The Right and the Wrong Way to Conduct RFP Sourcing Events
Dec 2, 2020
BY MIKE REGAN, CO-FOUNDER OF TRANZACT
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Last year, my wife and I decided we wanted to get serious about getting our weight under control. So we went to a doctor that specializes in helping people do just that. After doing some tests, asking a bunch of questions, and talking about our strategies for accomplishing this goal he told us: “Your intentions are good but the way you are going about it is completely wrong.”
Suffice it to say he had our undivided attention. You see, while we had spent a lot of time talking to friends, reading articles and working out on a regular basis, it took meeting with an expert to understand how to do it the right way so we could get the results we wanted. One year later, we have exceeded our goals!
Why do I bring this up? Because lately, we’ve been talking to a bunch of shippers who tell us that these CODE RED conditions in the transportation marketplace are wreaking havoc with their budgets, so they need to reduce their freight costs ASAP. Quite often they tell us that they will begin this cost reduction initiative by immediately issuing an RFP and conducting a transportation sourcing event–a.k.a. launching a “Beat up your carriers to try and get better rates” event!
So after asking a bunch of questions about their RFP strategy, listening to their answers and reviewing some of their data, we get to tell them what the good doctor in essence told us: You have great intentions but your RFP strategy is all wrong!
Candidly, some people don’t like hearing the truth, so they tell us that “this is the way we’ve always done it” or “the consultants are telling us we have to do it this way.” And then they ask: “What’s wrong with my RFP strategy?” The answer is pretty simple. Your RFP strategy and process may have worked well in the past, but it is outdated and the wrong approach based on what is happening in today’s transportation environment.
As we have learned from our On The Record Interviews and webinars with CEOs from major LTL and TL carriers, which are available in our Resource Center, the carriers have better data than ever before and they are using this data in their pricing decisions.
If you want to learn more about how carriers are using this data, then you owe it to yourself to listen to these comments from Geoff Muessig, EVP and CMO of Pitt Ohio, as he explains the flaws in RFPs from shippers that are primarily based on the belief that volume considerations are of paramount importance. Geoff and other carriers have repeatedly emphasized that the best RFPs address the operational characteristics of the freight and the extent to which the freight “fits” within a carrier’s networks.
At TranzAct, we wholeheartedly agree with Geoff’s advice that “the bigger opportunity of working with a 3PL for shippers is the information that they can access collectively and harness to make their entire supply chain more efficient.” And because our sourcing events are focused on ways shippers can increase the fit factor, they produce great results.
So if you’re looking for the right way of conducting an RFP–partner with an expert like TranzAct who can put you on the right track. To learn more about what carriers are a good fit for your company, we’d welcome the opportunity to have that discussion with you, so get in touch for help with sourcing.