Four months. That’s the average time it takes a shipper to complete an RFP, according to research from FreightWaves. That said, the most effective and efficient Full Truckload Requests for Proposal (RFPs) are well thought out and structured — and they don’t need to take four months. Planning your process and bid structure before your formal RFP can save you time, and ultimately money.
At the end of the day, the effectiveness of a bid event is determined by three factors: the structure of the bid package, the bid process itself and the bid’s timeline. With those factors in mind, we’ve compiled a list of key tips to help you execute your bid events in ways that save you time and balance your operational, service and financial goals, with the needs of your invited carriers.
Let’s take your RFP event to the next level.
Be Consistent with Your Request For Information (RFI):
Requests For Information, or RFI’s, are a great way to identify and learn about bidders before a formal RFP is sent out. Given the early role of the RFI, it is important that both documents are consistent with one another. You’ll want to convey the same message around objectives, scope, and what you’re looking for from the carrier.
Make sure to limit your RFI to the information that you will need during the decision-making process. All too often, shippers fall into the trap of capturing too much information, but end up not knowing how to utilize it. Focusing on things such as the number of trucks, terminal locations, etc., is best for an effective RFI.
Explain the Structure of Your RFP in a Formal Bid Letter
The most effective bids will explain the structure of your RFP process in the initial bid letter. With a copy sent to each bidder’s primary contact, use your bid letter to describe the bid, as well as details on the organization and next steps. Remember, there’s no such thing as over-communicating during an RFP — so start with a solid, thorough letter.
In terms of the content itself, be sure to include sections like:
- Business objectives
- Carrier minimum requirements (i.e., owned assets, certifications, additional insurance, etc.)
- Bidder description (word-based section for the bidder to describe their capabilities)
- Pricing template
- Terms & Conditions
- Desired credit terms
Clarify What the Bid Covers
One thing you’ll need to remember about effective bids is that it’s perfectly OK to repeat yourself. Even if you’ve already explained the scope of the bid in the RFI and bid letter, make sure there’s a section in the bid itself that reiterates scope. Whether it’s by geographic region, a single mode of transport (FTL) or an “Enterprise Bid” that includes LTL, FTL and parcel, be explicit about what’s covered. Within the scope, you’ll need to provide details on areas like:
- Service type(s) out for bid (FTL only, FTL/LTL, parcel, enterprise agreement)
- Lanes (with origin/destination Zip Codes)
- Special requirements (team drivers, appointments, et al.)
- Payment terms
- Terms & Conditions
Provide Details and Instructions on Your Pricing Template
Depending on where you are with your procurement technology, pricing templates can be executed with various tools, from being embedded in a TMS to spreadsheets submitted via email. Regardless of the method, include instructions on how to complete the template and, if possible, provide a sample of a completed submission. If you’re using a TMS, it likely has features like a glossary of terms or even video tutorials, so be sure to reference those resources in the bid, too. To get the most accurate bids, consider breaking down the template into:
- Base rates (for FTL, by lane, by load or by the mile)
- Standard and expedited service (for FTL, single driver vs. team driver)
- Fuel surcharge
The Bid Process
List the Steps in Your Bid Process
An effective bid process should be made up of easy-to-follow steps, so be sure to explain each step in your RFP journey clearly. Typically, the steps in a bid process include:
- Bid issuance
- Bid review period
- Submission of questions by bidders or bid Q&A
- Publication of answers to questions to all bidders
- First submission
- Submission of “Best & Final” pricing by short-listed bidders
- Individual discussions with short-listed bidders
- Award decision made
- Awards announced
Designing an effective bid is one thing; maintaining discipline throughout the entire process is a different story. When it comes to a bid event, maintaining discipline means that once you communicate the process, you stick to it.
FTL shipping is a relationship business. In the spirit of fairness and professionalism, you shouldn’t play favorites by giving an incumbent extra time or letting them fix mistakes in their submission. Other considerations that help to maintain discipline are:
- Any question or clarification requested by a bidder should be shared with all bidders
- Do not participate in any extra-curricular activities with carriers during the bid process (i.e., working lunches, dinners, team building events, etc.)
- Establish a “quiet period” during the decision phase of the bid where communications with finalists are not permitted
- Create and stick to a clear bid timeline
Timelines & Milestones
As mentioned above, if you’re going to conduct an effective bid, you’ll need to create a clear timeline. One of the dangers of any bid is that it gets dragged out for too long, so you’ll want to establish a timeline for each step in the process, ensuring the total timeline is reasonable. Of course, the size of the bid will, to a certain extent, dictate how long it takes to complete, but in today’s fast-paced world, anything more than six weeks is too long.
One best practice for the bidders is to provide them with a visual and easy-to-understand timeline associated with each step in the bid event. Closely tied to maintaining bid discipline, it will be necessary for bidders to know that if they don’t comply with each outlined event, they’ll be disqualified from the bid.
For your internal use, it’s also a good idea to create something as simple as a spreadsheet that lists each step and its corresponding completion date, along with the names of each bidder. Although manual, it’s a great way to keep track of where you are in a bid process and who is complying with each step.
While the “proof is in the pudding” and a shipper won’t know how effective a bid is until loads start moving, many things can be done to increase the chances of success. Efficiently researching your bid structure ahead of time and sticking to your process is one of the best ways to improve your odds at RFP success.
To be truly effective, a bid event has to be consistent, easy to understand, well-disciplined, fair and to the best extent possible — brief. Ideally, that means that a bid event starts with an RFI and moves on to a bid letter and, ultimately, a bid structure and process that reflects the shipper’s objectives.