How to Write an RFP for Freight

Your company may have a contract, an agreement, or just a “regular” Freight provider servicing your freight needs. But how did you arrive at this arrangement, have you actually reviewed what you need vs. what they supply, do they provide you with regular KPI reports? Do they have a lost/damaged delivery agreement that compensates your company, at least partially?

One of the key components of taking on a freight provider should be writing an RFP (request for proposal). This process does a few things; firstly it allows you to review exactly what you need, what you would like to have and what you do not need. It then gives the Freight companies a clear understanding of not only your requirements but also your freight profile – this allows them to calculate the quote with some accuracy.  It also gives you and the “proposers” a base line for which to have further discussions. And finally, if done right, it will make your job of direct comparison between Proposers that much easier as they will all have identical information and their submissions will be in the same format.

What your RFP should include:

1. Background – this is who you are, size of the company, reason for RFP, etc.
2. Overview – Project contacts, type of products, and type of customers, delivery method, and delivery range.
3. Objective – What you are trying to achieve (big picture) eg: next day delivery, nation wide.
4. Request for Proposal Terms – whether they are able to view pick up/delivery points, who questions are directed to, timing of the submissions, proposal format, variations, how the proposals will the evaluated, etc.
5. Definitions – An explanation of any acronyms used within the document.
6. Scope –What, when and how you expect they will make the deliveries.
7. Duration of Contract – When it begins and ends; considerations for next review.
8. Pricing – How the pricing is fixed, when adjusted and terms of adjustment, etc.
9. Delivery Guarantee – What guarantee (or compensation) will they provide for missed/damaged deliveries.
10. General Commercial Matters – this is the meaty bit and includes all the legal stuff, eg: reporting, invoicing, warranties, indemnities, insurances, returns, pallet control, etc.
11. Appendices – This should be a history of actual deliveries for at least one cycle, can be one month although 3-6 would be better. And preferably photos of normal deliveries.

The easiest method is to obtain a working template, then it is just a matter of changing it to you own requirements. The hardest part can sometimes be getting accurate, relevant history and deciding exactly what service you do want.

It will also take time, depending on the size of your operation (extent of deliveries) you can expect up to 6-8 weeks for a first submission from the providers.

When drafting the actual RFP document, you must ensure you have done your research and had the document checked for accuracy. Incorrect history data or a decimal point in the wrong place can cause havoc with the whole process or even scare away potential providers.

 So the steps are:

1. Define what you need and what you don''t, not what you wish for – This is all about doing your homework. Do you need door to door national wide, next day delivery, same day pick-up etc, itemise the standard you require to do business. Remember it is what is essential for you to stay in business. You can ask for any ‘nice to haves’ to be listed separately.
2. Data. The customer/delivery profile is different for every company; to give you an accurate proposal the providers will need accurate data.  This can be taken from your history records and de-sensitised (take out sensitive information eg: take out names and addresses but leave post codes.)
3. Put the list of requirements into a document and leave space for the suppliers to advise how they meet/match. They can add their unique, fluffy stuff separately.
4. Assemble the history data in a spreadsheet leaving a column for them to add their cost structure and resulting price – you will be cutting and pasting this into a ‘master’ for comparison later.
5. Put the RFP document together.           
6. It is best to have a selection of suppliers you believe may be desirable – but no less than four and probably no more than eight.
7. Ring the suppliers, ask them if they would like to participate, if so send the complete document, if not find another.
8. When the proposals are returned the fun starts, this is why the documents had areas for the suppliers to complete. Now it is just a case of aligning all the responses and grading their application to requirements, ie you now have a direct comparison of responses without the need to dissect or manipulate the information provided.

This is a powerful way of getting good providers on board. There are no hidden surprises before, during or after the contract is agreed upon. Plus you will have standards in place and being measured. Personally, I believe this is a duty of care, as freight is such a major component of variable costs.

 If this doesn't explain it well enough or you would like more help, you can always reach me at http://www.focus.com/profiles/mark-oldfield/public/