The impact of poorly managed sourcing events

September 4, 2017 Ken Klaver

Companies are increasingly taking their freight rates seriously, and so they should! As a result, we regularly tender rates in the logistics. But are you nailing it, or failing it?

Concerned with the sanity and preservation date in comparison with the market, logistics procurement is always on the lookout for better rates, service and risk reduction. But going out to the market is a lengthy exercise. Some use a tool (E-sourcing), while others rely on excel, a rather manual exercise either completely in-house or managed by consultants. But how are we making sure that our approach is the right one? How to measure your sourcing process?

Basically, there are two ways of finding out. First, ‘looking over the neighbor’s fence’. Compare your approach to industry leaders and laggards. Secondly, recognize the symptoms of your own process.

Reasons for poorly managed sourcing events

1. Requirements

Often, poorly managed sourcing events are caused by a combination of factors. The lack of technology, transparency (rates/rules) or communication before and during a freight RFQ to name a few. Nevertheless, the real decisive problem occurs prior to this.  Companies typically share their unique requirements with carriers in order to inform them and to receive the service and pricing that eventually suits them. This high level of customization often leads to the creation of complex excel templates that are hard to manage for both the Shipper and the Carrier as the latter receive many of such templates. When you create a new freight tender, please take into account that Pricing Analysts and Business Analysts need to be able to understand your documentation and get in general too many tenders in too many formats. Try to make it easy for them and you will achieve a better deal.

2. Lack of technology

Logistics people nowadays are convinced that a TMS can relieve them from a heavy workload. As tenders are mostly not a very regular occurrence, the use of technology in this area has been mainly neglected. But with the easy access and easy set-up providers nowadays offer there is no barrier to try out and start using technology that will make the life in the logistics department again a bit easier. 5 reasons why Shippers should abandon Excel-based tenders.

3.Relying on assumed savings

Companies tender often to achieve savings. But savings are only paper based until you actually check and validate freight invoices and the underlying logistics data. Most companies don’t do that and procurement only cares about the “assumed savings.” Needless to say that this, often forgotten part of tenders is crucial!

 

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The results of poorly managed sourcing events

1. Your business may miss out on the best suitable supplier.
2. Your overall productivity and business efficiency may suffer on account of the very long sourcing cycle time.
3. Your business may witness a plummet in cost savings.
4. Suppliers are fed up participating in your tenders. Resulting in less competitive quotations for your lanes
5. Lengthy and untransparent process ruins the morale of employees and suppliers

Tendering can be done so much better. Improve it and both shippers and carriers will benefit from it a great deal!

More about managing sourcing projects

Freight Forwarders: 5 Habits That Will Improve Tender Management10 things that make your procurement process terrible and less effectiveRoad Freight: How to improve your FTL tendersThe 5 Transport Tender tips carriers and forwarders must share with clients

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How to increase sourcing efficiency 

Using technology is nowadays a common solution to poorly managed freight tenders. With SaaS and cloud-based solutions taking advantage of an ever increasing digitalization of processes it only makes sense to start looking into smart procurement tools that make your sourcing life easier. The obvious reasons for doing so are listed carefully on this blog by our CEO.

On top of these reasons provided by our CEO, I have added some more critical advantages that dedicated logistics E-sourcing tools deliver to your organization:

1. Gain instant visibility into savings and event statistics (24/7 Rate card insights)
2. Reduce logistics sourcing cycles by up to 25%
3. Gain strength in handling large logistics sourcing projects with increased stakeholder participation
4. Better internal collaboration and buy-in from users and quality controllers, commodity managers
5. Incorporated logistics knowledge, business rules and market conform rate cards

Request your free TenderTool demo

TenderTool.com is the easiest to use cloud-based Freight Sourcing platform. Our platform saves Tender Managers, Pricing Analysts, Sales Managers and Procurement people an enormous amount of time as it automates all Excel number crunching, reporting, and analysis. Next to that, it gives full visibility in the RFP process so that you can easily manage the tender from 1 platform instead of your e-mail. Are you creating and managing tenders? Good, we should talk as we can save you time, frustration and money. Visit our demo page and request your free, live demo today.

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Ken Klaver

Ken Klaver (29) is active as a global sales manager for TenderTool. He has over 4 years experience in the Logistics industry as he previously worked in marketing and sales for ControlPay global Freight Audit

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About the Author

Ken Klaver

Ken Klaver governs ControlPay’s social media strategy, while developing brand awareness, generating inbound traffic and encouraging product adoption. On a daily basis, Klaver manages all social channels of CP, writes blogs, creates infographics and maintains a daily news page regarding the most relevant logistics and supply chain topics.

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