Scenarios is an RFP optimization tool that enables fast analysis of RFP events to create award strategies that fit your business needs. In this guide you will learn about Lowest-Cost and Custom Rule-Based Optimization scenario types available for events run via the Dynamic RFP platform.
Lowest-Cost Optimization
Lowest Cost Optimization finds the most cost effective way of allocating the volume requirement for each lane. The math and engineering behind it is impressive when applied to all the calculations in a given event, but it’s actually pretty simple.
If I need to move 5 loads on a lane, and the cheapest rate is $2.00/mi, lowest cost optimization will give that participant all the volume (provided they can handle it). If that participant can only handle 4 loads then they will be awarded 4 loads and the second cheapest rate will be awarded 1.
Select this option to understand the lowest cost of your RFP event.
Custom Rule-Based Optimization
Custom Rule-Based Optimization solves for more complex awarding strategies. You want the most cost effective way of allocating the volume but also have other requirements that need to be fulfilled even if it means not getting the absolute cheapest rate.
For example, you need the most cost effective way of allocating volume but... you only want to allocate to carriers, no brokers. That is what we call a constraint and constraints can be handled by creating a Custom Rule-Based Optimization Scenario so that only Carriers receive awards.
Select this option to solve for more complex awarding strategies within Scenarios using constraints.
Creating a constraint
Constraints are a set of requirements that you need to be fulfilled when creating a scenario for your RFP event. Each constraint will apply a rule within your scenario. You can have one to many constraints per Scenario but all constraints must collectively work together to successfully run your scenario. Additionally, you can create more than one Scenario for comparison, however only one scenario can be published. Let's look at creating a constraint.
There are 5 components of a constraint:
- Goal
- Lane Filter
- Lane Scope
- Participant Filter
- Participant Scope
Goal
The goal is the most important part of a constraint because it defines how the Custom Rule-Based Scenario will be different from the Lowest-Cost Scenario. Available goals include:
- Only award to specified participants
- Never award to specified participants
- Allocate spend
- Allocate volume
- Set a number of awarded participants
- Favor specified participants
A constraint can only have one goal, so let’s suppose you need the most cost effective way of allocating the volume but you want to only award to carriers instead of brokers AND you want to award at least 50% of volume to participants with ontime percentage greater than 80%. In that case you would set up two constraints, each with their own separate goal, and when you run the scenario then all constraints will be accounted for at the same time.
Additionally, a goal is by default restrictive. What this means is if something is not 100% feasible, it will fail. For example, let’s say the goal is to allocate 5 loads per lane to incumbents. If you have even just 1 lane in your event that had only 4 loads worth of potential incumbent volume, the constraint would be returned as infeasible. Another reason a constraint would fail would be if your entered data will result in zero allocations. For instance, you say you only want to award to incumbents but you do not have any incumbents who submitted a bid. This would result in zero allocations and the constraint would fail.
If a constraint is infeasible upon validation and saving then adjustments will need to be made to the constraint rules in order to successfully run the constraint.
Lane Filter
The Lane Filter gives you the ability to choose which lanes to include in the constraint.
If your goal should apply to every lane in your event, use Apply constraint to all lanes because it will make sure every lane is considered.
In the example above, Apply constraint to all lanes is selected and the goal of only awarding to Carriers is observed for all lanes.
If you want your goal to apply to specific lanes only, you can siphon them off by applying a lane filter. Keep in mind that you can apply a mix of filters based on the lane data you provide within your lane template. These filters will be treated as "or" so as long as a lane meets the criteria of at least one filter, it will be included within the constraint.
In the example above, Apply constraint to a subset of lanes is used and the goal of only awarding to Carriers is observed only on Lane A and Lane B.
When a lane does not meet the filtered criteria then it will be excluded from the constraint and will be allocated via lowest cost optimization (unless it is optimized by another constraint).
Lane Scope
The Lane Scope controls how your constraint is applied across your defined lanes set in your Lane Filter.
If you have a goal that needs to be applied across a grouping of lanes, then you should select Target your defined lanes as a whole.
In the example above, the goal is to allocate 3 loads and the Lane Scope selected is Target your defined lanes as a whole. The result is awarding only 3 loads to a participant across your entire event.
Alternatively, you might want your goal to be applied to each individual lane. In the example above, the goal is to allocate 3 loads but the Lane Scope is Target each lane individually. The result is awarding 3 loads to a participant on EACH lane across your entire event.
Participant Filter
The Participant Filter gives you the ability to choose which participants to include in the constraint.
If your goal should apply to every participant in your event, use the apply constraint to all participants option because it will make sure every participant is considered.
If you want your goal to apply to specific participants only, you can siphon them off by applying a participant filter. Keep in mind that you can apply a mix of filters based on the participant data you collect with your bid responses. These filters will be treated as "or" so as long as a participant meets the criteria of at least one filter, it will be included within the constraint. When a participant is excluded from the filter it will be allocated volume via lowest cost optimization (unless it is being optimized by another constraint).
Participant Scope
The Participant Scope controls how your constraint is applied across your defined Participants set within your Participant Filter.
If you have a goal that needs to be applied across a grouping of participants, then you should select Target your defined participants as a whole.
In the example above, Target your defined participants as a whole is selected for the goal of allocating volume of 5 loads. The result is allocating 5 loads total across all your participants.
Alternatively, you might want your goal to be applied to each individual participant. In the example above, Target each participant individually is selected. The result in allocating 5 loads to each of your event participants.
Conclusion
Scenarios is a robust tool that you can use to understand the outcome of different awarding strategies for your RFP event. From a simple lowest-cost analysis to testing a complex scenario consisting of multiple constraints, this tool provides the insight you need for faster, smarter RFP awards.