By Justin Wilcox and Mark Kroner
Taking the "get-in-and-get-out" approach to a procurement event can be messy and time-consuming.
Doing so leads to the perpetuation of a "set-it-and-forget-it" kind of exercise, missing out on the substantial value to be extracted from these events when looked at from a different perspective.
Savings is the primary driver, but process improvement, carrier engagement, and lane insights can also be realized with a bit of due diligence.
Most shippers drop the ball by not paying enough attention to the post-bid process which prevents them from capturing all of the benefits afforded to them.
In our experience working with clients we've come up with the top 10 post-procurement activities that will help you extract maximum value from your transportation freight spend.
Top 10 Post-Procurement Activities
1. Export bid results out of the RFP tool
After a procurement event is complete, the first step is to export the results out of the RFP application. Most applications should be able to export data in common file formats such as CSV, XLS, TXT, and DAT.
You want to ensure all the data from the bid is included in the exports, not just the rates themselves. The following are some of the types of data that can be exported from the bid:
■ Carrier lane rates
■ Carrier backup State-to-State matrix
■ Carrier capacity commitments
■ Carrier lane awards
"Most clients drop the ball by not paying enough attention to the post-bid process which prevents them from capturing all of the benefits afforded to them."
2. Manipulate Data For Import Compatibility
When using a 3rd party RFP tool, chances are the output data files will not be in a compatible format to upload directly into your TMS. This will require using applications such as MS Excel or MS Access to manipulate the RFP data into the correct file format required by your TMS.
Even when using an RFP tool provided by the same vendor as your TMS, there may still be the need to perform some data manipulation to prepare the data for import.
3. Load data into the TMS
Once the data has been configured in the correct format for your TMS, it is time to upload the data. There are also other configuration activities that need to be considered as part of the data loading, so it’s not as simple as just uploading the new rates and calling it a day.
■ Expire old rates – Before loading the new rates, you want to update all the existing rates to expire the day before the new rates go into effect.
■ Upload rates – When uploading the new rates, you want to ensure the effective date is the same date as in the contract.
■ Upload capacity commitments – As part of the bid, carriers should allocate Daily/Weekly/Monthly capacity commitments on lanes where rates were provided. This is a critical piece in the data loading process so that carriers are not assigned lanes beyond the capacity they have agreed to.
■ Make routing guide updates – If your TMS has routing guide logic built into the carrier selection process, then the routing guide rules will need to be evaluated and updated accordingly.
■ Assign lane awards (Performance ratings) – The lane awards identify which carriers will be the primary, secondary, and sometimes tertiary on a given lane. This may not always be the cheapest carrier, so additional configuration may be required to force the TMS to select the desired carrier(s). In most TMS systems this can be accomplished by giving the carrier a favorable performance rating or providing a ranking for each carrier.
■ Configure sequential tendering – If you are using sequential tendering as part of the execution process, you want to ensure that the correct carriers are being selected when the primary carrier declines a load.
■ Test in lower environments – All of the above activities should be conducted in a lower environment and tested before promoting into Production.
"...it’s not as simple as just uploading the new rates and calling it a day."
4. Publicize new and improved rates
Publicize the new rates internally to any groups that will use those freight rates as part of their day-to-day activities. For example, the customer service group may provide freight quotes to customers prior to placing an order.
5. Update downstream systems with new rates
It’s important to update any downstream systems that do not get real-time rate updates directly from the TMS. For example, a 3rd Party Freight Pay and Audit provider may only get rate updates as part of a weekly or monthly batch process.
Providing the rates from the bid will also ensure that the correct rates are being calculated when auditing carrier invoices—and prevent a mass of transactions from being incorrectly flagged for review.
6. Routing guide updates for vendors (if paying collect)
Provide collect vendors with updated routing guide instructions and carrier awards. Documents and systems used to instruct vendors, load planners, and sales resources on how to route a particular load must be kept up to date with the latest changes.
Keeping these systems up to date means that you will end up with much higher compliance and achieve the goals set forth by the procurement event itself – maximum savings and the best service available for a particular lane.
Oftentimes these updates are overlooked and only surface once KPI’s are reviewed to reveal non-compliance or a higher per-mile or per-pound cost than expected.
"It’s important to update any downstream systems that do not get real-time rate updates directly from the TMS."
7. Network modeling for large-scale pricing changes and carrier additions
Network or region-wide procurement events often have new carriers come into the mix and/or see existing carriers change lane pricing to encourage/discourage activity on certain lanes. This can have a significant effect on the assumptions made to accommodate the previous pricing/service landscape and alter the previous load building and routing strategy.
An example of this is a TL carrier’s approach to staffing team drivers; maybe this method has become much more expensive for the carrier and your baked-in assumption to always route certain long-haul moves with team drivers is more expensive than it’s worth.
8. New carrier electronic onboarding process / existing carrier updates for data mapping
Procurement events will invariably lead to new carriers being added to your network. In order to to get the benefit of new rates and build carrier relationship, it is critical for both the customer and the carrier to make sure new carriers are onboarded in a timely fashion. This benefits both the customer and carrier by reducing manual tendering, status updates, load closures, billing, and settlement.
Failure to onboard quickly and correctly may lead to a mismatch of expectations for communication timeliness and a delay in having loads closed for billing purposes.
■ Onboard new carriers from bid – Create an onboarding “script” that covers the critical areas ranging from defining customer/carrier operational contacts, to freight handling instructions, to sending all relevant pickup/drop-off location profiles to the carrier.
■ Setup EDI – Create an EDI standard within your organization so that when new carriers are added they immediately have all of the information they need for their EDI team to begin the mapping process (accessorial charge codes, line haul codes, exception codes, status codes, etc.).
"Oftentimes procurement is a set-it-and-forget-it kind of exercise and customers need to “trust but verify” that agreements are being adhered to."
9. Review anticipated vs actual savings (6+ months in)
Oftentimes procurement is a set-it-and-forget-it kind of exercise and customers need to “trust but verify” that agreements are being adhered to:
■ Create reports to track savings – These reports should be configured to quickly surface KPI’s that convey the value of the procurement itself. Metrics must continually be measured against data from the previous agreement period, so that there is an established baseline for reporting results in savings and service levels.
■ Make sure awarded carriers are being selected – Often times after a procurement event has concluded, there is an expectation that certain carriers have a larger role in the customer’s network—so make sure that these carriers get their freight! Sometimes the previously used carriers are still selected by force of habit, especially if associates like rate shopping or a routing guide is not in place.
■ Make sure carriers are honoring capacity commitments – Once carriers have agreed to take on a specified amount of loads, be sure that the metrics are answering that key question: are carriers actually delivering their stated capacity? Well-structured KPI’s are will measure tender rejection rate and whether or not carriers are making good on their commitments.
10. Make sure any volume discounts are being honored (6+ months in)
Some carriers will agree to certain savings thresholds where, once a certain volume is reached, new discounts kick in.
Here again is where KPI’s are crucial to ensuring compliance. These are even more important to stay on top of if your TMS tariff framework is not able to accommodate a variable pricing structure, which puts the onus on the carrier to adjust the pricing
There are a number of simple, discreet operations that can significantly impact the overall value of a transportation procurement event.
Staying on top of these activities can be a challenge for even the most experienced teams. Don’t let these slip through the cracks and you’ll be able to incrementally improve your processes—and uncover some hidden benefits along the way.
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Meet the Authors
Justin Wilcox is a Solution Architect with JBF Consulting and has 21 years of experience in the Transportation and Supply Chain industry. He has lead numerous initiatives with an emphasis on solution design, modeling, and TMS implementations to create highly customized logistics solutions, especially within complex supply chain networks.
Mark Kroner is a Senior TMS Architect with JBF Consulting and has 20 years of experience in Transportation Management Systems. He’s played integral roles in software implementations and upgrades, providing expertise in system configuration, installation, and functionality.
About JBF Consulting
Since 2003, we’ve been helping shippers of all sizes and across many industries select, implement and squeeze as much value as possible out of their logistics systems. We speak your language — not consultant-speak – and we get to know you. Our leadership team has over 70 years of logistics and TMS implementation experience. Because we operate in a niche — we’re not all things to all people — our team members have a very specialized skill set: logistics operations experience + transportation technology + communication and problem-solving skills + a bunch of other cool stuff.