In the forwarder world there are a lot of people you typically don’t deal with as a shipper yet they are handling and responding to your tender: tender managers, pricing managers and pricing analysts. Their job is often performed under high pressure from the outside and from the inside with deadlines internally and externally. And nobody seems to know or care that they process many hundreds of tenders every year.
Why is pricing a tender such a stressful job and what can shippers and forwarders do to improve it?
Shipper
Lacking experience
People on the shipper side that run tenders typically do not run tenders all the time and may take short cuts, do not know best practice and may use outdated or difficult excel files.
Excel files that shippers produce can be real problematic, here are some examples:
- Too company specific
- Too many unknown factors or pricing mechanisms
- Too complicated for no good reason
- Contain mistakes, poor data or are missing data
- Too many tabs
Next to that the files often are being updated during the tender either with new data or lanes or new cost items are added while the deadline does not change. This causes stress and extra time and communication spent on the tender.
Recommendation to shippers
- Seriously review your tender process and create a logistics procurement strategy. Take out unneeded complexities/
- Also review the documentation you are sharing with forwarders, maybe it is overkill.
- Ask yourself if you are not overasking, asking for lanes you do not have but just to have prices is not helpful and only causes extra work.
- Give reasonable deadlines to the forwarders as they also need to set internal deadlines to get quotations from everywhere, partners or colleagues.
- Consider professional advice with regards to a tender set-up.
- Get technology, an e-sourcing platform to run tenders with, digitization is a real opportunity.
Forwarder issues
- It seems often that forwarder organizations are very compartmentalized: sales, account managers and management seem to be far from the effort that goes into the quotation process. Tender Management and Pricing seem an isolated island within forwarders.
- Different level of knowledge among pricing people often leads to wrong pricing, questionable pricing or no pricing and makes tender managers chase up pricing all the time or the need to educate people in pricing is constant as people in pricing typically tend to move after an average of 3 years.
- Local P&L responsibility. The item that surprises me the most, basically getting good pricing from your own organization can be a challenge as cushion is being built on a local or country level which may interfere with a good global tender response. Apparently forwarder organisations have time and energy to fight these battles internally.
- Pricing seems to get the blame when a tender is lost and Account Management seems to get the praise when it is won. Pricing and Tender Management seem like invisible departments behind the scenes.
- Shippers have no clue in general about how much time and effort goes into the response of their tenders.
How to improve?
- I personally believe that Tender Management should get a better place in a forwarder organization and should be more visible to the inside and outside world of a forwarder: there is no communication on Linkedin about how tender flows work, what time goes into it, how a tender is being replied in many different countries etc. It seems to fit in with the typically non-transparent approach the forwarder community has had for a long time. But it is a lost opportunity, making your customer aware what effect he has on your organization is important.
- Educate the market and your customers on how to do things more efficient.
- Forwarders should integrate the sales, account management and tender management function much closer to each other. There are too many people in forwarding and forwarders in that sense work still very traditional. I am convinced that with the help of sales tools, the shift to digitization and online calls less people are needed and productivity can be enormously improved in forwarder organizations.
- Digitize the tender management process, at Freightender we offer RFQ Management, it is the solution made for forwarders to automate the tender response flow. It is crazy it is still done via excel and e-mail except for our customers.
Pieter Kinds (1975) is CEO of Freightender, a logistics procurement platform and RFQ Management platform for forwarders and is passionate about digitization and making the logistics industry more efficient.