Strategic freight procurement (SFP) is tailored to support (mainly shippers) with the procurement of long-term transportation services for logistics service providers (LSPs) or carriers. However, LSPs can also use this scenario to procure transportation services from carriers while offering transportation services to clients.
Process Steps
The SFP process is divided into four steps that are depicted in the following figure:
- Prepare RFQ:
The shipper prepares the required procurement. There is no interaction with the carrier. Historic transportation is analyzed and used as a forecast for the next period. Once the need for procurement is determined, it is divided by the shipper into different scenarios according to the trade lane, commodity code, or transportation mode.
It is not necessary to use the SAP TM system for the first stage of the preparation work. You can use the legacy systems to analyze historic data, forecast transport volumes, and classify procurement needs.
The final task of the first step is the creation of a central document for the SFP process, the freight agreement master RFQ. All of the procurement needs and classifications are entered into the master RFQ.
- Submit RFQ:
The interaction with the carrier is started. The carriers assigned to the SFP process are added to the master RFQ. If necessary, the target business shares are assigned among them. If the optional approval is selected within the purchasing organization, the individual RFQs are created and sent for each carrier.
- Evaluate responses and optimize:
Once the carriers have responded to the RFQ, the responses are evaluated and compared. SAP TM supports the comparison by creating ranking lists and suggesting the optimal business shares. You can start negotiation rounds with the carriers at this stage.
- Generate agreements:
The optimal business shares and carriers can be awarded once they are selected for the next period. Freight agreements are generated by one-click freight agreement creation when the carriers are awarded in the SFP process. A freight agreement acts as the contract signed between the shipper and the carrier.
