Why a Dynamic RFP Process Makes Sense for Distributors – Automating Your Freight RFP Process #1
The annual, quarterly, seasonal, or mini RFP for many wholesaler-distributors is often considered one of the most important supply chain tasks, but it can take weeks or even months to complete. During this process, distributors invite their most reliable carriers and brokers to provide contracted lane pricing for associated time frames. Distributors are then able to plan by locking in shipping rates and capacity with trustworthy vendors. Conducting an RFP to plan out lane pricing works in your favor when the market is right, but what happens when the market tightens and tender rejections increase?
The key to avoiding high freight costs during a volatile market is the ability to be flexible. Processes that use emails and spreadsheets have handcuffed distributors into sticking with their annual/quarterly static RFP rates, no matter what the market conditions are. Distributors can’t afford to commit the time necessary to conduct another RFP to find new vendors for better pricing, so they turn to the spot market to cover their freight, which drastically increases carrier cost. By utilizing an automated RFP tool, you can not only conduct new RFPs in hours compared to weeks, but you can also turn existing static RFPs into a dynamic, working RFP.
Until now, distributors have been forced to source pricing from only their own incumbent network. This inevitably limits the distributor’s ability to find the most efficient carriers to service their lanes for the year. With smart technology, however, you can work with your own vendors while also tapping into a network of shared carriers and private fleets found within one platform. In doing so, you now have the benefit of sourcing from a significantly larger pool of peer-vetted carriers; this option will ultimately give you the best odds of finding the right carriers for your lanes.
The benefits of a dynamic RFP now give carriers a level playing field to compete. Visibility into new opportunities means that carriers can now focus on their core competency lanes and ensure that service and pricing expectations are being met. While a carrier may have their headhaul freight already booked, working within a dynamic RFP affords them to more efficiently fill their backhaul lanes with competitive pricing where their trucks have driven empty in the past.
Having a better understanding of how a dynamic RFP process can dramatically improve your supply chain is more important now than ever before. Learn more about Emerge and NAW.