The transportation bidding process has historically been time consuming and difficult for many midsize to large, global enterprises to manage without proper in-house tools. As capacity in various transportation modes tightens, supply chain participants have invested capital in ways to automate bidding procedures in order to optimize capacity networks for overall supply chain resilience.
Keelvar, a sourcing optimization and automation software company, believes the transportation sector has one of the most difficult procurement processes due to the many factors that go into pricing decisions like product demand, market trends and weather conditions.
In an interview with FreightWaves, Alan Holland, founder and CEO of Keelvar, explained the procurement process for transportation suppliers tends to take a different approach compared to other industries.
“The transportation bid process is messy and takes more expressive communication,” said Holland. “Extra information is needed, for example load volume, to make a proper bid.”
Keelvar uses intelligent automation bots to help distinguish market changes and carrier availability so shippers, brokers and carriers can make better pricing decisions. Too often this process is done with large datasets that do not consider intricacies that could lead to improper bidding. With the combination of natural language processing and machine learning, the company’s automation can help find these outliers.
If done properly, bid processes can provide much-needed security for transportation suppliers.
“Procurement adds insurance for suppliers,” said Holland. “For midsize transportation suppliers, their viability depends on their procurement process. They need to be confident in their data quality so they can predict their cyclical [capacity] demand.”
As large shippers and freight transportation companies begin to integrate data analytics and technology solutions into their workflow, procurement and bidding processes will change with them. It is important for procurement teams to be able to gauge capacity availability and pricing in real time in order to compete.
In a 2020 procurement study led by KPMG, it analyzed current and future procurement processes and found that customers and employees will no longer tolerate long bid procedures or delays due to poor pricing practices by suppliers. The procurement process will become “customer-centric,” driven less by controlled spending and treated more as a value-added benefit for the consumer.
Holland agreed with this sentiment and explained that these services would no longer be considered an added service but a necessary one. In a customer-centric environment, the value added by your procurement process is not a competitive price but the service quality that is perceived by the end consumer. Keelvar sees this happening across all modes and has created products to help over-the-road, ocean and airfreight sourcing.
“We are starting to see a migration toward a shorter bid cycle,” he said. “Big shippers are implementing monthly bid cycles, based on market trend and opportunity, making pricing less and less competitive.”
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