So you’ve been tasked with putting together a complex request for proposal (RFP) for third party logistics (3PL) services? Not only is this a mouth full, but it’s also a very time consuming process in order to do correctly and include all information necessary. But worry no more – we’ve put together a checklist of some of the most important components to include in your RFP.
Business Issue and Services Required
The “meat and potatoes” of the RFP is a thorough description of the business issues and services required for your 3PL project. This will include all of the things that you’re looking for in an outsourced third party logistics partner. When creating this aspect of your RFP, don’t forget to include any assumptions that you use so that each potential service provider is aware of the confines of your needs.
Pricing Format Including any Special Pricing
One of the most difficult tasks involved with 3PL selection is comparing the various pricing structures of competing 3PL companies. Therefore, create some “rules of the game” so that you can easily compare apples to apples. Providing the expected structure of the pricing component puts you in the driver’s seat and will save you much needed time. Furthermore, many companies allow warehousing firms to also provide any specific pricing they would propose using in addition to the standard requested format. This allows providers to “pitch” other ways of streamlining pricing.
Term of Contract
Be sure to include the potential term of any fulfillment agreement. This sets the expectation for how long the relationship will last. Keep in mind that the longer the term, the better the rates that the providers will potentially propose, as longer term contracts hedges some of their risks. However, on the other hand, a shorter contract hedges your risk of performance should you want to switch providers in the future.
It’s important to set a timeline for the 3PL RFP to be completed by the various providers. Furthermore, you may wish to provide a timeline that spells out exactly how long they have to ask you questions, for you to respond to their questions, as well as any other timeframes needed during the process.
If you have a preference as to where the 3PL is located, be sure to spell this out clearly early on in the request for proposal. This way, providers will know right away if they are eligible or ineligible to compete based upon the location of their facility.
Most people enjoy knowing the ways in which they’re going to be “graded”, as it sets the expectations appropriately. Similarly, 3PL companies need to know what factors you’re going to use when “grading” them against other providers. While you don’t have to put everything out on the table, highlighting the most important factors will help them showcase the appropriate information to make a sound decision.
Key Performance Criteria
The best RFP’s are forward thinking – meaning that they not only help you provide a basis to make a decision, but also serve as a foundation for assessing their performance. By including key performance indicators that you’ll be using if they’re chosen, you not only get to assess their success or failure with these criteria, but you’ll also be gain insights into whether or not they have the capacity to measure the desired results within the confines of their current systems.
Questions for 3PLs
One of the most important aspects of an RFP is the section related to your questions for the various providers. This is your opportunity to ask them specific questions to get at the heart of how well they’ll be able to address your needs. Be sure to put some extra time into thinking through the most valid questions possible. By making the competing companies respond to questions, you’ll be the insights you need to make the best choice of a partner.
How to Respond and Point of Contact
Lastly, you’ll want to provide an avenue to respond to your request. Let the 3PL firms know how you want them to respond and provide a specific point of contact. By funneling all of the information flow through one representative, communications will be streamlined.