GENCO Canada
The following article, written by GENCO's own Bob DeVoss, appeared in the July 2008 edition of Traffic World magazine.
Traffic World Online
I wasn’t quite sure what to expect when our
transportation procurement team asked me
to play the role of “shipper” in developing a procurement process for a customer
of ours, a major LTL shipper. But despite my less-than-optimal experiences with the
LTL trucking industry, I was optimistic. I was excited by the potential of new Web-based bid
technology, sophisticated analysis tools and experienced data engineers. I was
optimistic that together we could deliver competitive rates that provided committed
capacity and fostered partnerships with shippers and LTL service providers.
That’s because the ground rules in the transportation industry, including the LTL market, have changed with the expansion of third party logistics. The 3PLs that provide LTL services don’t compete with LTL carriers; they’re partners. And over the past decade, as shippers came to rely more on logistics intermediaries to manage complex supply chains, that 3PL-LTL partnership has gained importance.
At Genco Supply Chain Solutions, we work closely with the LTL industry to improve our service offerings and maximize the benefits shippers can enjoy.
Features such as experienced daily management, state-of-the-art technology, quick resolution of claims, and improved receipt of funds have enhanced the relationship and strengthened our understanding of LTL requirements.
These attributes influenced the process we developed for this project.
Immediately after we signed our contract with the shipper to provide LTL procurement services, our team went to work on a process that encompassed best practices that have delivered excellent results for the past decade.
Our goal was simple: deliver a worldclass solution. The process we adopted had four phases, described as follows:
To deliver a world-class solution, we relied on direct communication with our customer, the shipper. This involved learning and understanding the service requirements of the freight for each shipping facility, in addition to more than 400 vendors that would be working with our team on converting the inbound traffic to collect terms.
Over a two-week span, our team made numerous presentations, conducted several face-to-face interviews, and recorded and analyzed extensive amounts of data. This information helped us :
I found that the time invested in developing the scorecard, in addition to baseline development of the rates, helps our customers make more informed decisions and truly benefits those carriers that have provided great service in the past and want to continue moving forward with their shippers in the future.
In this phase, we formally invited the carriers to bid.
The RFQ contained structured questions related to services requested, insurance liabilities, payment terms, fuel surcharge and electronic response. We instructed the carriers to review the electronic RFQ and nondisclosure agreement, sign the agreement if they were going to bid and attend one of several online training classes to learn how to respond electronically to the RFQ.
Excellent communication between the carrier pricing teams and our transportation procurement team enhanced this phase, which was monitored by our help desk.
Web-based bid technology has dramatically improved response analysis, thereby providing richer data and more accurate results. For this project, our engineering team developed “what if” scenarios to illustrate how proposed rates affect cost and service. In one particular scenario, our team identified an opportunity to develop pool point distribution sites for better cost and service to a specific area of the country.
After two weeks of digesting the data, we explained that the shipper could experience a 6.6 percent improvement in rates as well as a net 1 percent additional savings with a pool point operation.
We then reviewed each carrier’s response, graded the scorecard, evaluated the head-to-head baseline/proposed rates and identified several additional “what if” scenarios for analysis. Our team confirmed the results with the carriers, explained the revised request (pool point distribution site), and asked for a final bid on specific freight and origin/destination points. Three days later we received the changes for our final analysis and summarized the results.
With all the information now in the hands of our customer, we maintained communication with the carriers while decisions were being discussed at the shipper level. One week, later our customer met with our team to discuss the awards of business and the following decisions:
In this final phase, we confirmed with each carrier the language of the contract that we developed on behalf of the shipper. After ensuring that all changes were accurate and complete, we turned the contracts over to our customers for signing. One week after that, all contracts were finalized, and official awards were completed.
Over a 12-week period I witnessed a world-class procurement effort that delivered all aspects of our customer’s original request and identified a new tactical component for additional savings and service improvements.
It was a wonderful experience and opened my eyes to another aspect of how 3PLs continue to have a positive effect on shippers’ cost and service. The 3PL-LTL relationship is looking good.
GENCO Supply Chain Solutions is committed to the continuous improvement of its customers' supply chains. The company believes in providing analysis up front and throughout the relationship so that each customer can determine the best fit for their supply chain.
GENCO Supply Chain Solutions' engineers dig deep to uncover inefficiencies and new opportunities for customers to improve their supply chains. As opportunities are identified, GENCO Supply Chain Solutions' engineering and transportation management teams work collaboratively to prove their concepts and develop ROI models and KPIs. Equipped with the right information, GENCO Supply Chain Solutions can then design a supply chain that runs efficiently, accurately and cost-effectively in all directions based on the specific needs of each customer. The company then works to implement these cost savings initiatives and measure supply chain performance.
