3PL Tendering Process and Negotiations

A 3PL tender process can be a bit like buying a car: so many features from so many providers can be confusing and comparing like for like often appears impossible.

Challenges

Providers of 3PL solutions present themselves and their services in many different ways, and almost all of them will respond that they can do whatever is needed. Additionally, they will often suggest a range of additional services and options, the value of which may not be immediately clear. Making sense of all of this and creating a robust requirements specification can be time consuming and commercially challenging. Once in place, identifying suitable respondents, running a tender, shortlisting and negotiating with potential providers add further distractions, and test existing skill sets. Getting a complex, infrequent process right can be difficult for the uninitiated.

Opportunities

The road to a successful 3PL implementation starts with a well-founded tender document and negotiations focussed on the real needs of the tenderer. Using the skills of people who have developed tender documents, run tender processes, negotiated services & terms and established service level agreements in a wide variety of outsourcing situations can make that start a complete success. Such assistance can improve overall project lead-time, minimise effort and deliver a lower long term total cost by:

  • Reducing the amount of “rework” in tender document preparation
  • Confirming that the requirements well match the current and future needs of the business
  • Ensuring the requirements and exclusions are clearly described to all participants in the tender process
  • Enabling the sound matching of the requirements to suitable respondents 
  • Participating in tender discussions to confirm additions and modifications make sense
  • Bringing an external and experienced view to cost determinations.
Approach

GRA will work within your strategic procurement and tender framework or tailor our proven process to suit your needs. We believe a clear picture of service requirements is essential to a successful result and clearly describe the outcomes you wish your future 3PL partner to achieve (we initially focus on the “what”, rather than the “how”). We understand the nature of the business and its customers and we crystalise these elements into a working specification that unambiguously defines the requirements in language that makes sense to tender respondents. We will survey the market to find the most appropriately matched providers to introduce to you. Throughout this process we would consider:

  • Geographical and environmental (eg cold chain) considerations
  • Warehouse and transport management systems
  • Size, volume and value add requirements
  • IT systems and interfaces
  • SLA and performance reporting

We would generally provide input into transition plans to a new provider and offer advice on exit strategies for existing arrangements.

Outcomes

The following are outcomes of this approach:

  • A considered review of current practices and expected results
  • A requirements specification that truly matches the business needs
  • Service level agreements that are clear and explicitly represent the business expectations
  • Clarity of service and corresponding cost elements that enable rapid and valid comparisons.
Benefits

The benefits of this approach include:

  • Access to independent market analysis and unbiased participant assessment
  • Lowest internal resource usage in the overall tender process
  • Rapid agreement of scope and terms and a clear post award management framework 
  • Confidence that the successful provider is a good match and will deliver the best overall cost

– BACK TO CONSULTING

Testimonials

"GRA worked closely with us throughout the transformation providing not only technical expertise but with the understanding and experience in engaging people to navigate the cultural challenges that come with change. Their team are hands on, passionate and dedicated to delivering results and implementing sustainable improvements."

– Melinda Johnston, Supply Chain Transformation Lead, Allnex

Typical results

  • 20-40% inventory investment reduction
  • increased service levels ranging up to 99.9%
  • 10%-15% reduction in supply chain operating costs
  • 5%-20% spend management savings
  • the ability to fund business initiatives from operating cash flow (OCF) improvements
  • improved return on capital employed (ROCE)
  • a minimum 3:1 ROI (10:1 to 30:1 typical)