Transportation Sourcing - Why Your Procurement Driven Process Stinks!
Sep 26, 2018
Recently, I was having a conversation with some trucking company executives about the current transportation marketplace and how it has been impacting shippers. During the conversation one of the executives highlighted the flaws in the procurement strategies that a lot of shippers use to select carriers and award business.
When he noted that “The procurement-driven sourcing process they're being put through stinks!” I had to smile because we addressed many of his issues in our blog "Here’s The Problem: Your Procurement Driven Transportation Sourcing Process Stinks!" As I shared with him the four key issues in this blog, he made an interesting observation: “The purchasing/procurement driven model that most shippers use for sourcing transportation may have been effective five or even ten years ago, but carriers and shippers are operating in a different world today.”
For example, if a shipper does not understand “time based pricing” or how dimensional and density based issues will impact their rates, the carrier negotiations will not be fruitful. And more importantly, they need to address the reality that today, the carriers are using comprehensive data to determine who they will do business with and how much they will charge for their services. He concluded by stating that a lot of shippers had better understand what he referred to as “the new rules of the game.”
We’re very aware that shippers may not like this feedback but having negotiated billions and billions of dollars in transportation contracts over the years, we are experts in this area. We have an in-depth understanding of what these new “rules of the game” look like and how to address them when conducting transportation sourcing events.
If you’re looking for a great place to begin building a great transportation sourcing event, take a look at our Carrier Yield Test Worksheet. It’s proven to be a popular tool we offer to help shippers evaluate where they're at now with their carriers and how they can improve their carrier relationships and rate structures. You can download it here.
Additionally, you can watch this week's video to hear the things you need to have to in place to conduct a successful sourcing event.
Finally, if you have questions or are interested in some assistance in conducting a great transportation sourcing event, we encourage you to give us a call at 630-833-0890 or send us an email. We're on your team, here to help, and passionate about seeing you hold successful sourcing events.