Digital reverse auction as a strategic optimizer in freight procurement and e-negotiations

Digitalization of freight procurement operations has led manufacturers with multi-faceted advantages like cost reductions, improved efficiency, faster vehicle finalization and transparent negotiations. Traditionally, freight negotiations were performed in silos, affecting transparency and trust across the stakeholder units. These challenges further delayed the vehicle finalization process and resulted in the loss of opportunities for both shippers and transporters. 

Today, digital freight sourcing solutions are transforming freight negotiations via the reverse auction feature. It unifies the negotiation activities across freighters and carrier partners, encouraging equal stakeholder participation. In turn, organizations leverage the cheapest freight rates for their shipments.

What is a reverse auction?

The reverse auction feature caters to the transporters’ psychology of getting the business by revising their freight rates in online bidding. System  automatically allocates transparent rankings to the transporters as per their freight quotes in descending order. They can revise these quotes to improve their rankings, increasing their chances of closing the contract. 

Types of auctions in e-procurement 

The reverse auction feature can be implemented in 6 types of freight auctions. The procurement teams can post an e-inquiry as per their load requirements. 

E-Auction

The e-auction is typically used to procure vehicles for pre-planned shipments. Freighters specify the load requirements for the transporters to revert to their freight rates. The platform allows the logistics team to customize the date & time of the auction, encouraging transporters to bid on the requirement of the mentioned dynamics.

E-auctioning ensures the following:

Lot auction

The lot auction feature is a strategic choice for loads requiring more than one type of vehicle for the same destination. It allows the freighters to create different types of auctions for multiple freight requirements in a single project. More than one transporter can be selected as per availability. The feature can be used by checking the ‘Lot Auction’ box on the top-left corner while creating a load.

Lot auctioning ensures the following:

Live load auction

The live auction feature is used for last-minute vehicle procurement. This feature is a functional choice in case of last-minute cancellations or discrepancies that tend to increase freight costs. This type is not time bound and shippers can continue the auction until they receive the best freight quotes as per requirements. It prevents detention by ensuring on-time vehicle finalization and placement.

Live auctioning ensures the following:

Project load auction

The project load auction is used while procuring vehicles for supplying a product/ equipment of a distinct type. It allows freighters to choose any one kind of vehicle as per their pre-specified requirements. The procurement team must specify the number of pieces or products that need to be shipped, and the transporters can bid on the number of pieces they are ready to carry.

Project load auctioning ensures the following:

Contract load auction

This auctioning type enables freighters to procure multiple vehicles on a contract basis. The logistics managers can specify crucial dynamics like vehicle type, quantity per vehicle (kgs) and the number of vehicles required to transport the load. The available carrier partners can offer freight rates to cater to the contract requirements.

Contract load auctioning ensures the following:

Bulk load auction

The bulk auction can be used to procure vehicles for bulk shipments. Regardless of the number of loads, shippers can post their requirements digitally to find suitable transporters. They need to specify essential details like loading & unloading point, number of vehicles and product type. The transporters will digitally start bidding on the e-inquiry. 

Bulk load auctioning ensures the following:

Significance of E-Auction in freight logistics

Digital auction is a powerful optimizer for freight procurement operations. I t streamlines complex activities like freight bidding, negotiations and performance analysis, improving the overall process efficiency with the following:

Diving into the freight Procurement Process

The freight market in India is a hub of opportunities waiting for thorough optimization. Besides obtaining the best freight rates, Industrial competitiveness demands improved transporter performance, optimum OTIF and higher team productivity. TMS-based e-negotiations and reverse bidding improve freight sourcing & management processes, catalyzing business growth.

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