Logistics sourcing versus Logistics E-sourcing
Many people involved in Logistics sourcing and tenders will tell you this; Excel is not the ideal way of managing a freight RFP. As a result of this and the fast increase of solutions, thanks to the IoT-boom, the demand for logistics e-sourcing solutions are increasing rapidly.
The tender market has changed rapidly over the last 12 months and solutions are nowadays available on a large scale. But what is e-sourcing, what should you be looking out for, and what are the specific functions required in the logistics and transportation industry? In this blog, I give an answer to all of these questions and moreover, I leave you with some resourceful tips to sharpen you RFP pencils in the near future. Before we meet there, let’s quickly identify the fields of this subject.
What is E-sourcing?
A form of outsourcing where the purchase of goods and services are coursed through the Internet. Since the Internet enables firms to have access to a wide variety of goods and services, e-sourcing can help managers make better decisions in terms of costs and quality.
Logistics E-sourcing
In the logistics and freight industry, the focus of procurement practices is aimed at finding, evaluating and engaging suppliers for acquiring logistical services. More and more logistics professionals are aware that the time spent on a logistics tender could be dramatically reduced thanks to automated calculations and excel related actions that you don’t have to do yourself anymore. Next to that communications and management of the data flow with the carriers goes via the platform and not via your e-mail box. As you can imagine, data analysis, comparisons and carrier selection become very efficient as the platform has done the hard work for you.
3 focus points in the search for Logistics E-sourcing platforms
– Focus on dedicated freight sourcing tools
Conventional tools are widely available, some even at very attractive pricing. However, they do not support many functions that are very required when running a freight tender. What we see is that supportive functions around the rate card setup, transportation business rules are vital parts missing in these systems. For example, you are preparing an air freight tender, rated by chargeable weight. Before anything, you need to agree upon what is chargeable weight, how do we calculate this, what are the rounding rules, conversion factors etc.It goes without saying that the lack of these utilities can jeopardize the quality of a logistics tender…
– Focus on independent tools
The year is 2016…not 2002. So don’t be talked around tools that require the need for external/additional consultants in order to set up your freight tender. Look instead for autonomous logistics E-sourcing tools that are flexible, cloud-based (SaaS) and make use of modern technology. You don’t need training or large instruction manuals. Tools can be INTUITIVE so you can start working immediately.
– Focus on intuitive tools
The third point could be seen as an addition to the one before, but it does not harm to stress it enough. Make sure you select a tool that is comprehensive. Not only for you but also other team members, business units etc. The problem with tools using a complicated setup is that you will need all-round training sessions, on an on-going basis for existing and new members in order to make use of the tool throughout the whole organization. Besides the increasing cost picture, it also causes a big hassle and workaround to organize it. Bottom line: Look for comprehensive, consultant free tools that are plug and play, mobile solutions.
5 E-Sourcing functions you should keep an eye on
In the previous part, I already lifted a little corner of the veil, but in this chapter, I’m taking a closer look at the functions ‘inside’ a cloud-based E-sourcing tool for logistics and transportation. What functions are indispensable, and why are they a must for every tender manager.
1. Excel automated calculations
For starters, it is important to look at the automated, Excel replacing functions of a tool. I mean, this is the first reason to look for an e-sourcing solution. To recapture this problem, building rate cards and formulas in Excel is for many a daunting task, not to mention a time-consuming exercise. Besides that, on a company level, it is not too wise to rely on this, because people often change jobs and this means you would instantly lose all the knowledge of the Excel relations in-house. Then you have things like data validation, which should be an automated function (ask!!) to make sure you enter the analysis phase will correct data in your back pocket. How often does it occur that logistics tenders have to be renegotiated due to bad data in combination with unclear business rules?
2. Communication inside the tool
A big time-consumer is your communication process before, during and after the submissions deadline of logistics tenders. Inviting your selected carriers for the RFP via e-mail does not befit best practice anymore.
3. Documentation Management
Incoming data from suppliers, especially during larger tenders, tend to get messy, very messy. Managing all this in Excel is Ludacris and moreover, not a responsible practice. Search for tools that allow you to keep all the documentation ‘in the cloud’. A centralized process means keeping it easy for you to manage and easy to use for your suppliers (Collaboration people!!) Extra tip: Additional docs and questionnaires are options that are available nowadays in freight sourcing tools in the cloud.
4. Scenario building and Supplier Nomination inside the cloud
Many older transportation-dedicated sourcing tools are, besides tricky to work with, not equipped with analysis and reporting functionalities. The questions you should ask yourself; Is that really worth the investment?
Tender and freight procurement managers nowadays have a lot on their plate, but running complicated manual scenarios should no longer be one of those regular tasks. Newer e-sourcing tools for logistics offer in many cases standard, built-in reporting, and extended analysis functions. Look for impact scenarios, instant ranking capabilities and reporting that will support you during the negotiations with your (potential) suppliers.
5. Pricing
Don’t be charmed into long-lasting contracts for freight tenders. Why should you? Look for flexible sourcing suppliers in the cloud that enable you to pay per tender. As for the following steps, start with a small tender. Try out the system and its features, run for example a small LTL / FTL tender and get acquainted with the system. Are you satisfied with its capabilities? Then talk about strategic pricing!
About Freightender – Freight Sourcing
Freightender.com is a spin-off of ControlPay, the largest Freight Audit provider in Europe. At ControlPay we saw the need for a tender platform that is taking into account all the details behind rates and business rules in transport contracts.
