When you ‘win’ a tender, are you really winning?

Truck News

MISSISSAUGA, Ont. — Jacquie Meyers, president of Meyers Transportation Systems, issued a plea to shippers and carriers attending the Surface Transportation Summit, to re-evaulate the tender process, which she says has commoditized the trucking business.

“There are lot of challenges inherent to these tenders,” Meyers said. “Number one, it reduces the decision making down to price…often times when we win these tenders, you are not really winning. It’s not a long-term win. It means you were the cheapest or close to the cheapest. You have to give something up to be cheap. If you’re the cheapest, what are you leaving out? Driver training? Safety? Security?”

Another downfall to the RFP process is that it creates a disconnect between decision makers, and those who’ll be most affected by those decisions on a daily basis, Meyers added. A senior executive who chooses a low-cost carrier based on price, leaves the warehouse managers, sales team and other front-line workers to deal with the mess.

She said shippers relying on a tender process to select transportation providers often focus on the line item transportation represents on their financial statements, but not all the other areas of the business that transportation affects. Lost loads, missed deliveries, unprofessional interactions with a shippers’ customers and other possible repercussions of choosing a carrier based on price can cost more to a business than what it saved in transportation costs.

“Transportation managers are judged on that transportation line item, but not the other lines that transportation impacts,” Meyers said.

She also said that tenders are onerous and time-consuming to complete and that they often come with heavy-handed contracts attached.

“Within these contracts are unfair and overreaching clauses that, honest to goodness, put a carrier at risk of bankruptcy should something go wrong,” she said.

All that said, Meyers acknowledged it’s impossible to avoid the tender process altogether. At Meyers, if the tender is geared towards choosing the lowest-cost carrier or if it goes out to dozens of companies, Meyers said her company won’t participate.

“If I can’t get a human to speak to me, I’m not going to be participating,” she said. However, the company will engage in the tender process if there’s some human interaction involved, and the possibility of a long-term business partnership developing.

“We’re asking to be a strategic partner, not just a line item on your financial statements,” Meyers added.

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  • Jacquie you are bang on in principal but if the service providers at large don’t take the same attitude then nothing will change. You can’t blame a shipper for engaging in this process due to the fact that there continues to be enough good carriers that continue to play the rates game. And when I’m talking good carriers I’m not talking the mom and pops. There needs to be more collaboration between the carrier and shipper community to get beyond this. The reality is that if carriers continue to identify their value proposition as “price” then this will continue for many years to come. Carriers need to think more strategically and not give all their value away for free!

  • Very well put Jacquie. If only there were more companies like yours that still operated their businesses with integrity.

  • The business environment and contracts they imagine for student transportation are nothing short of abusive, since the shipper (the consortium operating for co-terminus boards) is often the only customer these operators have. If you lose one tender, you are out of business forever. Power corrupts and absolute power corrupts absolutely.

  • Clearly Jacquie does not understand the tendering process. Price is not always the focus, you should note in most tenders there are many service level requirements that significantly influence the final decision. With a broad range of choices out there we have found that the tender process helps us to identify those companies with a future vision, one that focuses on helping to reduce our costs while continuing to provide the service we expect. Our shareholders demand that we work with companies that continually strive for improvement. It is unfortunate that Meyers does not have the same vision, but maybe that is why your prices continue to remain higher than others.

  • Jacquie is right on this issue. I have been on the procurement and tender process and will say it is price driven even if it is advertised that the lowest bid will not necessarily win the bid it usually does. Most shareholders only see the immediate lower cost and give direction to pick the lowest bid. They seem to forget how much more it will cost when problems arise with the lowest bid and of course they want to know why it eventually cost more and why you can’t stay on budget. And at the next round of bids…. the hole process of price driven starts all over again!
    If a bid is not financially viable, how can you expect the company to provide excellent service? More often than not, the lowest bid company ends up having to break the contract because they cannot survive. Meanwhile, because you chose the lowest bid, the service to your customers may have suffered irreparable damage, you may loose customers and revenues…. so tell me where the benefits were to having chosen the lowest bid?
    Most customers don’t mind paying a bit of a higher rate if it means excellent service and a better partnership on a continuous basis. In the long run they saved more money efficiently.