By John Golob, Founder and Chief Marketing Officer

 

Steve Smith has an unrivaled lens through which he’s navigated the global tendering process. Serving 10 years managing tender responses for British Airways cargo, followed by four years at International Air Transport Association (IATA) and eight years in DHL Global Forwarding’s IT department before running its Commercial Station in San Francisco, Steve understands how tenders impact air cargo providers, forwarders, IT and commercial teams.

So when I invited Steve to stop by our new office in San Francisco, I was pleased to spend an afternoon with him, discussing his extensive experience and the charter of his new role as an independent consultants.

Steve explained his background, combining air cargo and forwarding with IT and commercial leadership. “I’ve had commercial roles in terms of sales leads and operational, and also been very much involved in transformation projects that are process- and IT-orientated change,“ Smith explained. “Throughout the years, I’ve had the benefit of seeing some of the fragmentation that we experience in the supply chain – particularly with exchange of data. Whether it’s EDI information on shipment visibility, or more recently, on the tender management process, it can be very inefficient for a freight forwarder and for the shipper when communicating requirements and delivering a tender process. I think there’s a lot we can still do as an industry to improve them.“

SAP doesn’t run the Fortune 500, its Microsoft Excel

Within the forwarding industry, Smith says they see far too many “email and Excel spreadsheet“ types of methodology still being used today – which he describes as “quite cumbersome.“ These email and Excel processes are also often being generated by the shippers. “That’s the way they work so we have to respond to that. It’s getting untenable, where you have such a huge email trail that you don’t really understand where you are in the process, who is doing what, or who should be doing what.“

This creates visibility and collaboration problems alike. “If you don’t understand the requirements from the outset, then the likelihood is you’re going to fail to provide a quality tender. If you’re not there as a team from the start, then the chances of meeting the customer’s deadline – which could be quite aggressive – are really diminished.“
Additionally, customers are regularly tendering for requests to provide information. “If we could make the process more efficient, it would increase the industry’s ability to respond both in a timely manner and with a quality response.“

Learning from the Past (Tenders)

While the forwarding industry has made significant strides in understanding variables in terms of forecasting, forwarding capacity, and pricing, they are facing new issues. Customers are doing more repeat business and the volume of tender is increasing, as is the complexity of delivery options.

“One thing that I’ve found is that often you don’t necessarily keep good historical information. That means you have to play catch-up to find out what the customer’s requirements were 12 months ago because normally they’re very similar. There’s nothing worse than having information that is lost 12 months down the line on how much of the business you won, or why you won it, or why you lost it,“ Smith explained. “It takes time and effort to really review and understand why you didn’t win that business. So anything you can do to create this kind of library that helps you understand why you won or lost business will help you be more effective as a freight forwarder and winning future business.“

In addition to more repeat business, customers are presenting more detailed delivery requirements, which takes a lot of time and effort to ensure that the 3PL provider can actually deliver to the customer’s specifications. “An example of that would be customers who are delivering network solutions, shipping their equipment from Asia down to Silicon Valley. They want to implement the network equipment on the weekend, and they’ve got expensive engineers waiting for that equipment. So there’s more complexity in terms of having a timely delivery, but then they also want white glove delivery. This means their service provider is actually delivering the equipment and unpacking it for the engineer to install that day.“

With that kind of complexity, it’s imperative to have a clear understanding of the customer’s requirements from the start so that everyone involved is “speaking the same language.“ Smith expanded, “The more that we can streamline the tender process, the more it can help the forwarder focus on delivering a cost-effective solution for the shipper.“

Room for Improvement

So even though the forwarding industry has made progress, there’s still a lot of room to improve process efficiency. According to Smith, several key areas are severely lacking, such as recording information on how customers want their services delivered, who the stakeholders are within the customer’s organization, and historically what was done in terms of win rates and how well service was delivered.

“When you look at the process, it’s not that complex. It makes me wonder why no one has delivered these solutions since we’re in one of the leading technology areas of the world.”

One reason may be simply that that it’s not been a priority within the industry. “Often, we’re talking about replacing our operational systems and finance systems, but being more efficient in a tender process would really enhance our ability to bring more revenue through the door and improve margins and profitability.“

Accountability Drives Higher Quality Tender Responses

The problem for tender management is an industry-wide issue, not just one for the big or global players. Whether a company has 10 employees or 100 employees, they are still dealing with complexity. The customer is still driving the requirements, and companies of all sizes have to be able to respond effectively.

When doing the qualification element of the bid, the right people need to be involved. “The sales team needs their business partners to qualify the bid – whether it’s legal, procurement, financing, or operations. There are so many situations now that require EDI and invoicing electronically, which are key. If you look at customer surveys, often invoicing quality is in the top three or four issues that they face.“

Collaboration is particularly important in order to know who the key stakeholders are that can deliver the customer’s requirements. For example, Smith explained that customers often want EDI messaging for shipment visibility. “Who is the IT partner that you need to work with to ensure that you can deliver that in a timely manner to the right standard?“

Smith points out that there also needs to be good collaboration between the sales and the operational teams. “At the end of the day, the district or station manager is going to be the one who has to deliver the needed service with confidence of the customer, so that person needs to be involved from day one. From a sales perspective, it’s pointless to offer a service if it’s going to fail at an operational level.“

Even within a single station, there may be multiple RFPs at once, and it’s important to know how to focus on those that will create the biggest volume. “Imagine the number of RFPs you have to track at a global level. If you can have that in a central, graphical representation, then that’s going to really help the business become more effective in its response to RFPs.“

Station managers want to be freed up to focus on the most important items – getting an effective price to deliver the requested services. Collaborating from the beginning is imperative for the station manager to fully understand the process and customer requirements. Otherwise, the bid won’t be competitive.

The Opportunity for a Smartphone based “Tender Killer App”
“Having a simplified software application that allows you to consolidate and envision the requirements, graphically or visually, would help any size of company. I don’t think it discriminates between the size or the complexity of your organization.“

When looking for technology solutions for this process, Smith said they need a program that is simple, configurable, easy to implement quickly, and that will help improve the day-to-day workload. “Bringing in an overly complex system that creates additional work is not a recipe for success.“ He also prefers a system that does not require a lot of extra training or IT support.

Another key technological feature would be for its users to be able to see the value of the product right away. “At the end of the day, the commercial team wants to win business. And if they’ve got an application that allows them to get the collaboration and visibility to deliver a quality offering, then it’s really going help the sales organization become more effective in their interactions and relationships with the customers.“

Being able to utilize technology while on the road – whether on a tablet or smartphone — is also critical. “If you’re traveling and somebody wants an instantaneous response, then it’s extremely important to have an application on your phone that is effective in communicating a quick decision.“

Mobile access also is necessary for dealing with customers after normal business hours. “Our customers are out on the road, many have unusual working hours, and having these mobile applications is critical for the freight industry. We are 365 days a year, 24 hours, 7 days a week. The requirement for information, in its simplified mobile form, is critical to the business.“

Implementing Winmore

For Smith, Winmore was an “eye-opener“ in what can be done in the tender management process. “From a strategic perspective, I see it as a stepping stone that pulls together historical data, integrating with your TMS and your operational system to help you analyze your win rate, and the shipment profitability or the volume that the customer actually tenders against the tender process. I can see that there’s so much to gain by being on this step of the ladder where you have collaboration and visibility within your organization.“

We couldn’t agree more and always enjoy welcoming customers such as DHL Global Forwarding at our headquarters in San Francisco. Please stop by again, Steve.