Smart Tender Automation: What's Available?Posted December 18, 2017
In my last blog post, I discussed the need for Smart Tender Automation. How are leading Transport Management Systems (TMSs) handling Tender Automation? Are they at the forefront of implementing smart decision making in their Tender Automation approaches?
Tendering & Software
A review of the classical software landscape shows that Tender Automation is not an area of particular feature depth or innovation.
To understand what’s available, consider the world’s leading Transport Management Systems (TMSs) capabilities: SAP, Oracle, and JDA all have versions of it. Here is a quick recap of them. For the benefit of European readers, Transporeon is also discussed.
- JDA’s “Carrier Sequential Tendering” is a configured rule tree approach. It first generates a list of allowed tenders based on the stored rates per carrier along with service definitions such as weight or transit time limits. The tendering then happens sequentially, i.e. to the first carrier until they reject or wait too long, and then to the next, and so forth.
- Oracle’s tendering supports three modes: sequential (basically what was above), broadcast, and spot. Sequential tendering is the same as for JDA: a strict one-at-a-time cascade of offers. Broadcast tendering is a first-to-accept approach where all carriers are offered at once, and the first to accept gets the job. Spot tendering is a time-limited auction where each carrier is asked for a bid, and the lowest bid at the end of a set period will win.
- SAP’s tendering also supports three modes: peer-to-peer, broadcast, and open. Peer-to-peer is the same as JDA and Oracle’s “sequential” tendering. SAP broadcast and open are the same as JDA and Oracle’s broadcast tendering, with the only exception that SAP’s “open” means all carriers are made the offer even if they typically would not be considered.
- Transporeon, somewhat confusingly, has a tendering module for large RFQs and a transport assignment module for daily tendering of loads to carriers. Their software has two modes. The first is called no-touch in which a rule tree is used to offer loads to contracted carriers. It is identical to SAP, JDA, and Oracle’s versions of sequential tendering. The second mode is best-carrier, in which carriers are asked for spot prices, and the dispatcher manually selects their preferred carrier from the list of bids returned. It is identical to JDA, Oracle, and SAP’s broadcast tendering except it is more manual because the dispatcher must decide rather than the software accepting lowest bids.
To summarise: the world’s leading TMS solutions approach Tender Automation as rote execution. They have simple rule trees, must be setup laboriously by system integration consultants, and are brittle as regards to changes in business needs. The world’s leading TMSs implement Tender Automation as a form of clerical automation. And this means, to be blunt, their tendering automation is dumb.
As I’ve discussed in my previous article, this poses substantial risks to companies using these Tender Automation approaches. Companies may face delayed shipments and unnecessary costs.
In my next blog article, I will have a more detailed look at how to make Tender Automation smarter.