Cards on the table: the letters “RFP” can cause a lot of eye rolls in the 3PL world.
The reason is understandable. Responding to requests for proposals (RFPs) takes up valuable time and in many instances, there is no payback, usually because there isn’t a genuine bidding process behind it. Most 3PLs would rather work through a referral process than take the time to complete an RFP for no real results.
But there are some legitimate reasons for doing an RFP. For example:
In those cases, you’ll want to know best practices for getting the service you need—with no “surprises.” Business leaders are surprised all the time by logistics costs that far exceed what they originally contracted with their 3PL, and the #1 culprit is inadequate or misleading RFPs. Yet another reason 3PLs are wary of RFPs!
There requires a key balance of using RFPs, and most 3PLs can fall victim to common pitfalls in the process—pitfalls that can easily be avoided with a little knowledge and planning. The tips below should help you outline what you need to do before contacting a 3PL for the most accurate RFP.
The biggest mistake executives at shipping operations can make is not doing a thorough needs assessment before hiring a 3PL. In many cases, this leads to spending significantly on unnecessary costs and missed opportunities for finding a better partner. For example, do you need special DC services from your 3PL like kitting? Will you need IT services? Will you need last-mile capability? Taking the time to analyze what you really need out of a 3PL will assist your decision-making.
To get an accurate RFP, you need accurate information on what you'll be shipping. You will need to collect and provide data based on:
If you don’t take the time to clean up your data on the front end, you’ll likely be surprised with a cost increase once the operation is underway. In spite of that, our research confirms that many, if not most, bids contain bad, unrealistic data. This can lead to inaccurate proposals landing back in your hands. Be prepared with accurate data before you make contact with a 3PL to avoid this circumstance.
Base your 3PL candidates on your current experience and discussion with your peers in the industry. Make sure you communicate any deal-breakers upfront to avoid wasting a lot of time for both sides. Transparency is good at this stage, so communicate a predefined set of criteria that will be used in the selection process, and know that some 3PLs might pass on a partnership with you.
Setting up a good set performance management program involves looking at both how you will measure performance (which metrics you will use) and performance management (how you will scorecard and measure the effectiveness of supplier’s performance). Ideally, identifying the appropriate metrics should be a collaborative process with the 3PL, the first step being a discussion of what success looks like. As one executive said, “In the end, blocking and tackling wins the game, but you have to know the score.”
We hope these tips help prepare you for the RFP process, including what to expect.
If you decide you want to skip the RFP process, that’s understandable too. There is something to be said for being referred to a trusted partner with experience in your vertical. You can do your due diligence even as you learn how to move forward.
Materialogic is a 3PL that has provided fulfillment solutions for 49 years to clients ranging from Fortune 1000 companies to e-commerce entrepreneur startups. We pride ourselves on having the right size solution for you today and as your business needs change over time. If you have questions about the RFP process or just about doing business with a 3PL, reach out to our team today.