The Request for Quotation (RFQ) process must be updated.
At a recent meeting of the Agriculture Transportation Coalition, Bill Rooney, VP of strategic development for Kuehne + Nagel, said that RFQs are a time suck. He explained that “many of them are way too complicated” and often “lead to suboptimal . . . business decisions.”
RFQs are too complicated, and for this reason the process should focus on the collection of information absolutely necessary for optimal decision making rather than gathering an abundance of trivial information that isn’t needed. RFQs are necessary, but we could simplify and improve the process by providing clear, complete information up front, while having responses focused on critical items, rather than a broad-brush approach.
RFQs–a thousand points or key service requirements?
Many RFQs arrive with a request for rate quotations on thousands of points and a deadline within hours or just a few days. At the same time, often the requestor has no data about key service requirements such as appointments, liftgates, additional manpower, or local conditions. This makes no sense. It’s time consuming and doesn’t take into consideration the additional information necessary to complete an accurate quote.
I believe we can apply the Pareto Principle to RFQs. The Pareto Principle (also known as the 80/20 rule) says that 80% of effects come from 20% of causes. If we apply this to freight data, we might say that 80% of shipments align with 20% of points. Therefore, when forwarders request a specific quote for each of numerous and nearly identical shipments to the same point, they are, in fact, asking their provider to spend valuable time (and money) compiling information that will not give them a real advantage.
Incomplete information (necessary shipping hours, appointment requirements, freight condition, local knowledge) leads to inaccurate bid costs when a carrier assumes there is more to the story. Your carrier may inflate his bid to cover the potential “unknown,” or worse, this could lead to service failures because the carrier was not told the whole story to account for your customer requirements, the cost to serve, and to rate fairly for everyone involved.
Can the RFQ process be fixed?
The simple answer is yes, the RFQ process can be improved greatly with an increased attention to what’s important and a culling of unnecessary information.
- Focus on key shipping points instead of requiring a specific quote for nearly identical shipments to the same points.
- Identify and communicate key service requirements necessary to provide the most value for your customer and to choose the right carrier.
- Concentrate on critical pieces of the bid that will allow the carrier to provide an accurate quotation they can stand behind for successful service as well as a speedy turnaround demanded by impatient shippers.
Here at Blue Eagle Logistics, we practice the complete inquiry. A complete inquiry allows your final mile carrier to provide accurate rates and cost information they can stand behind. Customers these days expect quick and timely service. And that’s what we are able to provide with a complete inquiry. We want to know what’s essential to make sure your end customers are 100% satisfied because if they’re satisfied, we know that you are satisfied.
Let’s work together to revamp the RFQ process. Let’s practice complete inquiry the Blue Eagle Way.