After a detailed evaluation of your logistics program and departments, your organization realized their need to partner with a third-party logistics provider (3PL) to more proactively manage their freight. Now that you have a greater understanding of your supply chain’s current and future states, it’s time to send a bid to a 3PL, but where do you start? If you have never sent a bid or Request for Proposal (RFP) to a 3PL, it can difficult to navigate what to include in your bid and which questions to ask during the bidding process. In this blog, the GTS experts weigh in on best practices.
1. Begin by Defining Goals – Before you create your bid, start by identifying your goals. What does your organization hope to accomplish? What does success look like? What type of service improvements do you expect? Estimated cost savings? Operational efficiencies? The better you understand the needs and requirements of the organization, the more effectively you can communicate this in your bid.
2. Make a List – create list of requirements that you seek in your vendor and do not hold back. In order to establish a strong partnership, it’s important to be upfront and to not settle. Outline the tools and services your organization needs to reach the defined goals.
- Must-have functions and features
- Type of service desired
- Basic Criteria – in this list, outline the minimum requirements a 3PL must offer
- ‘Perks’ List – outline the non-essential tools or services that would benefit you.
3. Gather Necessary Information – In order for a 3PL to accurately quote or find greater cost savings, they need a few key data points. Do not let this be a surprise to you – your current data and freight bills are needed to have a holistic understanding of your current logistic process. Make sure to include the following in your bid:
- Postal Codes
- Number of Pallets
- Accessorial charges
- Carriers used
- Ship Dates
Identifying Potential Candidates
4. Do your Research & Be Selective – As you begin your research, you will soon realize the overwhelming amount of vendors to choose from. As a result, it is important to keep the above goals and requirements in mind while reviewing possible candidates. Be selective in your process. If you send out bids to a large list of vendors, they are likely to pick up on that, and not respond with their ‘A’ game. Likewise, internally your team will have to dedicate time to carefully evaluating each response.
Prior to sending out a bid, many organizations issue a Request for Information (RFI). RFIs are less time-consuming to create and respond to in comparison to a Request for Proposal (RFP). It never hurts to gain a better understanding of a potential vendor to help with your bid creation and remove unqualified candidates from participation.
Networking is another great way to learn more about a vendor. Ask your peers, sister companies and friends who they work with and what they think of the value they gain from their partnership.
5. Questions to Ask: Once you have received interest from a 3PL on your bid, it’s time to begin some in-depth conversations about the organization to ensure their values and goals align with your own. Make sure to discuss their customer service practices, operational benefits (for example, are they only web based, do they have a logistics control center or are they just a call center?), how they manage claims and carrier relationships.
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