Mini-bidding has exploded in popularity in recent years. The combination of global crises, high shipping rates and port congestion has made it the go-to strategy for most forward-thinking shippers.
Moving away from large annual bids to small surgical bids targeting your heaviest and most volatile lanes, allows you to adjust your strategy quickly when prices change or disruptions occur.
This massive shift in tactics is changing the face of freight procurement, permanently altering our industry. Here's how mini-bidding is changing freight procurement?
There's more admin involved in freight procurement
John Paul Hampstead, Director at Passport Research, wrote how mini-bids have become more popular in freight procurement as shippers seek to “hug the market” and avoid overpaying.
The challenge is that running more regular RFPs and managing more carrier relationships can dramatically increase your workload. In his words:
"Proponents of mini bids have the right idea about marking contracted freight rates to the market on a faster cadence and making sure that rates work for both shipper and carrier to keep relationships strong. But mini bids, insofar as they require manual work, process management, negotiation and even auctions, introduce more shipper overhead and operating cost to move the same volume of freight."
This increase in manual work is leading to a change of its own: an increase in digital freight procurement adoption...
Shippers are adopting digital freight procurement tools
The logistics industry has been famously slow at digitising. Many shipping teams fully rely on Excel to perform all their freight procurement, even today! But as mini-bidding has become the best solution to deal with market instability, more and more companies are looking to digital procurement tech to implement this strategy. Here's shippers are using digital tech to implement a mini-bid strategy:
1. To reduce the increased administrative work
Teams can't manage the increased administrative burden with Excel alone, so they're turning to digital platforms to automate the manual work. For example, using a digital freight procurement platform, teams can create RFQs in less than five minutes, compared to the hours or even days it takes to do it using Excel.
2. To get insights into current rates
Transparency into current carrier contracts is difficult when you're running a global freight procurement strategy involving hundreds of carriers and lanes. Global teams like these are now using freight management tools that store all their current and historical freight rates in the cloud. This makes it easy to get instant insights into their own data and make strategic decisions at a moment's notice.
3. To improve relationships with top carriers
When you move away from massive annual contracts with carriers to increase flexibility and resilience - you need to ensure you constantly nurture your relationships with them to secure capacity. Digital tools allow teams to manage relationships with their best carriers in bulk, so they always keep them in the loop. They can also rank carriers, so everyone in the business can see who their most reliable suppliers are at a glance.
Shippers are using real-time market data in real time
Following market rates used to just be important for spot buying. But if you're running a mini-bid strategy, keeping up with the market is a must in order to tender regularly for the best rates.
Freight procurement teams are now following both the spot and contract market more closely than ever before - and changing their strategy to fit what's happening at that moment. New tech that integrates real-time market rates into rate sheets makes this fast and easy. In fact, today's freight procurement platforms are moving towards fully-autonomous freight procurement platforms that automatically tender based on market rates.
If you want to implement a smart mini-bid strategy that helps you cut costs and increase resilience in your supply chain, download the whitepaper below. It has everything you need to build a future-proof mini-bid strategy.