The Best Tips on Creating a 3PL RFP and RFQ

Last year’s shipment index was 15.6% higher compared to the previous year. Historically, this percentage would mean things are going normally in the shipping industry.

This year, however, that percentage represents a five-month low. In other words, there’s limited third-party logistics (3PL) service provider availability during a rapidly expanding demand for shipping.

As a logistics coordinator, it’s always been important to choose the right shipping partner. In this tight market, however, it’s more important than ever.

Keep reading for the best tips on RFP logistics planning and execution.

3PL Shipping Today

Most likely, you’ve seen the news. There are issues with the global supply chain.

The demand for goods is plentiful. However, there’s a lot of important stock stuck on docks and ships waiting to get delivered.

What’s worse is these issues may worsen before they improve. If you’re a logistics exec, you need to figure out what’s causing problems in your supply chain and how they’ll affect your organization.

Moving Goods in the Current Market

Historically, companies have relied on 3PL partners capable of delivering large quantities of goods the quickest. By working with these kinds of suppliers, shippers can order supplies whenever needed.

Companies never had to worry about running out of stock. Now, the same firms must rethink this strategy.

Today, logistics coordinators have trouble finding 3PLs that can deliver supplies at all. For some of these individuals, the luxury of fast delivery isn’t even on the horizon.

These market conditions highlight the importance of finding a quality 3PL partner. You can do so by finding the best service providers using intentionally crafted RFQs and RFPs.

RFP logistics and RFQ: What’s the Difference?

It’s all about covering the bases when it comes to creating an effective RFP. It’s easier for 3PLs to understand your needs when you create a clear RFP. A clear RFP also makes it easier for bidders to give you the information you need to make an informed decision.

There are three documents you can use to find out information from potential 3PL suppliers:

1. Request for Information (RFI)
2. Request for Quote (RFQ)
3. Request for Proposal (RFP)

You may have familiarity with these terms. Often, shipping stakeholders use them interchangeably.

Yet, each term has a different meaning and purpose. Let’s have a closer look at each request document term.

RFI

A request for information is relatively straightforward. As its name suggests, it’s a request for information.

You’d use an RFI to learn about a potential 3PL’s qualifications. It can also help you learn more about a company’s capabilities.

You can use an RFI to learn about the services offered by a freight carrier. However, it’s not a request for a quote or proposal.

It creates no obligation to any company that might respond. You might simply use an RFI to assess what companies to invite to the RPF stage.

RFQ

Among these three terms, people most often co-mingle the terms RFP logistics and RFQ. However, they’re different.

Depending on your needs, you might submit an RFQ as part of an RFP. Alternatively, you might use an RFQ as a standalone template for potential 3PL partners.

You might also use a standalone RFQ when requesting information about a standard service, such as a full truckload shipment. This kind of document is helpful when you need to hire a service provider quickly based solely on price.

RFP

Conversely, the RFP logistics process is more formal. It’s a call to available 3PLs to provide detailed proposals.

The idea is to find several service providers that can meet your needs and choose the best one. As a result, you need to create an RFP that’s granular and specific about your requirements.

An incomplete RFP logistics is ineffective. It creates more questions than it answers.

However, a comprehensive RFP logistics receives thorough and innovative responses. Also, it allows you to compare information equally across all submissions from potential shipping partners.

What’s at Stake?

Over the last two years, we’ve witnessed seismic disruptions in the global supply chain. There’s still plenty of uncertainty. Now, preparing for your next transportation bid is a mission-critical objective.

There’s much more change to come in the shipping industry, so now is an excellent time to re-evaluate your current procurement process.

By revamping your procurement process, you can better prepare for whatever changes may come. Even if the world were to experience another supply chain shock, you’d find you’re better prepared to make the best of the next supply chain disruption.

Tips for Coordinators

You may need to prepare a multi-round bid event to cover thousands of lanes. Alternatively, you may only need to create a basic Excel document you use to keep track of a limited number of carriers.

In either case, the following RFP logistics tips will help you manage your procurement process more strategically. These tips include:

Tip 1: Manage Market Uncertainty
Tip 2: Know Your Goals
Tip 3: Get Your Team on the Same Page
Tip 4: Learn More About What’s Going On
Tip 5: Assess Your Resources

You can execute bid solicitations successfully by learning these RFP tips. Let’s have a closer look at each one in more detail.

Tip 1. Lessening the Uncertainty of RFP Logistics

You want to optimize your firm’s bidding process. First, however, you must ensure you’re performing well in procurement process basics.

It may surprise you to learn that many companies haven’t established a foundation for operational excellence. Yet, they readily jump into advanced optimizations like consultative supply chain engineering and benchmarking studies. It’s like they’re doing algebra before they’ve learned how to do multiplication.

Instead, it’s a good idea to establish a stable operating environment by taking stock of your company’s technology and human expertise before working on advanced procurement optimization.

Covering the Procurement Process Bases

Let’s start with your technology. Regardless of the size of your company, you need a centralized way to collect, track, store, and analyze your supply chain data.

Of course, different company networks have varying levels of complexity. For example, your organization might make use of a simple shared Excel document.

Alternatively, your group may use a sophisticated transportation management system (TMS). On the opposite end of the spectrum from an Excel document, your company may use a powerful enterprise resource planning (ERP) or warehouse management software (WMS).

A considerable percentage of shippers use WMS. Likewise, many companies also have a TMS in place. Also, more than half of today’s companies use an RFP logistics management eSourcing platform.

Is Your Team up for the Task?

Just as you need competitive technology, you also need human expertise. As with your technology, your need for human expertise will vary depending on the complexity of your operation.

In some instances, some companies require entire teams dedicated to every facet of their supply chains. In other cases, a company can rely on a few people to cover the full spectrum of its supply chain needs. Regardless of where your company stands, you should have people focused on a few critical areas, including:

• Order Management
• Procurement
• Load Tendering
• Planning

Let’s have a closer look at these roles.

Order Management

Here, you must have staff competent in order taking and overseeing customer service. These individuals or team members might also coordinate with load planners and help build shipments.

Procurement

These staff members focus on establishing the strategy for purchasing transportation. They might also keep records of all the steps involved in the procurement process.

Load Tendering and Planning

This part of your team acts as a conduit to 3PLs and carriers. They also manage conflict resolution and develop carrier relationships.

Ideally, this part of your team would also help with logistics optimization. For instance, a member of this part of your team might include a supply chain analyst.

Tip 2. Know Your KPIs

You must establish key performance indicators (KPIs) that define success for your company. With a data-driven supply chain, you can reduce costs.

Data will also help you to improve efficiency. Yet, it’s not always simple figuring out what data to track.

Unfortunately, there’s no uniform set of supply chain KPIs. Also, every business tracks and weights KPIs differently.

When it comes to KPIs, it helps to start with your business goals.

Tracking Your Metrics

With KPIs, you must first define what you want to achieve. Now, you can work backward to determine what KPIs will measure your success.

In some instances, you could report on a KPI. Yet, you’re not completely clear on how it leads to a business goal.

In this instance, you’re collecting data for data’s sake. Even worse, this information may potentially create confusion within your organization.

Again, it’s vital not to start with KPIs. You must start by choosing your business goals, then you can select the proper KPIs.

Tip 3. Aligning Procurement and Operations

It’s also essential to align your procurement and operations goals. In other words, you must have your team and processes in place.

Also, you must know what you’re measuring and have the capability to do it. With this in mind, it’s vital to ensure that everyone on your team is on the same page.

You might have a smaller operation. In that case, you’ll find that this task is easier. However, there’s usually a healthy debate between procurement and operations in larger operations.

In some ways, this plot reveals itself identically among larger operations. Procurement wants to cut costs. Meanwhile, operations wants to maximize service.

Typically, these business units will bump heads, as their respective compensations are tied to these outcomes. Most often, however, the best procurement strategy for your company lies somewhere between these two extremes.

Getting Things Lined Up

Your procurement strategy must match your company strategy. For example, you might serve as a low-cost commodity provider. In that case, your procurement strategy should reflect this circumstance.

Conversely, you might manufacture a premium good. In that case, your procurement strategy should reflect that context. No matter the value of your goods, you must get everyone on the same page before soliciting RFP bids.

With this in mind, it’s a good idea to establish a steering committee. The committee should encompass leadership from every relevant business unit.

Your committee members should meet routinely during the year. The frequency of those meetings should increase in the months leading up to your annual procurement selection process.

Tip 4. Understanding the Shipping Environment

It’s critical to understand the current shipping market. You must also have familiarity with emerging trends.

As a logistics coordinator, you must have a solid grasp of how supply and demand work in the trucking industry. You should also have a full understanding of the truckload market in the country where you operate. You must also have the most up-to-date truckload market updates and forecasts available.

Now, you have baseline knowledge. You can use this information to guide your procurement strategy.

Planning With Partners

When assessing your resources in the trucking market, it’s helpful to lean on your strategic relationships. For example, you might award as much freight as possible to high-quality, prudent providers that are always available when the demand for shipping services is low. This way, you can build a relationship to ensure they’ll remain available when demand becomes high.

Also, if you work in procurement or finance, you might shudder at the thought of paying more than the lowest rate available. However, it’s not always wise to automatically give spot freight to the lowest bidder.

Remember, shipping operates in an inflationary market. You can use available loads at the current rates to serve as leverage to secure future shipping capacity. A carrier’s much more likely to give you capacity in a tight market if you give them access to your spot freight.

Tip 5. Gathering RFP Resources

Now that you’re getting close to the meat and potatoes, it’s time to start working on your RFP bid.

Now, you might manage your RFP process using one of several resources. For example, you might use your TMS system. Alternatively, you might use your ERP system if you have one in place.

A lesser percentage of companies might use a completely homegrown process. An equally small portion of firms may outsource procurement altogether.

As a logistics coordinator, you’ll need to create a proposal that accurately depicts your company’s needs no matter which resource you use.