In our latest episode of McLeod Insights, we sat down with Criss Wilson to discuss bid season in the transportation industry. Criss is a Data Scientist here at McLeod, and an industry veteran.
As we head into fall, we also head into bid season. So what questions should you be asking of your team?
Questions Transportation Companies Should Ask During Bid Season
Before you start bidding, there are some things you need to know. You’ll need to ask your teams some important questions from a continuous improvement perspective.
Analyze your wins and losses from one week to the next. Some of the questions you should be asking include:
- What do we want our performance baseline to be?
- What opportunities can we leverage?
- What markets did we win big in?
- What markets did we lose big in?
- Why did we win?
- Why did we lose?
- What corrective actions should we be taking, in light of a loss?
- How can we duplicate big wins?
- Were there promised tenders that we never received?
- Were there promise tenders that we received, then rejected?
Next, Criss says to inventory that information.
“You’re going to want to understand different lanes, and the lanes you were promised that you either rejected or the lanes you promised that you never got,” Criss says. “You’re going to drill into those, and you want to do a deeper dive into rate trend analytics on the buy and sell side, as well as net margin.”
Criss says companies should also understand:
- Successes and failures in contract pricing
- Balance of spot market unplanned loads compared to contracted planned loads
- When you received the loads and where they were
- Whether there was more demand at the beginning or end of the week
- What the markets were
- Ratio of capacity to load demand
Above all, Criss says it’s important to begin with the known variables, rather than the unknown.
How to Leverage Bid Season Data
As you assess the answers to your questions and the data you’ve gathered in the process, you’ll need to know how to leverage the information. Test your opinions about big wins and winning markets against your subject matter experts’ opinions.
“You want to know what the spot market is doing in your market, even if you’re not going to the spot to get your capacity,” Criss says. “You want to understand what the spot market says your capacity is worth. And on the flip side of that, what are our sell side rates doing with our customers?”
To get a good assessment, Criss also says companies should analyze:
- How many rate actions have we taken?
- Can we hold onto those rate actions?
- Based on the customer price, what are our net margins in those lanes?
As you gather information, start deeper discussions with your subject matter experts, account managers, and the customer. If you can’t manage repeatable wins, you need to know why they aren’t repeatable.
“If you’ve got opinions about why wins are not repeatable, you want to bounce those opinions off the subject matter experts that handle that customer’s business, as well as the customers themselves,” Criss says.
Have a detailed conversation about whether wins can be consistent, and whether corrective actions are sustainable. Then, consider whether losses are avoidable before determining next steps.
“If our losses are not avoidable, then we’re going to have to take a pricing action, look at raising rates, look at building capacity, or look at getting to market earlier, which means the customer is going to have to give you better lead times,” Criss says.
“There’s capacity in every market; the best capacity goes first. If the early bird is in that market first, they’re going to get the worm. So you want to make sure you’re that early bird.”
To listen to the full interview with Criss Wilson about bid season, click here.