When it comes to logistics outsourcing, one question comes up more than most.
How many suppliers should you invite to tender?
It’s a critical decision that can affect the entire process.
Curious about the ideal number? Watch the full video to get the answer and key insights!
When it comes to logistics outsourcing, one of the most common questions I get is: how many suppliers should we invite to the tender process? Whether you’re calling it an RFT (Request for Tender), RFP (Request for Proposal), or RFQ (Request for Quotation), the goal is the same—finding the right partner for services like warehousing and distribution.
Open vs. Closed Tender Processes
At one extreme, you’ve got open tenders. These are common with governments and large corporations that have to allow anyone to bid for the work. While this might seem fair and transparent, it can lead to a flood of responses, many of which won’t even be suitable. Filtering through all that is a massive headache, and frankly, it’s not an efficient process.
At the other end, you have closed tenders, where you invite a select group of suppliers to participate. This is the approach I’ve always taken over the past 25–30 years because it’s far more targeted and effective. You focus on the suppliers who are genuinely capable of meeting your needs, saving everyone time and effort.
Be an Informed Buyer
Acting like an informed buyer is key to getting the best results. Let’s compare it to renovating a bathroom. You wouldn’t post an ad asking anyone and everyone to quote—you’d be swamped with irrelevant responses. Instead, you’d shortlist a few contractors based on their location, expertise, and budget fit. The same logic applies here. By narrowing your list, you get bids from suppliers who are the right fit for your business.
Building the Right List
So, how many suppliers should you invite? Start with the end goal in mind. Ideally, you want three strong contenders by the end of the process. To get there, I usually recommend inviting around five suppliers. Why? Because some will inevitably drop out along the way—particularly in today’s market, where warehousing space is tight, and 3PLs are stretched thin.
Your list should include a mix. Always invite the incumbent supplier—it gives them a chance to review their performance and potentially offer something better. Add a newcomer or outsider too, maybe a fresh name in the industry or someone recommended by a trusted source. Five is usually the sweet spot.
Inviting too many suppliers can make you look like you don’t know the market, and it discourages serious bidders. Keep it targeted, act like an informed buyer, and focus on quality over quantity. That’s how you run a successful tender process.
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?“.
