With logistics outsourcing playing such an important part in today’s supply chain management strategies, it’s very possible that you will be involved in an outsourcing project during your career, either on behalf of a client or a supplier. If so, it will help to be familiar with the document used by companies to outline their requirements when inviting suppliers to bid for the work.
The Request For Proposal
This document, critical in the supplier selection process, is known as a “request for proposal” or sometimes a “request for tender”. A company seeking an outsourcing supplier will draft an RFP/RFT and send it to a shortlist of suppliers that appear to be suitable candidates for partnership. A logistics outsourcing RFP should be highly detailed and very clear in setting out the company’s requirements for service provision. In many ways, the logistics outsourcing RFP is the foundation on which the partnership is built and its quality can make the difference between a successful or failed venture.
Why Most Logistics RFPs Fall Short
Here’s something I’ve noticed after reviewing hundreds of these documents over the years. The problem isn’t usually that companies forget to include information. It’s that they include the wrong information, or they bury the important stuff under pages of corporate boilerplate that nobody reads.
I worked with a mid-sized retailer a few years back who’d written a logistics RFP that was genuinely impressive in length. Forty-something pages. The thing is, about half of it was company history and mission statements. The actual operational requirements? Scattered across a few paragraphs here and there. The suppliers who responded were basically guessing at what the company actually needed.
The best logistics RFP documents I’ve seen are the ones where someone’s clearly thought about it from the supplier’s perspective. What does a 3PL actually need to know to put together a sensible proposal? That’s the question you should be asking yourself.
The “Must Have” Components of a Logistics Outsourcing RFP
An RFP for logistics outsourcing services should comprise the following inclusions, if it’s to provide suppliers with a basis for making informed service proposals.
- A clear and concise overview of the issues driving the outsourcing decision
- A description of the specific services required
- A detailed breakdown of the business requirements (this will make up the bulk of the RFP)
- The service KPIs to be used for supplier performance monitoring
- Specification for supplier pricing breakdown (all suppliers should provide pricing according to the prescribed specifications)
- Specifications for the format of supplier proposals (as with the pricing breakdown, a standard format makes it easier to compare proposals)
- Company contact details and instructions for submitting a proposal
- Description of supplier selection criteria
A Few Things Worth Adding
Beyond the essentials listed above, I’d encourage you to include some context about your business trajectory. Are you expecting growth? Seasonal peaks? New product lines that might change your warehousing needs? Suppliers appreciate knowing what they might be signing up for beyond the immediate scope.
And honestly, don’t be afraid to share what went wrong with previous arrangements. If you’re switching providers because your current 3PL keeps getting orders wrong, say so. Good suppliers will address that directly in their proposals. The ones who gloss over it probably weren’t paying attention.
There are some additional sections which may be contained in a logistics outsourcing RFP, which I’ll discuss in a future post, along with some alternative approaches to documenting the sections listed above. For now though, this short article has hopefully served to clarify the most important components without which, the selection process could be hard work and may even result in an outsourcing partnership that’s struggling from day one.
