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Bid Management: Three Steps to a Better Contract

Bid Management

In the latest report from the Logistics Manager’s Index, data from around the country indicates that transportation capacity continues to increase, a massive shift from the previous two years when carriers were struggling to keep up with demand. Coupled with the fact that inventory doesn’t seem to be a problem right now, this trend leaves many companies eager to revisit historically bad contracts and perpetual ‘Peak Season’ rates that have been locked in place since the height of the global Pandemic.

In other words: Let the Bid’s commence!

Importance of Bid Management

While the data shows it is indeed a great time to go out for bid, it won’t mean anything unless you’re prepared to negotiate, and negotiate well. The carriers are not looking to do you any favors, and they are always going to prioritize their own bottom lines. However, if you come to the table ready to play, you can secure massive savings for years to come.

Here are three steps in the bid management process that can have a huge impact on the eventual outcome:

Start with Leverage:

As we said before, the carriers are incentivized to write contracts that favor themselves. That’s why it’s vitally important to bring multiple carriers into the bid process. Carriers are always interested in winning new business, especially from a competitor, and letting your incumbent know you’re willing to make a change can have a dramatic impact on their proposals. While you may not have to actually make a change, letting the carriers know you are in fact willing to walk away puts you in the best position to get what you want.

Come Prepared:

Speaking of leverage, it’s important to properly understand your own shipping profile in order to prioritize rates and discounts. Has your volume recently changed, moving your discount tier? Has your demand shifted, potentially changing the impact of different zones? Has your product line changed, affecting weights and dimensions? What is your most common accessorial charge? How about surcharge? The carriers have teams of employees preparing detailed data for every negotiation and proposal, and if you don’t have the business intelligence to keep up, you won’t know where to start.

Understand the Offer:

Finally, as anyone who’s seen a carrier contract can attest to, they are long, convoluted documents, intentionally designed to be esoteric and hard to read. Over the course of a bid process that may contain multiple proposals, the carriers can and will change many items, sometimes completely unrelated, in an attempt to sneak a better deal for themselves. It can be difficult to spot these minor changes in a thirty-page document, but they can have a massive impact on your bottom line over the course of a few years. That was one of the reasons behind the founding of FreightOptics, our proprietary advanced logistics platform that can easily analyze multiple carrier proposals against each other, including ‘what-if’ scenarios, comparing savings down to the penny level.

It’s not hyperbole to say that getting the most competitive rates and discounts possible out of a carrier negotiation is the single most important factor in your company’s transportation spend. And with the current state of the supply chain industry, now is the perfect time to go for it. Just be aware that it’s not as easy as simply asking for a better agreement. But, if you have the right tools, and know what you’re doing, you can take your business from surviving these difficult times, to Thriving.

If you would like to learn more about maximizing your savings and increasing your supply chain efficiency, reach out to us today.

You Can Be Better. We Can Help.