Whether you’re starting a new transportation program or looking to improve an existing one, carrier selection is a key part of program success. Procuring the right carriers is not always straightforward, and a typical bidding process may not always reveal the best choice.
Be Practical and Thorough
Here are some things you can do to make carrier procurement easier — and smarter:
Define your priorities:
As a shipper, only you know what’s most important to you in terms of a transportation solution. Is it service? Price? Visibility? Flexibility? Getting a clear picture of what you need is essential to your carrier negotiation and selection.
Realistically, price alone is rarely the driving criteria. Service quality and the ability to meet your specific requirements often inform the decisions. For example, if your receiving hours are stringent, if you have limited dock doors, if you have physical restraints on live loading versus dropped trailers, these conditions must be met. If your pick-up and delivery times are only marginally negotiable, timing and reliability go to the top of the list.
Being pragmatic about what will and won’t work for you — and your various locations — will make the procurement process smoother.
Mine your internal business intelligence:
Your capacity needs fit into your organization’s larger mission and goals. So, what are your company’s business goals for the coming year? How does your transportation strategy fit into the big picture?
Consider what your competition is doing. In certain markets and industries, transportation can be the deciding factor when it comes to winning more business. Also, as you build your budget, think about your internal systems. For example, are you able to break out transportation as a separate cost and track performance? Would this knowledge make a difference to you?
Get market insight:
Another key element in the carrier procurement process is what’s going on outside your walls. Is the market softening or hardening? How will inflation impact your overall costs? Are logistics providers scrambling for freight, turning away business or somewhere in between?
Having a good understanding of the market, the international supply chain and other factors lets you be strategic in developing your business plan. A logistics partner can help you gain this type of insight — including industry trends, benchmarked lane rates, shipping patterns and capacity forecasts — and weigh in on how market factors might affect your carrier procurement process.
Track and report:
Once you’ve launched your program, it’s important to know if you got what you paid for. This requires tracking execution (performance, rates, service levels) against planned capacity.
A transportation management system (TMS) delivers and analyzes the data you need to assess your program success. If service or price (or both) don’t align with your expectations, with a TMS, you’ll be prepared with the data to present your case and work with the provider on how to fix these issues.
It’s All About Relationships
As with all business arrangements, relationships count. If you’ve chosen the right transportation and logistics provider, you should feel confident and comfortable discussing performance hits and misses with them. There are likely adjustments that can be made to make the relationship a win-win for both sides.
This type of trusting, open door relationship is beneficial to both parties and leads to mutual success.
Covenant’s transportation management team is expert in carrier procurement and would be happy to talk with you about your selection process and criteria. Contact us to set up a time to chat.