurate freight descriptions, or excessive packaging that takes up too much space on a trailer, the carriers see this and include an “insurance factor” in their rates. This is essentially a protection for them because they know there is a higher cost to serve that particular shipper.

As one carrier told me: "When we know that waste exists, our customers will pay more for their transportation than they would if they simply addressed the waste." 

So before you issue that RFP, look for the waste in your operations that will result in higher rates. There are many questions to ask—is the data you are providing to the carriers accurate? Are you detaining drivers at your docks? Are you asking for extended payment terms of 75 or 90 days? If so, every carrier we talk to says you can expect higher rates.

Now is the time to act! I have had multiple conversations recently with shippers who dragged their feet instead of addressing their LTL waste months ago and are now lamenting the lost savings that could have been there for them.

Two ways we can help you get started:

1. If you aren’t sure where the waste is in your system, we can perform an LTL Strategic Assessment that has produced savings for numerous clients of ours. We can help you identify opportunities for efficiency and drive them throughout your organization in order to produce better results for your LTL and truckload sourcing events.

2. We can help you issue a “world class” RFP that will get you the absolute best possible results, starting with a benchmark of your current rates.

At TranzAct, we are also taking action to help our clients and carriers. We are engaging in a research project about the RFP process along with our friends from the National Industrial Transportation League (NITL), and we look forward to sharing more about that soon.

For now, give us a call at 630-833-0890, send us an email or schedule a time to meet. Let’s get started on eliminating the waste in your supply chain and on the road to savings!

BY MIKE REGAN, CO-FOUNDER OF TRANZACT

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