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Creating and unlocking value in an organization starts with knowing precisely where things stand, and where the opportunities for improvement lie. This analysis focuses on the impact Electronic Freight Tendering has on Logistics Service Providers.

Commercial freight transportation is a very complex process. There is intense competition to provide lower charges as well as best in class customer service. This in turn increases pressure to improve execution of transportation orders. Electronic tendering proves to be a significant tool at the hands of transporters to reduce costs and improve customer service at the same time. Electronic tendering is fast, efficient and certain vs dialing for diesels. 
 
 
Figure 1

Figure 2Electronic tendering is in wide use today, however, many companies are still not leveraging its advantages. (based on participant data in Fig2).

Utilizing electronic tendering to communicate and confirm execution with carriers results  in multiple benefits (Fig3). The data collected during tendering forms the basis for facilitating an annual spend re-bid exercise on a solid foundation.

Carrier charges vary with market dynamics of supply and demand. Electronic tendering
enables competition between carriers on prices and services and arbitrage against contract prices.

Figure 3

  Charge Management cost is reduced by doing away with complex calculation of freight charges  Abased on contract conditions, carrier approval of charges and audit costs. Post electronic Atendering, the freight charges are managed as per full and final consensually agreed rates and Aconditions for the order. 

  This also has a mobility component, especially for small and medium carriers who often are Adoing business in the field / driving the vehicle. Mobile tendering is an appropriate way to reach Aout to decision-makers in this competitive category of carriers.

KEY TAKEAWAY:

This analysis investigated the correlation between Transportation KPIs and electronic freight tendering.  Performance data indicates that electronic tendering directly and significantly impacts transportation costs and customer service.  There can be enormous  improvement in areas such as annual spend re-bid, continuous move discount shipments, and reduce the effort for FTEs performing execution, visibility and charge management tasks.

This SAP Transport Tendering Mobile App – YouTube provides a quick overview of the mobile tendering functionality.

Note1: Electronic tendering is the process of optimally selecting a carrier for a shipment using internet based applications on computer/ mobile devices. There could be multiple tender types:

(1) Peer to peer – sequential tendering to preselected carriers

(2) Broadcast – simultaneous tendering to preselected carriers

Interested to know more? Please contact us:

For more insights on Business Performance for your area simply e-mail us at valuemanagement@sap.com.

Note to readers: SAP’s Performance Benchmarking program is a strategic service sponsored by its Industry Value Engineering organization.
Launched in 2004 together with ASUG as a forum to exchange metrics and best practices, the program today has grown into one of the largest such global programs in the industry – with more than 15,000 participants from over 4,000 companies and with studies available in 12 languages. Participants receive – free of charge – customized and confidential benchmarking comparisons against industry peers, as well as aggregate analyses. To participate in the SAP benchmarking program, visit
https://valuemanagement.sap.com

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7 Comments

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  1. Michael Appleby

    Nice article, but I am curious why you post it here instead of in the SAP Transportation Management (SAP TM) community?  In the interest of full disclosure, I am a moderator for that community.

    From first glance this community seems (or perhaps should be) more focused on Travel and [Personal] Transportation rather than on the Logistics of material transport which is what the TM community is all about.  It would certainly make more sense instead of splitting attention between two separate communities.

    Regards, Mike

    SAP Rapid Innovation Group – RIG

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    1. Robert Leeds

      Hi Michael,  The SCN for Travel and Transportation is an “industry” network and thus deals with many solutions for Cargo Transportation and Logistics Services as well as for Passenger Travel and Leisure where as the SAP TM community is “product” focused and deals with many different industries that may use SAP TM and does not get into other solutions like how CRM or SAP ERP solutions are handled.  So I think Anurag’s blog should be posted in both communities because it addresses both TM and the industry of “Logistics Service Providers”.  I agree this creates a bit of an overlap, but I cannot see how to avoid this because SAP TM crosses many industries and the product shares a name with an industry with further adds confusion. 

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      1. Michael Appleby

        Hi Robert,

        I agree that it is a good idea to create a link to Anurag’s blog in both communities, but I would also request that you add a link to the SAP Transportation Management (SAP TM) in the Overview page of this community.  I will ask Natalie Bernzen (Space Editor for SAP TM) to do the same for this community.  Make sure interested folks know about both sources of information.

        Regards, Mike

        SAP Rapid Innovation Group – RIG

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        1. Anurag Gupta Post author

          Robert and Michael,

          I agree with the conclusion of your discussion.

          My next blog, like most blogs, relates to both an industry and a LOB. Will take care to follow the best practice of tagging to both. 

          (0) 

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