allowing shippers to stay on top of carrier realignment
strategies and be able to pivot quickly if rate and capacity
patterns are altered, the authors contend. Annual procurement builds carrier goodwill by fostering some level of predictability of load flow, they add. Carriers appreciate consistency of traffic and the beneficial impact it has on their
resource utilization. In return, they will be more willing to
allocate appropriate capacity at an agreed-upon price,
according to the authors. It will also enhance service levels
for that shipper because carriers will be better motivated to
outperform, the authors said.
“What a procurement exercise does, above all else, is
allow for price discovery,” said Raetz. “The more visibility a
shipper has into its business and the more information
that’s available to the carrier, the more rewarding it will be
to the shipper.”
AVOIDING “STALE” BIDS
One shipper, Houston-based retail chain Stage Stores Inc.,
has gone even further in its procurement re-evaluation
practices. “Our rating is dynamic based on competitive bidding, rather than an annual volume bid. This removes the
dilemma of ‘stale’ bids,” said Gough Grubbs, Stage’s senior
vice president, distribution/logistics. “As more competitive
bids come in for certain lanes, incumbent carriers are given
from end
to end.
That’s about it.
and deliver on
time every day...
the opportunity to revise their rates in our system if they
choose to. If not, they drop down in the pecking order for
future loads.”
The study’s authors stress that they don’t advocate a strat-
egy that would trigger a massive annual turnover of a ship-
pers’ carrier universe. They note that carriers want shipper
relationships that foster multiyear stability. At the same
time, however, shippers need to understand that freight
transportation—and the nation’s truckload networks that
move most of that freight—is a fast-changing business and
what might be in place this September may not be there the
following fall.
Those most surprised by this process are procurement
professionals who oversee the buying of trucking services,
said Kevin McCarthy, director of consulting services for
Robinson. “Those with a procurement background have a
hard time understanding that you can’t leverage truckload
transportation,” he said. “It’s not like buying boxes. There is
no bidder’s remorse. The shippers won’t tender the freight,
or the carriers just don’t pick it up. For procurement folks,
that’s a novel concept.”
By contrast, McCarthy said, transportation professionals
that live in this world simply shrug their shoulders. “For
people who’ve been around the block and have access to a
TMS, they are not surprised at all,” he said. ;
In a nutshell.
These are the faces of UTi. They
represent just a few of the thousands
of professionals in over 60 countries, in
every major market and industry vertical,
delivering client-centric supply chain
services and solutions to our clients.
Our people collaborate with our clients
to deliver value to their businesses,
competitive advantage to their
supply chains, and the assurance
they need, knowing that on our
team, there’s never a
weak link.
To view our Team UTi
videos, find out more
about how we can
strengthen your supply
chain, and register
for a chance to win an iPad,
visit go2uti.com/promo.
Not a weak link in the chain
