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 costs are now an increasingly large part of supply chain budgets, so it is important that shippers choose the right carriers to transport their products. Success in this area depends on developing the right RFP, says Meester. And that requires access to market intelligence as shippers strive to keep up with changes in the market without disrupting their existing networks.
Shippers can face significant unexpected costs in the form of supplies and surcharges. To minimize the possibility of surprises, they need to be able to negotiate to find the right carrier for the right network. Selecting carriers that meet their long-term business needs and nurture the customer base is “top priority,” says Meester.
Cost has always been a primary concern when issuing RFPs, but it’s easy to get misguided when the carrier is unwilling to share information with the prospective carrier. “I’ve always believed that the best negotiations are fairly transparent,” says Meester. “The carrier needs to know what you need to get out of that relationship and vice versa.” Strong partnerships, he adds, are built on trust from the start.
When should a shipper do an RFP? “Most of the time it’s not soon enough,” says Meester. He suggests starting the process 12 to 18 months earlier, involving internal stakeholders and having a firm understanding of how the chosen carrier network will support the business strategy.
That way, “when negotiating, everyone involved has a common understanding of what they’re looking for,” says Meester. “And that takes time.”
