The Home Stretch
In part one of this series we talked about some of the more basic data to gather and the checks you should make in selecting your "potential" service providers. This month we briefly review the quotat...
In part one of this series we talked about some of the more basic data to gather and the checks you should make in selecting your “potential” service providers. This month we briefly review the quotation process, the rate review and other essential steps and criteria you should include in order to better select your carrier.
Using your Carrier Profile information you can select those service providers who would best service the lanes and points you wish to have quoted. Remember at this stage you are using the Carrier Profile only as a pre-qualifier to securing quotations. You want to deal with licensed, insured providers who have met your reference checking.
Every service provider must receive the same detailed information in your quotation request. Give sufficient product details including (but not limited to) the nature of the packaging, dimensions, specific product characteristics, loading/unloading requirements, and expected service standards.
Whether you send out a formal quotation/bid/tender or just phone/ email/fax for a series of quotes, you have an obligation to your company to secure competitive rates no matter what your service requirements might be. For more significant quotation undertakings we would suggest you give those quoting at least a week to provide you with their input. There will always be instances where you require spot quotes with quick turnarounds but generally with these you end up calling carriers with previous experience with your company.
Once the quotes are received you have the task of reviewing. While it may be difficult to benchmark rates within your industry by calling up your competitors to see what they pay, you can get a good idea of pricing through this quotation process. It’s one thing to create a benchmark to a potential service provider but a note of caution – avoid shopping rates by giving copies of one company’s quotation to another company and violating a trust. Soon you’ll be discovered by others for doing this and your reputation will be tarnished.
Visit Your Supplier
While you might buy the odd thing over the Internet based upon a picture of the goods, you best get off your rear pockets and make the effort to see who might be the custodian and ultimate representative of delivery to your customers. If you plan on giving someone $100,000 worth of business then a visit to their head office or local operations should be on your “to do” list. A mentor of mine used to say “let’s go see if they have a phone and a desk.”
While we’ve highlighted a number of the more significant buying criteria there are so many others (this list is not exhaustive) that might be just as important to consider in the carrier selection process including the following:
Safety record. Ask for it periodically.
Responsiveness to service issues – your references can help on this – how well do they communicate?
Their knowledge, experience, do they handle your competitors? Is that a good or a bad thing?
Ask how often your products are handled, and how and where they are handled within the delivery cycle.
Assessorial charges – what do they provide, charge for, and for how much – don’t wait for the “surprises.”
You might require more full service providers that might do customs clearance, warehousing, seamless handling.
Training (Hazmat for example) and recognition/rewards (like safety, community involvement) that they provide to their staff, drivers.
Technology abilities including tracking, tracing, accounting/invoicing accuracy, report generation.
Culturally do they fit with your corporation, and its image. Will they to be good ambassadors of your goods?
Finalizing the Deal
Short list those carriers who best meet the criteria you’ve deemed to be most important in your bid process and obviously who have the competitive numbers to earn a final look. With each quotation package and face-to-face meeting with carriers you will add to your ability to negotiate these packages.
There are many items that must be included in the process of finalizing the tariff of rates quoted regardless of your choice. Document how long the rates will be in effect (minimum period, try for a year), any service guarantees and methods of reporting, payment terms, surcharge formulas and tracking methods, equipment requirements, penalties/remedies. Some like to formalize the process with a contract. If either party requires a formal contract then be prepared to wait out the legal process before you finalize your agreement.
Whatever it is you determine to be the more significant criteria for your selection process we believe you should formalize your approach to the selection process. Commit to the process and show your supplier network that you take the time to “qualify” carriers. They will better appreciate the efforts you make and your relationship will be stronger because of it.