By Prof. Dr. Stefan Iskan
For freight forwarders and contract logistics service providers, tender management should be at the heart of the enterprise. But it is precisely this strategically important area that often remains unexploited. Logistics service providers and their customers from industry and trande suffer frequently severe tender „heart attacks“. The consequence: Firefighting, negative EBIT margins, loss of reputation, and frustration. For sure: The process of a proper tender management is complex from a content and technical as well as from an auditing point of view. Critical especially for freight forwarders: The logistics structures of their industrial customers are often stuck in process and network structures. Their tenders and RFQs are mostly about streamlining costs. Freight forwarders and contract logistics service providers run the risk of "burning money".
However, there is a different way of doing tender management. The problems are sometimes homemade in the logistics service provider's practice. On the side of freight forwarders and contract logistics service providers, tender management is a basis for business development. And thus a task of strategic management. And not, as is usually the case in the corporate landscape, a tool of the sales department. Logistics service providers who want to increase their success rate (hit rate) in tenders and RFQs must not only optimize their tender management, but also make it visible in the form of a top management position.
A comparison between automotive manufacturers and logistics service providers makes it clear: CEOs in the automotive industry usually come from engineering or production planning. They know their production process and product including cost structures in detail. The importance of precisely these two areas of expertise in the company and the qualifications of the players involved are correspondingly high.
Freight forwarders and contract logistics service providers, on the other hand, often do not have a corresponding top management position. And how about full transparancy on process costs in operations and administration for each tender? Freigh forwarders and contract logistics service providers who want to increase their success rate in tenders can build on the following ideas:
▪ Clearly define corporate strategy (target industries, customers, regions, solutions)
▪ Anchor tender management in the person of a top management member
▪ Consistently process only those tenders that are in line with the formulated strategy
▪ Say strictly „No“ to customers and to their RFQs being not in line with your formulated strategy
▪ Say strictly „No“ to logistics consultants and software providers who also work for your industrial customers (why enabling them with your know-how?)
▪ Integrate tender management, key account management and business development, data engineering and analytics plus implementation management and KVP in one single department as an internal 4PL unit for your entire enterprise (learning organization)
▪ Introduce 100% AI based software-based tender management and network simulation
▪ Rigorously visualize data errors in tendering and recalculation towards shipper top management
Similar to product engineering, tender management and thus the cost and profitability of a contract are determined at the beginning of the tendering process. Enterprises consisting of key account and tender management as well as an implementation experts and data engineering teams are likely to have a better success rate, but also higher profitability, than if they work separately. In this optimized constellation, experience learning from tender to tender is made possible and learning experiences from implementation are transferred to the next tender processing.
As far as the tender and pricing managers themselves are concerned, logistics service providers need to rethink their approach. They must no longer be seen as tender processors, scapegoats or cost drivers. There must be investment in intelligence in these workplaces in the form of people and IT. Given today's quarterly thinking on the executive levels, this is certainly not an easy undertaking.
Prof. Dr. Stefan Iskan
Professorship for Logistics and Business Informatics,
Automotive SCM and Digitization
Trusted Advisor in Logistics and Automotive Industry
Info Box on Event Highlight
Tender Management Conference 2023
26 September 2023. Mercedes-Benz Arena Stuttgart. Conference Language: German.
Procurement and tendering of transport and contract logistics in the area of conflict between capacities, availability, profitability and "Excel frustration". 22 Speaker, e.g. Volkswagen/PowerCo, BASF, Community from Mercedes-Benz and Daimler Trucks, Brose, Saint-Gobain, DHL Freight, DB Schenker, FIEGE, Prof. Dr. Rüdiger Grube (Former CEO of Deutsche Bahn AG) and many more.
Programm and Registration: