Student: Ignacio Helquera Sanchez, SCM 2018

Student: Mita Hendra Mukti, SCM 2018

UBERization of Freight Procurement
Advisor: Christopher Mejia
Sponsor: UBER Freight January 2018 Poster Session

Motivation / Background Initial Results

Freight tender processes are complex, time consuming, and inefficient. What variables affecting shipper’s procurement strategy?

Long-Term Contract
Shipper # of fulfilled load Carrier
Agreement On-time pick-
per agreement safety up and
Relative
Transportation delivery
price
Management System Tender
Service Level
Select carrier from Primary Historical Acceptance Tracking
Tender
Routing Guide Carrier price capabilities
Yes
No
tLT > tMIN? Accept? Price Transparency
No
Yes
Select alternative
Carrier
carrier and clearing Carrier
Carrier
mechanism

Yes
No
tLT > tMIN?
The Problem
Accept?
No Yes
Spot Execute Spot Market through
Market Shipment
Current freight market provides shippers limited visibility and certainty over carrier application
availability, desired shipment time, and expected price to pay. These inefficiencies
Figure 1 Carrier Selection with Automated Escalation increase procurement lead time and cost. In a more liquid market, shippers will benefit
from procuring their freight directly from spot market.

Key Question / Hypothesis Methodology Expected Contribution

1. What are shipper’s decision factors in choosing long-term contract
market vs. spot market?
2. Assuming we have more liquid transactions, how would shippers’
procurement strategy and supply chain network change over time?
Relevant Literature
1 By developing a model that describes shipper’s behavior during freight
Conduct high level research on freight transportation, contract and spot market
tender transactions, we aim to achieve a better understanding of
• The impact of rising technologies, especially in digital freight matching
2 Identify key variables affecting shipper’s procurement strategy such Uber Freight, on shipper’s procurement strategy
• Possible product extension of existing technologies that would benefit
3 Develop reference mode for behavior of each variables identified
shipper, carrier, and ultimately freight industry

• Contract design and supply chain coordination in the electricity

industry. Fernando S. Oliveira, Carlos Ruiz, Antonio J. Conejo. 2013 4 Develop causal loop diagram and identify future patterns
• Topics in contract pricing and spot markets. Yi He, 2008
Ignacio Helquera
• Business Dynamics: System Thinking and Modeling for A Complex Mita Hendra Mukti
World. Sterman, 2000
5 Test the behavior by simulating the model with different scenarios Sanchez