Once the LSP (Logistics Service Provider or simply “provider”) proposals are received, a project team must evaluate them to find a successful proposal to rank the providers. Evaluating the proposal and the provider requires focused attention from the selection team and can be tricky if you aren’t sure where to begin.
Both the specific elements of the process and the evaluation criteria will help your team find a successful proposal.
· Technical proposal response:
Have your team go through the elements and sections of the proposal and rank them for each provider. This ranking will provide an assessment of the relative quality of the fit to the company as well as to the operational requirements.
· Scope of resources:
If the proposal is for a particular facility or process function representing a subset of the Company’s requirements, then the providers who offer a broader or narrower range of services and infrastructure than addressed by the proposal may be favorably or unfavorably rated.
· Cultural match:
The team should assess a perceived cultural match from the pre-proposal dialog, the proposal itself, follow up discussions, question clarifications, and from site visits. Cultural match is subjective and should become apparent during the course of the communication process.
· Existing relationship:
Incumbent providers should have an advantage based on knowledge of processes, communications, volumes, and requirements unless they are generating service failures or cost overruns.
Providers will always provide references that give positive reviews of their services. Request references for both current and past accounts. Ask consistent questions to dig deeper into problem resolution, communication issues, and conflict experiences. How providers address and work through the inevitable problems, miscommunications, and minor failures that occur illustrates their true value as a partner.
· Site Visits:
Consider this step to be “trust but verify”. What is your first impression of the site? Assess the strength of their site team and the team to be assigned to the Company’s account. Observe the productivity and the housekeeping or adherence to Good Manufacturing Practices (GMP). Ask questions of the supervisors, floor leads, customer service reps, and other floor workers to learn more about the management, training, process knowledge and process improvement, and communication style of the operation. At the conclusion of the visit, determine if the “walk” matches the “talk”.
Select the best partner based on fit and use price as a tie breaker or ranking adjustment factor. The lowest price may or may not be the partner to select. Extend all pricing based on the quoted units multiplied by the expected volumes to determine the total expected cost. Consider pricing differences after the other evaluation criteria have been evaluated and ranked. Once the best partner is selected based on fit, negotiate pricing based on in depth meetings and planning sessions.
Once all of the information is summarized and reviewed by the team, one or two providers typically stand out as the top candidates which makes the final selection relatively easy based on the factors deemed most critical for success.
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