The 4 S's: For-hire Logistics and Transportation Services

Copyright 2005 CATTAN Services Group, InCopyright 2005 CATTAN Services Group, Inc.c.

For-Hire Logistics and For-Hire Logistics and Transportation Services: Transportation Services:

How Do You Bring Purchasing Skills to the How Do You Bring Purchasing Skills to the Process of Purchasing Transportation and Process of Purchasing Transportation and

LogisticsLogistics

2828thth WERC Annual Conference WERC Annual Conference byby

Thomas L. Tanel, CTL, C.P.M., CCAThomas L. Tanel, CTL, C.P.M., CCA2nd Vice Chair, ISM Logistics & Transportation 2nd Vice Chair, ISM Logistics & Transportation

GroupGroupandand

President and CEO, CATTAN Services Group, IncPresident and CEO, CATTAN Services Group, Inc


How Do You Bring Purchasing Skills to the How Do You Bring Purchasing Skills to the Process of Purchasing Transportation and Process of Purchasing Transportation and

LogisticsLogisticsPurchasing Transportation and Logistics Purchasing Transportation and Logistics

is just like purchasing any type of is just like purchasing any type of serviceservice

Good Purchasing skills and procurement Good Purchasing skills and procurement process are applicable as wellprocess are applicable as well

Understanding price versus cost is Understanding price versus cost is applicable as wellapplicable as well

As Dizzy Dean, the great Baseball As Dizzy Dean, the great Baseball Legend once said, “If you can do it, it Legend once said, “If you can do it, it ain’t braggin!”ain’t braggin!”


The Four S’sThe Four S’s

SourceSource

SolicitSolicit

SelectSelect

SecureSecure


The Four S’s: SourceThe Four S’s: Source

Identify Logistics and Transportation Identify Logistics and Transportation requirements:requirements:Review and clarify req’mtsReview and clarify req’mtsObtain feedback on 3PLs and Obtain feedback on 3PLs and

carrierscarriersReview KPIs and analyze gapsReview KPIs and analyze gapsEstablish which gaps are most Establish which gaps are most

criticalcritical



Gather data and manipulate Gather data and manipulate information:information:Compile or obtain 6-12 months of Compile or obtain 6-12 months of

history/activity req’mtshistory/activity req’mtsObtain details: inbound and outbound; Obtain details: inbound and outbound;

origins and destinations; weight, origins and destinations; weight, cube and # of pieces; traffic lanes, cube and # of pieces; traffic lanes, supply chain streams, and demand supply chain streams, and demand chain streams; types of equipment; chain streams; types of equipment; volatility and performance req’mtsvolatility and performance req’mts



Create a RFI: Create a RFI: Review 3PLs’ and carriers’ company Review 3PLs’ and carriers’ company

and public profilesand public profilesInvite both current and Invite both current and new new sourcessourcesGet: completed profile questionnaires, Get: completed profile questionnaires,

financials, insurance and safety financials, insurance and safety certificates, authority or operating certificates, authority or operating documents, and referencesdocuments, and references


The Four S’s: SolicitThe Four S’s: Solicit

Develop a RFB/RFP: Develop a RFB/RFP: Decide which 3PLs and carriers receive Decide which 3PLs and carriers receive

solicitation based on RFI resultssolicitation based on RFI resultsDetermine your preferred pricing and Determine your preferred pricing and

contract formats contract formats Specify whether bid/proposal by lane Specify whether bid/proposal by lane

allocation, region or complete scopeallocation, region or complete scopeInclude TCA/NITLInclude TCA/NITL Voluntary Guidelines Voluntary Guidelines

to Good Business Relationsto Good Business Relations


The Four S’s: SolicitThe Four S’s: Solicit Send bid/proposal package to qualified Send bid/proposal package to qualified

sources: sources: Prepare a template with details of info Prepare a template with details of info

gatheredgatheredProvide clear instructions concerning info Provide clear instructions concerning info

you want includedyou want includedAttach a copy of anticipated contract and Attach a copy of anticipated contract and

T&Cs upfrontT&Cs upfrontProvide sample performance reports to be Provide sample performance reports to be

used as measures of agreed performanceused as measures of agreed performanceEstablish what is a responsive bid/proposal Establish what is a responsive bid/proposal

and adequate submission dateand adequate submission date


The Four S’s: SolicitThe Four S’s: Solicit

Hold a Pre-Bid/Proposal Conference: Hold a Pre-Bid/Proposal Conference: Invite qualified bidders/proposersInvite qualified bidders/proposersDiscuss expectationsDiscuss expectationsHold Q&AHold Q&AProvide feedback and answers to Provide feedback and answers to

allall


The Four S’s: SelectThe Four S’s: Select

Verify documentation submittedVerify documentation submittedEstablish T&Cs that may require Establish T&Cs that may require

adjustment, compromise or adjustment, compromise or negotiationnegotiation

Analyze bid or proposal submissionsAnalyze bid or proposal submissionsDevelop selection criteria or Develop selection criteria or

negotiation strategynegotiation strategySelect or conduct negotiationSelect or conduct negotiation


The Four S’s: SecureThe Four S’s: Secure

Provide contracts to selected 3PLs Provide contracts to selected 3PLs and/or carriersand/or carriers

Emphasize Emphasize LLong ong TTerm erm RRelationshipelationshipMonitor 3PLs’ and/or carriers’ Monitor 3PLs’ and/or carriers’

performance, costs and commitmentsperformance, costs and commitmentsSeek continuous improvement and Seek continuous improvement and

incorporate feedback incorporate feedback to and fromto and from Hold IPRs and provide a performance Hold IPRs and provide a performance

report card on a regular interval report card on a regular interval