A question I hear all the time is: How many suppliers should you include in a logistics outsourcing tender?
It’s not always straightforward.
Watch the video to learn the key factors and discover the answer for your situation!
When organizing a logistics outsourcing tender, deciding how many suppliers to invite is critical to achieving the best outcome. Whether you’re dealing with a Request for Tender (RFT), Proposal (RFP), or Quotation (RFQ), the process is about finding the right supplier fit for services like warehousing or distribution.
Open vs. Closed Tendering
Open tenders, common in government and large corporations, allow any supplier to bid. While this ensures impartiality, it often attracts an overwhelming number of responses, many of which are unsuitable. Closed tenders, where a select group of suppliers is invited to bid, are far more focused and efficient. With over 25 years of experience in logistics outsourcing, I’ve consistently used closed tenders as they deliver better results.
Why Acting Like an Informed Buyer Matters
An informed buyer takes a targeted approach. Think of it like hiring a contractor for home renovations—you wouldn’t cast a wide net and sift through countless quotes. Instead, you’d identify a handful of suitable contractors within your budget and preferences. Similarly, in logistics, narrowing your supplier list ensures relevant, high-quality bids, saving time and effort.
The goal is to have three strong contenders at the end of the process—suppliers that meet your requirements, fall within budget, and are well-suited to your needs. To achieve this, start with around five invites. Some suppliers may drop out during the process, especially in today’s tight logistics market, where warehouse space and resources are often limited.
Crafting the Right Supplier List
Your shortlist should include a mix of reliable options. Always invite the incumbent supplier, as this gives them a chance to reassess their performance and offer improvements. Including a newcomer or an outsider—perhaps a recommended provider or one new to the market—can bring fresh perspectives and innovation. With five suppliers, you create a competitive environment without overwhelming yourself or discouraging bidders.
Inviting too many suppliers, such as 10 or more, signals a lack of understanding of the market and dilutes supplier enthusiasm. A well-curated list of five shows you know the industry and its capabilities, ensuring suppliers see the opportunity as worthwhile.
Related articles on this topic have appeared throughout our website, check them out:
- Supply Chain Cost Reduction: The Dangers of Supplier Squeezing
- Supplier Selection: Evaluate the Risks to Reap the Rewards
- How to Address Chronic Poor Supplier Performance
Editor’s Note: The content of this post was originally published on Logistics Bureau’s website dated March 22, 2023, under the title “Logistics Outsourcing Tender – How Many Suppliers to Invite?“.
