source: ThyssenKrupp Nirosta

Standardising freight tenders worldwide

ThyssenKrupp Stainless is counting long-term
on electronically enabled freight tenders with TICONTRACT

Saving time and expenses, increasing transparency: these are three familiar goals for logistics managers in all industries and sizes of company. It is also the task facing Ernst Bernsdorf, Director of Transportation at ThyssenKrupp Nirosta GmbH, a business unit of ThyssenKrupp Stainless AG. "When it comes to the process of running freight tenders, we are confronted with a huge manual workload every time", says Ernst BernsdorfBernsdorf. He has been on the lookout for a professional solution for a long time and is prepared to tread new paths in order to stay fit for the rapidly changing logistics market and the challenges and requirements it brings with it. "That's why in July 2007 we chose the tendering platform TICONTRACT from TRANSPOREON e-sourcing GmbH in Kempten", adds Bernsdorf. "In Q4 2007 we ran a tender for our logistics contracts with electronic support for the first time." The decision to work with TICONTRACT was a strategic one. At the moment ThyssenKrupp Stainless carries out tenders for €90-100m of business a year in Germany. In future the tool is also to be used in Italy, the USA, Mexico and possibly in China. "My main priority is that with TICONTRACT we can harmonise the entire process and document it properly. I don't expect us to cut our freight costs by a huge amount. I think anyone introducing a system like TICONTRACT today in the expectation of significant savings in freight costs is deluding themselves" avers Bernsdorf. "There is definitely a certain amount of potential for optimisation," he adds. "But anyone with the potential to save more than 5% has been doing something very wrong in their logistics beforehand."

As well as optimising freight costs, Bernsdorf's main concern is to standardise processes worldwide and document them in line with internal auditing requirements. "Analysis from one central office, worldwide and internationally for the whole Stainless business unit: those benefits are priceless for me". At the end of the day a whole range of land and sea freight, full and partial loads as well as national and international transportation needs to be managed – with a tender volume of some €400m. An administrative workload which is hard to get to grips with. "Beforehand we used to run our tenders manually via email requests and Excel spreadsheets. But that made each tender a major assignment," recalls Wolfgang Dewitz, Department Head of Transport Logistics at ThyssenKrupp Nirosta. The road contracts are renegotiated every year and sea freight every quarter.

The TICONTRACT system is web-based; dispatchers receive a log-in and can run tenders for contracts online. "No one knows their logistics as well as the dispatchers themselves," says Roland Hötzl, managing shareholder of TRANSPOREON e-sourcing GmbH in Kempten. "So we have developed a user-friendly system which clients can operate easily and intuitively themselves." The tender generator takes the user through the process step by step. Even complex request matrices with price fields, text fields and drop-down menus are easy to create. Once it has been set up, the matrix can be used again and again as a standard template for the whole group. Then just details like relations or transport volumes need to be altered for different tenders. "In the introductory phase we got a lot of support from the TICONTRACT advisors," confirms Bernsdorf. "We set up the first tenders together via an online conference. The system is nearly intuitive to use and easy to handle, so we got to grips with it pretty quickly." The TICONTRACT development team works constantly on innovations and improvements. They respond continually to users' feedback in order to keep developing the platform and make it more specialised and adapted to the ever-growing demands of the logistics market.

The dispatching company can select suitable partners from a pool of over 6,000 registered service providers and also invite the carriers and freight forwarders it has worked with successfully in the past to take part in the tender. For ThyssenKrupp Stainless this means still being able to work with familiar, proven cooperation partners but also to make new contacts. "We certainly got things moving a bit in terms of quotes and pricing and are now also working with new partners in some areas", explains Bernsdorf. The chosen providers receive an invitation to take part in the tender via the system. "For carriers and freight forwarders taking part is free. They can simply use the application via a log-in," adds Hötzl.

In addition to standardised tendering the platform also offers dispatchers functions for analysing the quotes internally. "For us this analysis tool was the really interesting thing," says Bernsdorf. "Using different simulations we can show best prices, rankings and scenarios. That makes the whole process extremely transparent and means that we can compare the offers better." For example the best price for a given relation is calculated automatically and compared with the price from the previous year. "The manual version we used before TICONTRACT didn't make it impossible to compare individual quotes, but it did make it difficult and time-consuming," admits Department Head Dewitz. In over 50 per cent of tenders they used the 'round management' tool. "We run very complex tenders in a two-stage process. After analysing the first round we then move onto to final negotiations via TICONTRACT with the most interesting providers."

Ultimately the decision is based on quality factors, experience, references and the chemistry between buyer and seller, as well as the price. Personal contact is and remains the vital link. "That's the way we intend to keep it too, despite the electronic, internet-based support," states Bernsdorf firmly. "But there are a lot of manual steps and time-consuming work which we can happily leave up to TICONTRACT".

March 2008