Four years after the pandemic roiled the retail industry and disrupted supply chains in previously unimaginable ways, retailers across the country are still recovering. Wild swings in consumer demand have made it difficult to determine appropriate inventories, and the costs of owning their logistics infrastructures are continuing to skyrocket.
That is leading many retailers to consider outsourcing their warehousing and logistics to third parties. For many, however, the question of how to write an appropriate request for proposal (RFP) is a vexing one. The goal is to communicate their needs clearly to each selected supplier so they can evaluate the resulting bids on an even playing field. A clear, effective warehousing and logistics RFP should involve the following elements:
1. Identify the pain point they are trying to relieve.
Before any warehousing and logistics supplier can provide retailers with a price for their services, they have to have a clear understanding of what problem they are trying to solve. Retailers should provide a breakdown of their requirements and include a wish list of what they need. It doesn’t have to be elaborate (although it can be). It just needs to be clear and provided in a format warehousing and logistics suppliers can understand.
2. Ask how the partner plans to address the needs of the retailer and require them to be specific.
It’s important to understand the process a warehousing and logistics supplier will implement to solve retailers’ problems. They should ask whether the warehousing and logistics provider will be handling the account in-house or if subcontractors will be involved. Discuss the performance metrics, such as on-time delivery statistics, that the retailer will be evaluating to make sure the project stays on track. Offer a hard timeline of when everything needs to be in place so no customers are lost. Ask if there is any flexibility in contracts.
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3. Include everyone when developing the RFP.
While it may be tempting to turn the process over to an operational team, any reputable warehousing and logistics supplier needs to have a complete understanding of what the customer service expectations are. To that end, including the sales and customer service teams in the production of the RFP is smart. It will enable everyone to be on the same page from the beginning. In other words, the RFP should be a cross-functional document, providing them with the best chance of finding the right vendor to meet specific needs.
4. Decide ahead of time what kinds of companies will be invited to bid on the project.
Before retailers create an RFP, it’s important to understand what kinds of companies they want involved in the process.
They should seek companies that have long track records of stability. Logistics companies are easy to set up but harder to maintain consistently for years. Look for someone who has had long-term success and satisfied customers.
Finally, the invited companies should also be adaptable. They need to be able to adjust to changing market conditions and requirements while maintaining appropriate levels of service. Do extensive research to see what companies are the most adaptable.
5. Provide specific deadlines and explain how bids will be evaluated.
Clarity of deadlines and an explanation of how each bid will be evaluated are crucial. Provide step-by-step instructions on when submissions are due, important milestone dates and a final date by which the retailer will have chosen their warehousing and logistics provider. Include a go-live date. That will allow warehousing and logistics suppliers to plan their own staffing needs and other considerations. They will appreciate the consideration.
6. Seek companies that offer short-term contracts to offer maximum flexibility.
Most warehousing and logistics companies are only interested in business if the retailer is willing to sign a long-term contract to use their facilities. As the market has become more volatile, however, short-term contracts are a better solution. Look for companies that can offer short-term contracts, which will provide the flexibility to scale up or down as market conditions fluctuate.
7. Make sure the retailer stays in control.
At every step of the way, retailers must clearly understand the specifics of what they need and how they plan to achieve their goals. They must stay in control of the process. Any appropriate partner will walk beside the retailer through a project, not take over the business. Focus on creating effective partnerships and look at third-party warehousing and logistic suppliers as an extension of the retail team, not a replacement.
As retailers adjust to the new realities of warehousing and logistics, more companies than ever will turn to third-party suppliers to help them manage their costs. To ensure they find the right partner for their needs, writing the RFP properly is critical. The process outlined above should guide the conversations in the right direction and help retailers find companies with which they can build long-term, mutually beneficial relationships.
Clay Perry is Director of Client Services and Solutions at BroadRange Logistics. He has spent over 10 years working in various aspects of the supply chain, from manufacturing to warehouse management. At FedEx, he was in operations management with the inventory control team, then moved to a solutions manager role, as well as some time in marketing and account management. Perry also worked in inbound/receiving and inventory control at CEVA Logistics before working in a sales engineer role with Choice Logistics for two years. At BroadRange Logistics, Perry is Director of Client Services and Solutions.
