Smart Tendering: The Future of Procurement

by Vector | Jul 7, 2021 2:16:22 PM

Smart-Tendering-The-Future-of-Procurement[1]

There's a growing idea in logistics that smart tendering is the future of procurement. But what is smart tendering?

First of all, tendering is the competitive practice of submitting and receiving formal bids to perform a job or service. In terms of transportation, tendering is the process of negotiating and aligning shipments of freight most optimally between shippers and carriers, or third-party logistics providers.

Smart tendering is the same process, but aided by software that uses AI and machine learning to automate certain aspects of tendering.

The goal of tendering is to strategically and efficiently match a freight shipment with the most ideal and cost-effective carrier. Smart tendering uses digital tools that make accomplishing that goal easier.

We'll dive deeper into smart tendering and the future of procurement in this post. But while we're at it, we should also perform a public service and draw a clear distinction between two hot, similar-sounding topics of 2021: smart tenders and chicken tendies.

So let's dive in and find out what, if anything, smart tendering has to do with the seemingly global obsession with fried chicken tenders! Grab your sauce, buy the dip, we're taking a dunk!

Wall Street Bets or the Wall Street Journal?

First of all, the Wikipedia yearbook page for 2021 fails to note one of the splashiest stories in history. I'm referring, of course, to the rise of the retail investor—and the rocket-ship assent of meme stocks.

In 2021, retail investors flooded the stock market with dollars via smartphone trading apps like Robinhood and Webull. These apps have been around for a few years, but in 2021, retail investors appeared to get organized. Stocks and cryptocurrencies like Gamestop, AMC, Bitcoin, Dogecoin, and Cardano all experienced huge leaps in valuation.

Much of the hype behind the volatile market activity was attributed to social media retail investment groups—specifically, the Reddit page wallstreetbets.

This subreddit can be described as social media posts about stocks and cryptocurrency information. There, you can find analysis, opinion, uninformed hype, memes (hence the term meme stock), lament, pining over Lamborghinis, rocket ship emojis, and constant mention of tendies.

Indeed, a subreddit like wallstreetbets tends to be a raw representation of the internet compared to the Wall Street Journal. In other words, you'll find the full spectrum of what social media has to offer. It has its own acronyms, memes, and language. If you can stomach it for more than three minutes, you'll laugh. You also may cry. Something will likely offend you. And something might genuinely amaze you.

Smart Tenders and Chicken Tendies

Regardless, you find support for one raw data point concerning human nature. The cold, hard, unifying truth is that everyone on wallstreetbets shares one thing in common. We're all hungry for chicken tendies.

No, not the traditional comfort food of childhood. To clarify, tendies means profits. According to cyberdefinitions.com, it means "financial gain from the stock (or cryptocurrency) market."

And herein lies the key similarity between tendies and smart tenders. It's all about the bottom line. We're all chasing gains.

As noted above, smart tendering is an AI-driven software-based procurement process that identifies and matches ideal carriers for your freight shipments. In other words, smart tendering helps your gains. So let's talk more about the smart tendering process.

How Smart Tendering Works

Like we mentioned, smart tendering is all about simplification. Thousands of freight shipments are posted per day. Freight is posted on load boards onto various networks and splashed across internal transportation management systems (TMSs). In the past, legions of brokers, account reps, and carrier reps would pound the phones looking to align freight with truck drivers.

First, you had to scour the load boards looking for live loads to hook. Then, you had to guesstimate the correct market price for that particular route and load of freight. Before smart tendering, pricing the market accurately was a matter of personal experience, historical data, guesswork, and trial and error. Negotiations based around this guesswork take place thousands of times per day.

Smart tendering takes away a lot of the guesswork, to say the least. Key features of smart tendering include automated search and selection protocols like:

  1. load ranking to align specific types of freight with certain carriers,
  2. route guidelines to align certain lanes with specific carriers,
  3. market-rate price predictions, which provide predictive, live pricing data to help properly quote, instead of guesstimate,
  4. carrier-quality ratings to rank carriers based on safety and on-time delivery, and
  5. automated negotiations to award loads automatically once your chosen parameters are met.

In other words, the key aspects of the procurement process are simplified and streamlined with smart tendering. This results in increased throughput, saved time, reduced costs, and overall agility. In addition, this data-driven decision-making process minimizes the risk of misquotes, unfamiliar carriers, and missed opportunities.

In addition to those strategic benefits, some believe the smart tendering process can even help reduce global carbon emissions. A global supply chain operating more synchronously and efficiently? That's certainly enticing!

The Secret Sauce of Smart Tendering

Peel back smart tendering to the studs, and you'll find that the entire framework driving tendering—and thus smart tendering—is data. In essence, the advantage of smart tendering is how much data it crunches. Smart tendering combines vast pools of data sources into an ocean of knowledge. Smart tendering software then distills that cocktail of information down to a single serving.

Thus, smart tendering improves the overall quality of the procurement decision-making process. Of course, there's a caveat! Your data pool, data ocean, or even data cocktail is only as good as your raw data.

So it's worth noting that the secret sauce of the smart tendering process is ensuring you have the highest-quality data. Digitized documents are the future of data. Here's where a document digitization company like Vector becomes a key ingredient to the recipe of success.

If you're wondering what measure you can take today that will best establish your company for the fast-approaching future, it's digitization. Bringing Vector into the fold will allow you to digitize your data, streamline your workflow processes, and align you with the future.

The Future of Procurement

If you haven't noticed, the world is evolving rapidly. We're coming out of the COVID-19 pandemic like cannon fodder. Depending on your neck of the logistics woods, it probably feels a little scattershot right now. Combined with that are more and more tech and the haunting suspicion that we can never catch up.

This is why I noted digitization up above. If you feel like your company is slipping behind in the tech race, digitization is a great opening salvo to get in the fight. In short, Vector enables digitization in the supply chain. The relative upfront investment cost in digitization is low. And there are many long-term benefits to be gained.

In terms of smart tendering, digital strategies create more accurate projections. In general, the idea of applying technology and digitization to your day-to-day processes will lead to incremental improvements. Consider the compounding benefits of increased accuracy and efficiency of digitizing. The impact on businesses can be massive.

Get Smart About Your Tendering

In conclusion, let's point out a couple of lessons the market has learned from meme stocks. On the one hand, the phenomenon of an asset shooting up in price for no other reason than it's trending on social media is a feature, not a bug, of modern financial markets.

On the other hand, everyone is ravenous for data—any and all data—because data turns into tendies. So don't be sentimental. Don't HODL and diamond-hand the paper-handed ways of past supply chains. Look around. Look at meme stocks! We are clearly in a brave, new world.

As such, the future of supply chain procurement is smart tendering. And smart tendering uses the most, best data. And digital supply chain tools like Vector ensure your system is fed a steady stream of the highest-quality data. So partner smart tendering with digitization, and you'll be on your way.

Gas up the rocket ship! We're all headed straight to the moon!

This post was written by Brian Deines. Brian believes that every day is a referendum on a brand’s relevance, and he’s excited to bring that kind of thinking to the world of modern manufacturing and logistics. He deploys a full-stack of business development, sales, and marketing tools built through years of work in the logistics, packaging, and tier-1 part supply industries serving a customer base comprised of Fortune 1000 OEMs.

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