How Effective Are Your RFPs? Seven Key Metrics for Shippers

Redwood is one of North America’s top freight brokers with over two decades of procurement experience. We manage the RFP process for customers and negotiate with carriers every day. There’s no doubt that, amid today’s volatile market conditions, companies are putting more time, effort, and thought into their RFPs.

After bids are received and loads are awarded, what are the actual results? How well is your RFP process working for your organization? Are you getting the results you’re looking for?

Most shippers aren’t sure whether their RFPs are actually effective, because they lack a system of metrics. Remember the old adage, “You can’t manage what you can’t measure”? That’s truer today than ever.

One metric every shipper tracks is their overall freight spend. While cost is certainly an important metric, it doesn’t come close to telling the full story. Your shipping success ultimately depends on service levels, reliability, sustainability, and multiple other factors. Selecting carriers based only on cost can actually cost you more in the long run. (Read on to learn more about how and why this happens.)

To help gauge the effectiveness of your RFP process, Redwood has assembled this list of seven key metrics you should be actively tracking. Thanks to modern transportation management solutions, you have all the data readily available.

These Seven Measures Tell the Real Story

1. On-time, in-full performance

You’re trusting carriers with your important customer relationships. Are they succeeding in protecting those relationships? One of the most important key performance indicators (KPIs) for full truckload shipments is on-time, in-full (OTIF) performance. You should be tracking this data on a carrier-specific basis, but also by loads and lanes. Maybe you have carriers who excel in one lane but are not as strong in others. This will change the way you bid those lanes, and think about your carrier mix, in the future.

It's also important to make sure you and your carriers are aligned in how you define OTIF success. Is a shipment considered on-time if it arrives by 5:00 pm—or do you and your customers value appointment times?

OTIF isn’t a simple or straightforward metric. If you’re not capturing the details of OTIF performance, you’re missing out on opportunities to improve it via smarter RFPs.

2. Tender rejections

Both shippers and carriers tend to hedge their bets in a dynamic freight market. Shippers may line up extra capacity as a buffer, while carriers might deliberately bid low to win the business. As the market tightens, those low bidders will begin to reject load tenders now that they can secure higher-than-contracted rates on the spot market.

Why are tender rejections such a critical metric? As carrier tender rejections increase, rates escalate—sometimes as much as 35% if shippers are forced into the spot market.

You can avoid this expensive problem by tracking tender rejections closely, identifying the lanes where they’re most likely to occur, and then evaluating future bids more carefully in those lanes. Getting a low bid is exciting, but is that bid realistic—or is the carrier overselling? An incumbent carrier might offer a low price based on their familiarity and comfort level with your team but beware of the new bidders who offer a cost well below other suppliers. If a bid seems too good to be true, it probably is, and ultimately, you’ll find yourself scrambling for coverage in the spot market at premium rates.

3. Volume by carrier

It’s great to have carrier diversity, but you should also be taking advantage of regional suppliers who’ve established “power lanes.” Because these carriers have strong driver and fleet capacity in certain regions, they can typically combine reliable performance with rate competitiveness. They might also be able to support round trips within that region cost-effectively.

Your volume-by-carrier metric will reveal the extent to which you’re leveraging regional carrier strength and power lanes. It will also highlight your overuse of some carriers when it’s not warranted.

Keep in mind that regional coverage patterns can shift over time, making specific carriers more or less attractive as conditions change. It’s helpful to form collaborative relationships with carriers to track these patterns, as well as partner with a procurement expert like Redwood that can keep you informed about evolving carrier strengths and weaknesses.

4. Bid adherence

Capitalizing on power lanes, and forming collaborative relationships, are two key reasons most shippers assign up to 80% of their loads to established partners. Bid adherence—the ability of carriers to keep their promises—is another.

It’s important to bring on new carriers, but smart shippers keep a close eye on bid adherence for newer suppliers. Make sure new carriers are actually honoring their commitments and not asking for rate adjustments, or adding accessorial charges, as time goes on. While incumbents know your business and submit realistic bids, it’s not uncommon for a recently onboarded carrier to find themselves in over their head. When they can’t adhere to their original bid, it’s the shipper who ends up paying the price.

5. Overage, shortage, and damage

If there’s a clear “red flag” metric, then it must be a carrier’s tendency to over-deliver, under-deliver, or damage products in transit. Every shipper should be producing an over, short, and damaged (OS&D) report, which captures information on cargo quantity and the condition in which it was received.

Today, capturing this information in real time is critical, so suboptimal carriers can quickly be removed from the mix—and claims and reimbursements can be managed accurately. If you need help capturing, analyzing, and applying this kind of detailed data, Redwood has the technical expertise to automate the OS&D tracking and reporting process.

6. Customer satisfaction

Your satisfaction as a customer partner is paramount, but equally important is the satisfaction of the end customers receiving your cargo. Tracking customer feedback—and relating it to specific carriers—will tell you a lot about your suppliers’ real-world success. Carriers who deliver both speed and accuracy will increase your end-customer satisfaction, improving the probability they’ll order more of your products in the future. Conversely, carriers who fail to keep their promises are damaging both your customer relationships and future revenue prospects.

7. Sustainability

If your organization is placing more emphasis on sustainability—including Scope 3 emissions produced by your carrier network—you’re not alone. Just about every business is trying to operate greener today. Fortunately, tools like Redwood Hyperion make it easy to track emissions on a carrier-by-carrier and load-by-load basis. You can see which suppliers are helping minimize emissions, as well as which carriers are generating empty miles and running your numbers up. This information can be factored into your bid evaluation process, along with other metrics.

Measure, Manage, and Improve Your RFPs with Redwood

Of course, this list is not exhaustive. Every company has its own unique priorities and metrics like carrier diversity, driver safety, and cargo theft rates that should be factored into the RFP process. Relevant metrics for RFP success will change over time as market conditions and the freight industry landscape evolve, but we hope this list is a great starting point for measuring and improving your RFP effectiveness.

Many shippers lack the internal capabilities to create and manage a set of RFP metrics. As a proven freight procurement expert, Redwood can help. We’ll determine the most important list of metrics for your business, streamline data collection, and create an automated process for tracking—and improving—your RFP effectiveness on an ongoing basis.