Driving Efficiency in Airfreight Logistics Planning with Adaptive Tender Support

The Importance of Successful Tenders in Airfreight Transports

Air cargo transportation plays a crucial role in the global economy with an estimated 35% of value of global trade carried by air, even though it covers less than 1% by volume according to IATA. Despite its higher cost, airfreight provides unparalleled speed and reliability, ensuring critical and high-value components are delivered promptly to avoid production delays and to lower capital employed in transit stock. It serves as a vital complement to the regular sea freight transport, offering a solution for urgent shipments and maintaining supply chain continuity in unforeseen circumstances.

The procurement of airfreight services is typically conducted through a tender which involves numerous variables, including CO2 emission reduction, volatile costs and diverse transport strategies. This complexity necessitates meticulous preparation and strategic execution to achieve cost-efficiency, reliability, and compliance with stringent industry standards. Unlike other commodity goods procurements, the process for airfreight services always requires a structured planning phase to evaluate alternative network options.

This article explores airfreight tender management, examining challenges and benefits, and offering insights and recommendations for optimization.

Characteristics of Airfreight Tenders

Airfreight tenders are formal procurement processes where manufacturers invite logistics service providers (LSPs) to bid for the transportation of goods.

Key preparatory activities include:

Volume and Weight Estimates: Accurate forecasting of shipment volumes and weights is critical. Misestimations can lead to increased costs or capacity shortfalls.
Route Optimization: Determining the most efficient routes that balance cost, time, and risk factors.
Process Specification: Thorough analysis and definition of required processes with all involved parties.
Service Requirements: Specification of service agreements, such as standard or express shipping and dangerous goods handling.

Additionally, the evaluation of offers in airfreight tenders is a multidimensional process requiring careful consideration of various key factors:

Cost Calculation: Comparing freight quotations against a predefined baseline or current market levels to ensure competitive pricing.
Technical Concept: Assessing proposed logistics strategies, including volume availability, airport routing, service level agreements and emergency solutions. Structured comparison of bids and benchmarking with available market data supports qualitative evaluation of offers.

Given these complexities, a successful tender in airfreight logistics is contingent upon thorough data analysis, precise modeling, and the ability to adapt to changing variables quickly. This highlights the need for a robust, flexible software tool like Siemens Supply Chain Suite (SCS) that can handle various logistics planning scenarios.

Common Approaches and their Limitations

Various consulting companies offer tender support services in airfreight logistics. These approaches generally fall into three categories:

Traditional Consulting Firms

Traditional consulting firms rely heavily on manual processes and expertise-driven methodologies. They use historical data and industry experience to guide clients through the tender process. While these firms provide valuable insights, their methods can be time-consuming and may lack the agility needed for dynamic logistics environments. The approach is typically project-based and is lacking a continuous data model for recurring topics.

Specialized Logistics Software Providers

These providers offer software solutions designed specifically for logistics and supply chain management. Their tools typically include features like route optimization, freight rate comparison, and performance monitoring. However, these solutions often follow predefined processes and may not offer the flexibility needed to tailor the software to unique tender requirements. Configuration of all tender-relevant components to a pre-defined framework can be a complex process. This can deter clients from fully leveraging these tools or lead to the neglection of relevant information resulting in a suboptimal decision.

Integrated Solutions Providers

Some companies combine consulting services with advanced software tools. These integrated solutions offer a blend of expert advice and technological support, allowing for more comprehensive tender management. Yet, these tools may still suffer from limitations in customization and be tailored towards a one-time usage.

The Advantage of Digital Twin Technology in Airfreight Tenders

A revolutionary approach to overcome these challenges is Digital Twin Technology as offered by Siemens Industry Software (SISW). This approach creates a virtual replica of a physical logistics network through continuous data integration providing a dynamic and multifaceted tool for recurring tenders and overall supply chain transparency.

Improved Efficiency through Integrated Network Design

One of the most significant advantages of the SCS is its capacity for long-term data enhancement and increased transparency through centralized data management. By continuously updating the digital twin, planners can maintain an accurate and current model of the logistics network. Analysis of historical shipment data can reveal trends such as decreased volume, transport bottlenecks and sustainability metrics, which are all crucial for optimizing future freight strategies.

This ongoing process supports informed decision-making not only during the concept phase of a tender but in all logistics operations and enables increasingly reliable and efficient tender management over time.

Enhanced Data Analytics and Reporting

Digital twins provide advanced data analytics and reporting capabilities that are essential for strategic decision-making in airfreight tenders. Unlike predefined frameworks which restrict in- and outputs, our approach empowers the planner to individually design use cases for their current requirements. This enables detailed analysis of tender data, market trends, and supplier performance. A typical example of this are rate comparisons with market levels for long-term contract monitoring.

With a transparent and auditable trail of all tendering activities, SCS enhances risk management. This allows manufacturers to identify and mitigate potential risks early in the tendering process, reducing the likelihood of supply chain disruptions. The ability to monitor recurring data, such as historical shipments, enables a constant proof of concept for the current transport strategy, ensuring its effectiveness over time.

Cost Savings through Enhanced Tender Management

SCS supports a streamlined tender management process, from data entry to supplier selection and contract management. Once defined, processes within the tool are reusable across bid rounds and tenders. This consistency reduces the need for rework and ensures that best practices are applied consistently, saving time and resources. Manual interventions are reduced creating more efficient and reliant tender processes. Access to detailed data and advanced analytics enables data-driven awarding processes leveraging current market conditions to secure favorable rates and terms. Automated model calculations support strategic negotiation approaches such as real-time auctions.

Constant market data integration and central data management support long-term dynamic pricing models that adapt to market volatility. The ability to simulate various scenarios allows planners to test different strategies and understand their potential impacts. This ensures that airfreight tenders are managed with optimal efficiency, reliability, and cost-effectiveness.

Conclusion

The complexities of airfreight tenders demand a solution that emphasizes efficiency, data management, and strategic planning. The Digital twin technology, with its capabilities for integrated network design, enhanced data management, advanced analytics, and long-term transparency, offers unparalleled advantages for airfreight tender planning. By leveraging this technology, companies can achieve more efficient, cost-effective, and reliable logistics operations, ensuring their success in a dynamic and competitive market.

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