By John Golob, Chief Marketing Officer

 

When Ron Lentz started in the transportation industry over 40 years ago, “logistics” was not a widely used term – except in the military. “It was transportation, distribution services – those types of things,“ Lentz recalled over coffee at layover in O’Hare International Airport.

Lentz should know; he spent 22 years in finance operations for Ryder, later becoming the head of sales before leaving in 1999 to start his own IT business. Over the years he’s run 3PLs, freight forwarders, trucking companies, and worked in several transportation and logistics roles before running the T&L Practice at G2 Capital Advisors, the leading industry-focused investment bank.

During his time with Ryder, in particular, the industry experienced major changes. “I wouldn’t call it an evolution; I’d call it a revolution.” After 1979 when transportation was deregulated, the trucking industry exploded. The industry grew from around 20,000 companies in 1979 to over a million companies in the 1980s, and Ryder soon became one of the first third-party logistics (3PL) service providers.

The RFP Learning Curve

In 1988, Saturn sent out a blind RFP which was one of the first, Lentz, recalls. “This document shows up from Anderson Consulting – now Accenture. We looked at each other and didn’t know what to do with it,” Lentz laughed.

Lentz and his team spent six months putting a proposal together, then entered a meeting room filled with Saturn officials to make their pitch. “We didn’t even know the right questions to ask at that time,” admitted Lentz. “We walked in with big three-ring binders that we had printed in a software product called Harvard Graphics, hoping and praying that we had all the right material inside.” And they won.

Saturn helped turn Ryder Distribution into a just-in-time environment. “Prior to Saturn, it wasn’t just in time; It was just in case.”

That Saturn contract changed the way Ryder did business. “Ryder was smart enough to figure out that if it could be done in automotive, it could be done in consumer products. It could be done in healthcare. It can be done in all these other areas.” Ryder began building a reputation for meeting the changing industry’s needs, and they started receiving more and more RFPs.

By the 1990s, Ryder had a large team consisting of salespeople along with back-end support from finance, operations, and marketing members. Although they had built the in-house expertise on how to respond to an RFP, they were still not winning as many awards as they expected.

By 1996, Ryder realized they needed to look at how much it was costing them to respond to all those RFPs. “We didn’t charge to respond, so it was basically free consulting.” In fact, they were at less than a 10% success rate. When they finally determined how much each RFP response cost, the numbers were staggering – ranging anywhere from $100 to $150,000 each.

Understanding the Meaning of Each Requirement

Around 1993, another industrial conglomerate forwarded an RFI to 33 companies, including Ryder, who already had a dedicated contract carriage operation in production. Lentz and his team proudly presented their pitch to a group of about fifty representatives from across the globe, then left, high-fiving each other and expecting to soon sign the paperwork.

Instead, they took all the proposals and placed them into three tiers – the top group, the middle group, and the bottom group. Guess where Ryder landed? Not where they expected.

As they company later told them, they had completely missed the mark. “We never asked a question. We just pulled our answers together,” Lentz explained. “We were trying to fit our solutions into what they were asking us to do instead of listening to them and their solutions.”

A New Focus: Data- and Insight-driven RFP Management

After that sobering reality, Lentz spent six months reworking how to respond to RFPs, and everything changed. One of the key elements of RFPs that Lentz learned is never to respond blindly.

Sales experts teach the need to make at least five contacts with someone before submitting a proposal in order to win their business. The RFP process tries to take that contact out of the equation. However, there are some things that can be done to add that interpersonal relationship into the bid:

• Research as much as possible about the company before responding.
• Review every RFP question to ensure understanding of what they are asking. “If you don’t, you better find out.”
• Set up appointments and ask questions.
• Try to find out the “whys” behind their questions.
• Ask what they’ve done in the past that worked or didn’t work.

“Even if I understand the RFP, I’m going to set up an appointment to do an interview with them and ask them specific questions, so I have clarifying points,” he explained. “The more points of contact you have, the more you’re going to enhance your odds of winning.”

Choose Wisely

After their significant fail rate, another important lesson Ryder employed was carefully choosing which RFPs to submit.
Today, Lentz recommends the use of an Operational Review Committee, or ORC, that must sell each other on why they should spend time and money going after an opportunity. This not only helps the team determine if it’s a project worth pursuing, it also allows for a collaboration of ideas, input, and questions. “If you can’t answer the committee’s questions, you have a good reason to reach out to the client and get those questions answered.”

Three important questions to consider are:

• Can we win this?
• Do we want to win this?
• How much will this cost us?

With Ryder, the team was given a specific dollar amount to spend, but only if there was a high certainty of closing the deal.

Lentz stressed that it’s also essential to recognize when to walk away from an RFP, even if time has been committed to responding. “I’ve even walked away then had clients come back and sell me on why we should be involved, and we ended up winning the deal.”

Finally, if you can’t meet the RFP deadlines, be up front with the client. “I’ve actually gone back to the client and said, ‘Look I can’t do this for another 30 days. If that means that we’re out of the picture it’s ok because for your benefit, I want to have the right resources.”

The Three Keys to Successful RFPs

“To win in logistics, you have to have the right people in the right place doing the right things. You have to have the right processes and they have to be enabled by the right technology.”

1. The Right People

Lentz uses the term “enablers” to describe the right people doing the right things.

First, you should ideally never have just one go-to person who is responsible for answering all questions regarding the RFP. Lentz suggests determining who in your organization may have some of the needed skills, then training that someone(s) to help your top player. “A team of four is about as large as you want to go.” Those (up to) four subject matter experts can have others on their team, but there should be no more than four people responsible for pulling the RFP together, leveraging dozens even hundreds of resources across your entire company.

2. The Right Process

In Lentz’s experience, the early days of answering RFPs, in particular, was a “painful process.” He explained, “As you’re climbing that mountain to go get the deal, you’re not marketing, you’re not talking to potential clients, you’re not talking to existing clients. You’re not sleeping. Literally the last days before a major RFP is due, you’re pulling graphics to make it look good, but you didn’t have anyone check it. You weren’t thinking about winning that deal by the end. You were just thinking of getting it off your desk. “

In Lentz’s early days, the RFP process was very disjointed. The team – which mostly consisted of people with other jobs to do besides RFPs – struggled to communicate and meet deadlines.

Losing that RFP forced Lentz to reexamine and streamline their RFP process. Specifically, they looked at questions like how do you win the bid? How do you lose? How should you go about answering questions? What’s the mindset behind the questions?

“You should have in your process go and no-go points. You should have a very detailed qualification process built into that and it should all be enabled by the right technology.”

And once you determine that the RFP is a go, there should be systems in place for pulling the bid together.

3. Technology

In the early days, Ryder relied on Excel spreadsheets, Access Databases, and Harvard Graphics to pull proposals together. New technology makes the whole process easier and more professional, but a lot of companies are slow to adjust. “Logistics has always been a slow adapter to technology. However, that’s changing today faster than it ever has before.”

Lentz stressed that technology can empower the right people and processes, so they can answer the right questions quickly, which ultimately enables the team to win – “and win big.”

Just as the right people are enablers, so is the right technology. By using the right technology, people can learn how to do things faster and better through processes. It’s a tool that enhances efficiency and removes those points of contact that are ineffective. “If you can measure how effective you are, you can change your path based on your effectiveness.”

Additionally, using the right technology makes logistics services more valuable to customers and gives a strong first impression. “It tells the marketplace, look, I’m a professional organization that can handle your needs – whether that is a $5,000,000,000 organization or a $200,000,000 organization.”

As for Winmore. Lentz stresses he’s a big fan. “It’s fun to use. It’s interesting to use. It’s easy to use. I can use it on my phone. I can use it on my PC. I can really benefit from using it and know the benefits from it.”

The Bottom Line

Finally, Lentz concludes that if the entire business model of a company supports the RFP, companies will win more proposals. “The way to win is to know you can support those people and those processes, then have it enabled by the technology that is going to speed it to market. If an RFP technology can help you do all that, what are you going to do in the end? You’re going to win more.”