Logistics outsourcing is an increasingly common initiative in many industries. The requirement to outsource logistics has grown in line with globalisation and increasing time and cost constraints on logistics operations.
Outsourcing logistics or supply chain operations is a major undertaking, and requires a full understanding of the business case, and full and detailed analysis of 3PL proposals from both a quantitative and qualitative perspective. To truly get the best solution from the 3PL market, companies need to engage providers in an open and collaborative way; they need to ensure that the logistics provider has a full and detailed understanding of how their operation works, and they need to approach the market with a clear and structured process.
How Our Logistics Consultants Can Help
We have extensive experience of managing logistics tenders, and also of designing logistics solutions on behalf of 3PLs. Regardless of the type of logistics operations being outsourced, a clear and accountable process needs to be followed to ensure 3PL solutions offered are efficient and consistent with cost and service expectations.
Logistics operations can consume a large proportion of a company’s operating costs, and are very often customer facing. Consequently there are significant risks that must be managed to ensure that the process for tendering, supplier selection and implementation is diligent and effective.
Our logistics consultants are extremely well-versed in logistics outsourcing and the 3PL market. Some of the key areas where we can support you include:
It’s important to, not only to be clear on why you are considering outsourcing (or re-tendering an existing contract), but also what your expectation from the service provider will be. Surprisingly cost is often not the main driver, but rather value, flexibility and innovation are. When outsourcing logistics the objectives need to be clear and well communicated in advance, ultimately forming part of the selection criteria when considering final responses.
The traditional method of identifying providers is through a ‘Request for Information’ (RFI). RFIs have their value but they should be used with caution. As a consultancy we have undertaken many logistics tenders and are very familiar with the 3PL market. Consequently we can often negate the need for an RFI process, instead connecting directly with the providers we already know to be suitable candidates. We often advocate bringing in the most suitable providers to present their business instead of a traditional RFI process. This is a far more effective method of establishing suitability, but also of engaging providers in the tender process.
The number and quality of responses a tender receives is highly dependent on the quality and level of detail provided in the operational profile. Significant time and effort needs to be deployed in order to provide a profile in the tender that accurately represents the business and its future objectives. This includes product data, receipt transactions, despatch transactions, delivery points, operating constraints and seasonality.
The Invitation to Tender (ITT) needs to be comprehensive, but also concise. Our logistics consultants will ensure the document is written with care and attention and an understanding of the salient points logistics providers will need to consider in their response. An ITT written by our consultants will cover, as a minimum, the operational profile, commercial framework, modelling constraints and IT requirements, along with strategic plans and a clear objective statement.
The tendering process should comprise a series of key stages covering objective validation, operational profiling, identifying potential providers, tender creation and finally tender assessment. Responding to logistics tenders can be a time consuming and highly analytical process and consequently the tender information and process should be as clear and concise as possible.
Please read our section on Logistics Tender Management where we have detailed the typical 9 steps we take to fully manage a logistics tender.