How should shippers approach the process of issuing a request for proposal (RFP) for carrier services? Advice from Tim Meester, vice president of business development for the central region of Green Mountain Technology.
Freight cost is making up an increasing portion of supply chain budgets today, so it’s essential that shippers select the right carriers to move their products. Success in that area depends on developing the right RFP, Meester says. And that requires access to market intelligence, as shippers strive to keep pace with changes in the marketplace without disrupting their existing networks.
Shippers can be hit with substantial unexpected costs, in the form of accessorials and surcharges. To minimize the possibility of surprise, they need to be able to negotiate in a manner that will result in obtaining the right carrier for the right network. Choosing carriers that will fulfill their long-term business needs and maintain the customer base is “top of mind,” Meester says.
Cost has always been a major concern in the issuance of RFP, but it’s easy to get off on the wrong foot if the shipper isn’t willing to share information with the prospective carrier. “I’ve always believed that the best negotiations are fairly transparent,” Meester says. “The carrier needs to know what you need to get out of that relationship, and vice versa.” Strong partnerships, he adds, are based on trust from the start.
When should a shipper undertake an RFP? “More often than not, it’s not soon enough,” Meester says. He suggests starting the process 12 to 18 months early, with the involvement of internal stakeholders and a firm understanding of how the chosen carrier network is going to support the corporate strategy.
That way, “when you get into negotiations, all stakeholders are aligned about what they’re looking for,” says Meester. “And that takes time.”
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