Innovating the RFP process: Forward-looking logistics sourcing strategies

Abstract

Since the COVID-19 pandemic, transportation professionals have been challenged with managing intricate supply chains. Market volatility has become a major pain point, with unforeseen costs and capacity constraints creating transportation network disruption. This challenge provides the opportunity to re-evaluate existing procurement processes and carrier partnerships. While the typical time to negotiate contracts is during the request for proposal (RFP), the annual event remains costly and inefficient, often administered via e-mail and Excel spreadsheets. With no sign of a slowdown in the demand for goods, there is increased pressure on shippers and carriers to transform their transportation practices to become more efficient. Breakthrough analysed their ecosystem of over 21 million annual shipments and over US$22bn in annual transportation spend to quantify the value of selecting carriers that match network priorities and growing volume with the optimal carriers. Breakthrough found that selecting carriers that match network priorities can result in 14 per cent cost savings. Growing volume with carriers throughout rate cycles can also add additional cost savings of 2.75 per cent or US$0.08 per mile lower than other carriers. Data-driven logistics sourcing strategies that allow transportation professionals to broaden their carrier networks and secure reliable capacity are discussed in this paper.