Overcome Challenges in Freight Bid Rate Management
Freight bid rate management is one of the more obscure parts of supply chain management. With fluctuating rates impacted by a multitude of variables, it’s understandable why it’s one of the most challenging aspects. We saw an increase in rates in 2020, and this trend is expected to pick up again in 2021. In today’s world, optimizing your bid rate management is more critical than ever.
But we know that bid rate management comes with obstacles. We at Trax are here to help you overcome the hurdles in bid rate management so you can select the best carriers that meet your needs now and in the future.
Challenges in Bid Rate Management
Let’s discuss some of the common challenges that we see in bid rate management, and how you can overcome them to put you on the path toward fully optimizing your supply chain management.
Varying Rates
Rates differ based on a plethora of reasons: location, multi-mode transportation, complex routes, carrier availability and capacity, etc. An example of this volatility was seen in September 2020 when global airfreight capacity decreased by 28% for international operations compared to the previous year, in part from the impact of the COVID-19 pandemic.
Rate cards themselves have thousands of lines depicting rates across different geographies and differing cases. Furthermore, take into account the more volatile factors that affect efficient bid rate management, such as fuel charges, accessorials, and more. In 2020, we saw oil prices have a heavy impact on rates.
This all can become quite a complex challenge to navigate, especially if you don’t have clear visibility to compare and manage your rate bids, whether you need to compare hundreds of unique elements—such as mode or region—among hundreds of carriers globally. The right platform, such as Trax, gives you the visibility and control that you need to select the right carrier to meet your needs.
Manually Managing Bids
Many companies manage bids manually through an in-house process. Manual management, however, is less than ideal. It leaves room for human error, delays, poor visibility, and other issues.
Furthermore, manually managing bids is a large undertaking. It takes up time and resources that could be focused elsewhere on growing your business, not to mention the costs of paying a team of employees to do this work.
Technological advancements have made global procurement practices through a single, easy-to-use platform possible. You no longer need a large team to pour hours into bid rate management. A platform like Trax’s that centralizes the process minimizes—and eventually eliminates—errors, and makes it easy to perform side-by-side bid comparisons. You gain greater control and visibility over the process, need fewer resources and less time dedicated to the task, and also boost your cost reductions—costs associated with bid rate management and those that result from selecting carriers well-suited to your needs.
Risk Mitigation
Bid rate management is full of risks, such as market fluctuations, financial, quality, on-time deliveries, compliance, and policy adherence. And these are just some of the risks that you have to navigate. However, risk mitigation is possible with tools that offer enhanced carrier and financial management, such as accrual management, routing optimization, KPIs for carrier scorecards, and more.
Through optimization of your supply chain management, you become more aware of the risks that lay ahead and can expertly navigate them, or plan and prepare for a potential risk rather than react after the fact. This boosts your bottom line, increases efficiencies, and ensures value to your customers isn’t harmed.
Inconsistent Bid Management
Another peril of bid management is inconsistency. Unless bid management is both centralized and standardized, you can receive bids that make it difficult to compare apples to apples.
Centralizing bid management is crucial for an efficient and streamlined process. This becomes especially critical when considering different types of bids, contractual and spot for example. Take August 2020 as a great example, as spot quotes were 80% higher than the same month in 2019. A centralized process enables you to shift your operations more smoothly to deal with any market variations. You can centralize and optimize your bid management process through one easy-to-use platform.
Standardizing your bid management is key to not only identifying a carrier that can serve your needs, but also receiving accurate rate bids. For example, across geographies and even across business units, the same rates may be contracted on a different basis and inconsistently. This can have a massive impact on your profit margin associated with your carriers.
An important practice to help you centralize and standardize your bid management process is tailoring your request for proposals (RFPs) to meet your business needs rather than using any given template.
RFPs Not Tailored to Freight
Mastering freight RFPs is a vital step toward your supply chain management success. RFP templates normally address service or technology business needs. But in this industry, you need both. By tailoring your RFPs to your freight needs, you set yourself up to find the best carrier for your company and continue your journey toward optimizing your global procurement process, which is a stepping stone to mastering Transportation Spend Management.
A technology-enabled rate bid management platform allows you to tailor RFPs and request bids for new rates, evaluate what-if model responses, and view bids across rate dimensions, carriers, and geographies. Tailoring your RFPs to match your freight needs is a large step in the direction toward maturing through the Trax Transportation Spend Management Maturity Model.
The Trax Transportation Spend Management Model is a framework that provides a roadmap for large, global enterprises to shift from a lack of visibility and control to a fully optimized and accurate data-based transportation supply chain—for all modes and geographies. Companies that mature through the stages of this model—Proactive, Optimizing, and Leading—are able to drive change and innovation and dominate the market. Companies at the Leading stage can weather any storm and use those difficult circumstances to their advantage and grow the gap between them and the competition.
The Best Solution to Freight Rate Bid Management
While the challenges of freight rate bid management are aplenty, we live in a time when technology can help us overcome the most mountainous obstacles. Through leveraging Trax’s platform and having our seasoned experts on your side, you can overcome the challenges in rate bid management.
That, however, is just one step in the overall goal of total Transportation Spend Management optimization. If you’d like to learn more about how we can help you optimize your freight rate bid management and your Transportation Spend Management, contact us today.