Save Time and Money: How 4PLs Streamline Your Logistics RFQs
June 9, 2023
September 5, 2023
Operations teams are master multi-taskers. From knowing which fires require more priority and attention to masterfully solving multiple burning issues back-to-back, operations teams can handle it all - assuming that there are enough hours in a day.
With lots of fires to put out and exceptions to handle on a day-to-day basis, anything that can free up more time from the operations team is a huge boon to the team and to their company. And this is where fourth-party logistics companies can come in.
One major responsibility that operations teams’ handle is to maintain the company’s logistics capabilities or capacity by finding and onboarding shipping partners when needed. Doing these according to best practices requires a lot of resources, which working with a 4PL can help to free up on your team’s end.
But before we dive into how 4PLs can free up your team’s resources, it helps to recap some RFQ best practices first. Please note that this refers to contract logistics for logistics parcel delivery partnerships and not request for freight quotations, which are more for one-time-contracts for bulk freight involving palettes or containers.
Setting Clear Expectations
One of the marks of a failed RFQ is when you get no replies from suppliers or none of their replies meet your expectations. Some logistics companies who are still interested in working with you could counter propose what they feel is more feasible to them based on how strict your requirements are.
As businesses, we constantly refine what we provide for our clients’ needs. Do they need it cheap and don’t mind waiting or are they willing to pay more for fast, guaranteed deliveries?
Without the right priorities, you might end up with a cheap partner with poor service or an expensive partner with great service that you cannot afford to scale up with. In certain cases like these, the expectations that were set could be impossible or were not set realistically.
Logistics RFQs and the quality of the logistics partners you find are determined by how clear you are about your logistics needs. By having a clear understanding of what kind of problems your partners need to solve, you can set realistic expectations and requirements in your RFQ.
When you work with a 4PL provider, they will scope out your company’s requirements with you before they engage in any RFQ exercises. This way, time can be saved on reducing the chances of a failed RFQ to begin with.
Standardise As Much As You Can
After setting clear expectations on what your company and your customers need, it pays to have standardised templates and processes with your 3PLs. This way, future interactions with similar logistics service providers can be smoother as they are more familiar with how you request for information.
Normally, an RFQ includes the following information from the company’s side:
Details of the pickup and delivery
Service Level Details - target lead times for each lane
Origins, destinations and freight type
Indication of volume - 45 kg/ day or week or month OR estimation of volume based on time range
Special requirements - dangerous goods, COD, special requests (i.e., video cameras in the sorting warehouse), special cameras, temperature control, etc.
Standardisation like this also helps out with analysing and comparing services and rates across the partners who come back to you.
When you work with Janio, we already have established rate cards that are regularly refreshed or updated with our established network of logistics service providers.
Do RFQ’s Regularly and With Sufficient Lead Time
With today’s volatile market conditions, the rates and prices of services can also vary a lot. As your volume grows or fuel prices change, it pays to run RFQs regularly to ensure that your company is always getting the best rates that your logistics service providers can offer.
RFQ processes can vary from one project to another. On average, the whole process can take anywhere from 4 weeks to 6 weeks depending on the complexity of the request. With this in mind, budgeting around 8 weeks’ for an RFQ could be prudent.
Below is a rough timeline of how long an average RFQ process can take:
Opening the RFQ - 2 - 3 weeks
At Janio we’ll open the RFQ for these lanes and it depends on when you want to start. Scoping out your conditions and requirements occurs at this stage.
RFQ is sent out to partner network, awaiting responses or requests for information (RFI) from network partners - 2 - 3 weeks
Answering requests for information from the logistics partner shortlist - 1 - 2 weeks
Shortlist and Onboarding 1 - 2 weeks
How 4PLs can Save You Time and Costs
Fourth Party Logistics (4PL) providers like Janio are able to assist in terms of providing better rates and also by taking on the burden of completing RFQs on your company’s behalf, freeing up your man hours to focus on other pressing matters.
Economies of Scale and Established 3PL Networks
4PLs like Janio work with large numbers of logistics service providers of every size and lane while having access to the volumes of all our clients. Janio, as a case in point, works with over 300 logistics service providers.
Having the volumes of some of the largest eCommerce players available gives 4PLs the leverage and economies of scale to negotiate better rates and delivery time commitments with partners. With quarterly RFQs, the rate cards you get from 4PLs tend to be stronger compared to negotiating the rate cards with your company’s volume on its own.
Outsourcing Tedium: 4PLs Can Handle Requests for Information
Two of the most time-consuming activities in the RFQ process is responding to your logistics service providers’ requests for information (RFI) as well as standardising and analysing participant 3PLs’ rates and performance commitments.
After the initial brief has been sent to your list of 3PLs, interested 3PLs will usually request for more details such as delivery timing requirements, estimated volume commitments or other details such as whether you have the right licences, documents or requirements for certain types of goods. One example is the Material Data Safety Sheet (MSDS) if you want to ship liquids or aerosols like beauty products on flights.
Each partner will likely ask for different things and will try to probe you for more information. This can take a while as the back and forths pile up which can distract your team from other operations aspects that they could be attending to instead.
Working with a 4PL relieves your team of this burden and acts as a single gateway that they can turn to instead of having to manage communications with multiple parties all at once.
Outsourcing Tedium: Standardising 3PL Analysis
Different 3PLs have different ways of calculating zones and delivery rates for the specific zones. Some examples of this non-standardised information are:
Weight breaks - some competitors have 500 gram weight breaks, others have larger weight breaks or could charge more above a certain weight if they are not equipped for heavier deliveries
Delivery Zones and Postal Codes - some 3PLs split up country delivery areas differently. For example, urban areas such as Metro Manila in the Philippines or Greater Jakarta in Indonesia could be charged differently compared to the rest of the islands they are on respectively.
Rate Card Templates - each vendor has their own rate card template
All this data needs to be consolidated onto a single model for proper apples-to-apples analysis of your 3PLs’ delivery performance and rates. Working with more partners to cover more countries increases the complexity, which can take up a lot of your team’s time.
4PLs like Janio do all this on a regular basis and have established teams, processes and relationships with our network of 3PLs. If your company doesn’t have as much experience handling these or needs their time freed up for more pressing matters, consider working with 4PLs like us who have the tools and expertise to help you out.
Time Savings With 4PLs
Supply chain professionals and operations teams are always looking for the right balance of things - be it delivery quality and cost, or finding the most balanced use of their time amidst all the pressing priorities that they have. However, time is always limited and teams can only be stretched so far.
By working with a 4PL like Janio, your operations team can be freed up from RFQ’s tedious tasks like back-and-forth requests for information with 3PLs and also standardising and analysing rates and zone data from all your selected 3PLs.
Help with 3PL procurement is just the start. 4PLs like Janio cover the full logistics vendor management journey from procurement, to real-time monitoring via dashboards, to exception management and beyond.
To find out more about procurement and other areas Janio can help you with, reach out to us via the banner below: