7: Execute sourcing process

1. Finalize sourcing documents

In Step 6, you finalized the internal SOW to ensure it aligns with your organizational goals and is reviewed by key stakeholders. In this step, you will finalize the external SOW and supporting annexes for release to potential LSPs. This version is finalized for external use and includes all necessary details to ensure that LSPs can submit comprehensive and accurate proposals. Focus on:

• Finalizing the SOW for external release: Ensure the SOW is fully detailed, clear, and ready for potential LSPs to review. This includes refining the SOW to provide precise instructions, performance expectations, service-level agreements (SLAs), and timelines for delivery

• Integrating supporting documents & annexes: Ensure any annexes—such as technical specifications, reports, or datasets—are clearly referenced within the SOW and included in the final documentation package. These documents should provide LSPs with all the necessary information they need to submit accurate bids

Clearly communicate the contract period length in the SOW. Shorter contracts may deter providers, especially those needing to make significant upfront investments or those based outside the region. Consider offering longer contract durations when feasible to attract a wider range of capable LSPs and allow for more competitive pricing, as this will increase participation and ensure you receive strong proposals.

2. Specify pricing format

Define the pricing format you require from the LSPs to ensure that pricing proposals are clear, comparable, and aligned with your budgetary constraints. This might include:

• Fixed pricing for specific logistics services (e.g., warehousing costs per square meter)

• Variable pricing based on activity volume or usage (e.g., cost per kilometer for transportation)

• Cost-plus pricing where a fixed percentage is added to the actual costs incurred

• Performance-based pricing that ties compensation to achieving specific performance metrics (e.g., on-time delivery rates)

By specifying the pricing format, you can better compare proposals from different LSPs and select a provider that offers the best value for money. For example, performance-based pricing might be advantageous if your focus is on improving service levels over time

3. Publish sourcing documents

Distribute the finalized sourcing documents to potential LSPs. Please consider:

• Establish a publication plan: Determine the appropriate channels for releasing the documents, such as direct invitations to LSPs, posting on procurement websites, your organization's website, or relevant industry platforms

• Set posting duration: Provide a sufficient posting period before responses are due. For simpler RFQs, a shorter period may be adequate, but more complex RFPs or RFTs may require a longer response time. For example, if your tender involves complex logistical requirements such as multiple level of the network and/or large numbers of delivery locations, allow additional time for LSPs to develop comprehensive proposals that demonstrate how they will meet your needs. Consider a minimum of 30 days for complex tenders

• Set clear deadlines & instructions: Provide a detailed timeline for submissions, including deadlines for questions, clarifications, and final proposal submissions. Include a structured communication plan that outlines how updates and responses to inquiries will be managed. This ensures all bidders have equal access to information and understand the process

4. Manage communications & clarifications

Establish a process to handle questions from potential LSPs and provide necessary clarifications:

• Centralize communication: Use a centralized platform for all questions and answers, such as an online portal or dedicated email address, to ensure transparency. Maintain a log of all questions and responses to share with all potential bidders

• Organize a bidder conference (if applicable): Consider holding a bidder conference to provide an overview of the sourcing process, clarify expectations, and address any initial questions. Regularly update bidders on any changes or additional information, maintaining transparency and building trust throughout the process

For instance, in complex, multi-region operations, a bidder conference would allow potential LSPs to ask specific questions regarding the logistics network and expectations, which helps them submit proposals better aligned with your needs.

5. Receive LSP responses

Collect and document all responses from LSPs:

• Adhere to submission deadlines: Ensure all responses are received by the specified deadline. Document any late submissions according to your organization’s policy

• Secure documentation & storage: Use a secure repository to store all received documents, ensuring they are easily accessible for the evaluation process. Develop a scoring system or set criteria for evaluating proposals to ensure objective and comprehensive decision-making

Allow for sufficient lead time before the LSP is expected to start operations. LSPs coming from outside the region may need additional time to set up operations, procure assets, or train staff. Specifying a realistic lead time can attract a larger pool of qualified bidders and reduce the risk of operational issues during the transition.