Best Practices in Transportation Procurement Bringing the Paper Savings to Reality Moderator: • Paul Page – Editorial Director, The Journal of Commerce Speakers: • Gary Girotti - Vice President, Transportation Practice, CHAINalytics LLC • Joe Lombardo - Group Manager, Transportation, Nestle USA • Paul Bacon - Product Manager, Transportation Bid Collaboration, i2 Technologies
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Best Practices in Transportation Procurement Bringing the ......Best Practices in Transportation Procurement Bringing the Paper Savings to Reality Moderator: •Paul Page –Editorial
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Best Practices in Transportation Procurement
Bringing the Paper Savings to Reality
Moderator:
• Paul Page – Editorial Director, The Journal of Commerce
Speakers:
• Gary Girotti - Vice President, Transportation Practice, CHAINalytics LLC
• Joe Lombardo - Group Manager, Transportation, Nestle USA
• 18 carriers awarded, 19 with Nestlé Fleet– New Carriers - 0
– Brokers - 3
– EDI - 8
– SmartWay - 10
• 26 Scenarios run
Temp Control TL/IM• Savings met expectation
• 70 carriers invited
• 37 carriers awarded, 38 including Nestlé Fleet– New Carriers - 1
– Brokers – 4
– Intermodal - 5
– EDI - 26
– SmartWay - 28
• 33 scenarios run
The process took about 16 weeks from beginning of data
collection until new awards went into effect
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Best Practices and Learnings
• The central tenant of carrier relationships, is treat your carriers fairly– If you negotiate an 18 month rate agreement - stick to it
– Two rounds of bidding is fine as long as you give the carrier some information between rounds
– Communicate as much as you can to the carriers:
• About your problem areas
• About what you are looking for as far as services
• About how your operations behave
• The carrier market is very soft, so carriers are willing to be aggressive on price - but also look for other value added services– Reporting, trailer pool management, EDI communication
– Make a credible case to support your FSC program and stick to it
– The escalator should be relative to the fuel efficiency of the average truck plus allowance for empty miles
• Do not assume, look at the numbers– This is where the optimization engine is very powerful in helping you understand the
cost of the operation constraints you impose
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Achieving the Projected Savings
The keys to obtaining the projected savings are:
1. If the rate is too good to be true, it likely is not true– Benchmark so you know where the market is, and what is true
– If you do not know the carrier, be very careful in counting savings
– Chainalytics typically estimates• A carrier new to the network needs to beat the incumbents by 3-4% to make
the switch worthwhile
• A carrier new to the lane or locations needs to beat the incumbents by 2-3% to make the switch worthwhile
2. Monitor to the plan– The results of a bid is just a plan of what you expect to do
– Have a process that monthly/quarterly monitors actual activity to the plan• Ensure plan changes are tracked for carrier failures, implementation errors,
network changes, new lanes, etc.
3. Maintain regular and structured communications with suppliers– Regular performance reviews, promotional forecasts, new lane awards, etc.