Comments on: Transportation Procurement Remains Hot http://logisticsviewpoints.com/2009/07/30/transportation-procurement-remains-hot/ Providing logistics professionals with clear and concise analyses of Logistics Trends, Technologies, and Services Thu, 02 Feb 2012 16:39:32 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Gary_WDX http://logisticsviewpoints.com/2009/07/30/transportation-procurement-remains-hot/comment-page-1/#comment-73 Gary_WDX Fri, 31 Jul 2009 14:50:28 +0000 http://logisticsviewpoints.com/?p=1482#comment-73 To just clarify the last sentence of my prior post, what I mean by "rebidding" is an RFP/RFQ type procurement event, while "real-time adjustments" refers to the ability of carriers to adjust an automated quoting system to current conditions. Gary WDXfreight.com To just clarify the last sentence of my prior post, what I mean by “rebidding” is an RFP/RFQ type procurement event, while “real-time adjustments” refers to the ability of carriers to adjust an automated quoting system to current conditions.

Gary
WDXfreight.com

]]> By: Gary_WDX http://logisticsviewpoints.com/2009/07/30/transportation-procurement-remains-hot/comment-page-1/#comment-72 Gary_WDX Fri, 31 Jul 2009 14:33:47 +0000 http://logisticsviewpoints.com/?p=1482#comment-72 Two truths can exist at opposite ends of a spectrum, while practical solutions are found at various points in between, dependent on specific circumstances as well as philosophies. Case in point: government can’t spend money it doesn’t have for necessary and desirable programs vs. citizens seek to minimize their taxes. Case two: long-term contracts between shippers and motor carriers reward customer volume commitments, and help both parties make better plans vs. both shippers and carriers are foolish not to react to current market realities and optimize their choices. The type of shippers whose contracts are primarily rewarded by lane are relatively limited in their market options, as they attempt to fulfill their volume commitments to their carriers in good faith, while their carriers are also unhappy locked in to pricing that was likely negotiated on obsolete lane density assumptions. Other types of high-volume shippers are able to successfully live more in the middle of the spectrum, such as those whose contracts with their roster of carriers are more network based (rather than by lanes), and they are still able to shop between the carriers with whom they have relationships (without so much focus on volume per lane). For this latter type of shipper, existing TMS’s have largely added unnecessary rigidity to the process by selecting carriers in a pre-determined cascading process, and are not able to respond to current market condition adjustments in pricing. At the same time, carriers are looking for more flexible and efficient ways to update their pricing to their current and prospective customers in reaction to current market and business conditions. Rather than constant rebidding, (a time consuming and burdensome process), the better system is one that allows carriers to make real-time adjustments to their base rates, and carriers to use their established discounts to then shop between their own roster of preferred carriers, thus maintaining those relationships. Two truths can exist at opposite ends of a spectrum, while practical solutions are found at various points in between, dependent on specific circumstances as well as philosophies. Case in point: government can’t spend money it doesn’t have for necessary and desirable programs vs. citizens seek to minimize their taxes. Case two: long-term contracts between shippers and motor carriers reward customer volume commitments, and help both parties make better plans vs. both shippers and carriers are foolish not to react to current market realities and optimize their choices.

The type of shippers whose contracts are primarily rewarded by lane are relatively limited in their market options, as they attempt to fulfill their volume commitments to their carriers in good faith, while their carriers are also unhappy locked in to pricing that was likely negotiated on obsolete lane density assumptions. Other types of high-volume shippers are able to successfully live more in the middle of the spectrum, such as those whose contracts with their roster of carriers are more network based (rather than by lanes), and they are still able to shop between the carriers with whom they have relationships (without so much focus on volume per lane).

For this latter type of shipper, existing TMS’s have largely added unnecessary rigidity to the process by selecting carriers in a pre-determined cascading process, and are not able to respond to current market condition adjustments in pricing. At the same time, carriers are looking for more flexible and efficient ways to update their pricing to their current and prospective customers in reaction to current market and business conditions. Rather than constant rebidding, (a time consuming and burdensome process), the better system is one that allows carriers to make real-time adjustments to their base rates, and carriers to use their established discounts to then shop between their own roster of preferred carriers, thus maintaining those relationships.

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