How a Good RFQ Builds Great Vendor Relationships

Be clear on what you want to accomplish before you engage potential partners with the request for quote process

The most successful companies in the world don’t try to do everything themselves. They understand the importance of keeping a focus on their core competencies and partnering with specialists in various fields for the rest. And that’s especially true when it comes to logistics and transportation contract and pricing negotiations.

The request for quote (RFQ) itself is a specialized and complex process. A successful RFQ doesn’t just find the best pricing for your organization, it finds the right partners, too. Many companies do not have the internal expertise or resources to dedicate to these projects and instead retain the help of experts who specialize in logistics and understand the RFQ process inside and out.

Before you start

The RFQ process should start with a thorough investigation of your company’s needs. Bring together the stakeholders and examine what your company needs this vendor to accomplish. An effective RFQ defines your specific needs, challenges, and parameters, but it must also lay out the requirements to achieve your overall objectives. Can you turn those objectives into a series of specific statements?

Those statements should accomplish three things:

• Describe the specific service challenges you want to overcome.

• Put actual financial targets on your cost savings objectives.

• Name the issues you want to see resolved.

This exercise has two important goals:

1. It helps you clarify what you want to accomplish.

2. It helps vendors understand what you are asking them to bid on and accomplish. A good RFQ will give the companies competing for your business a thorough perspective of what a successful working relationship with you looks like.

The RFQ preparatory stage can also reward you with a deeper insight into the obstacles and challenges preventing your business growth. Take the time to carefully explore gaps and inefficiencies. This is where an outside logistics specialist can be especially helpful by providing insight into ways other companies have engaged logistics vendors to solve similar problems or reach similar goals.

Generous information

Your doctor can’t help you unless you tell them where it hurts. Likewise, your RFQ must potential vendors understand how they can help alleviate the pain points in your logistics operations. This is important because an RFQ should ask for itemized prices of well-defined and quantifiable services, and the more information your vendors have, the more accurate these estimates can be.

No vendor worth retaining will complain that you provided them with too much information about your business requirements and service specifications. They’re not going to grumble about the information you provide regarding reports you’d like to see, timelines you want to meet, or any other goal. In fact, there may be details you are not considering that will help them prepare a better quote.

Within the confines of trade secrets or confidentiality, the more information you can provide about potential liabilities and your own inefficiencies, the better the potential partner can respond and show you how they can help.

The RFQ preparation process

An RFQ is essentially a complex document that facilitates a process. It starts with a detailed investigation of your needs that can be prepared by the business manager or an outside specialist with research and input from stakeholders.

The average global transportation RFQ can take from 8–12 weeks to implement. Preparation may represent 25% or more of this time. It’s thorough, time-consuming and detail-oriented work. The omission of crucial information can result in confused bidders, which may discourage some of your best prospects from participating.

This process can be time-consuming to execute if your company does not have logistics experts on staff. Many companies choose to partner with a logistics specialist to facilitate it.

At Resource Logistics, RFQ and RFP preparation are part of our core competencies. Over the past 10 years, we’ve developed a 15-step bid process that starts with benchmarking what we’ve been able to successfully negotiate for other clients.

The process has been refined to the point where we often request just four days of time from our clients’ management and operations personnel, and then just five hours for review. The service includes a bid analysis tool that helps you select the winner based on detailed information ranging from location requirements to tariffs and accessorial charges. It’s these details that often derail a quote because crucial undisclosed information comes as a surprise to the carrier.

Beyond the RFQ award

Once you’ve selected a new logistics vendors, the next phase begins. The finish line isn’t a signed contract — a successful RFQ prepares both parties for a successful ongoing relationship. At Resource Logistics, our job isn’t complete until what’s been negotiated and agreed upon has been implemented.

Are you paying too much for shipping? Resource Logistics Group specializes in helping companies find the best solutions for their logistical needs. Contact us for a free benchmark analysis of your transportation data and contract language.