Freight Audit and Payment Solutions Bring Immediate and Long-Term Benefits
Q: Why do companies need visibility to compete in today’s environment?
A: Companies that do not have visibility across their whole logistics operations are likely to miss out on opportunities to work more efficiently and deliver cost savings.
For example, a customer told me they spent around $95 million on a single lane from the United States to EMEA. Because that company had grown by acquisition, they ran multiple ERPs. When we brought them on to our platform we could see the spend was almost 140% higher on that lane, and multiple transportation providers were being used and consolidation opportunities were undetected.
With one simple but trustworthy view of their logistics spend in a single platform, they were also able to build a new DC that meant more robust and cost-efficient shipping without affecting customer satisfaction.
Q: What are customers looking for in a freight audit and payment solution?
A: Customers will often state they have freight invoice validation under control with either manual checking, in-house systems, or add-ons to their ERP or TMS platforms. Frankly, none of these methods are complete or robust enough to handle all of the data on an invoice, be it EDI, spreadsheet, or paper (or any mix of the three).
Additional supporting documents are not usually considered such as POs, BOLs, PODs as well as additional ASNs and RFTs. The invoice may be rated and calculated correctly based upon the known factors to an auditor, but without additional supporting documentation, do we know if the service level has been met or was the waiting time charge fair based upon the pick-up times and arrival time at the customer’s warehouse?
Customers want to know the freight bill audit and payment (FBAP) technology company is ensuring mistakes are caught and rectified as soon as possible with the transportation provider—be that error in the favor of the customer or the transportation provider while still adhering to Incoterms and avoiding costly late payment charges.
What a lot of customers do not see is the benefits of having accurate data available to them in a business intelligence platform (be it the FBAP vendor’s platform or their own internal BI tools). This is where consolidation opportunities can be found, mode shifts become evident, and discretionary accessorial charges can be caught and negotiated going forward.
Q: What are the long-term benefits of using freight audit and payment?
A: In the first 6 to 12 months of a freight audit project, the freight audit vendor can quickly identify “low hanging fruit”—these can be continual errors in invoices. It also means rates which have expired or have not been negotiated can be identified and corrected very early. Non-company liability is also a key way to save money by ensuring not only invoices pertain to your own company but also the part of the business you work in if the company is split into varying parts.
Freight audit vendors will automate the process of cost allocation (GL coding) which allows individuals doing this work to engage in higher-value work.
In the medium to long term, the savings and benefits come from continued checking of duplicates, non-company liability, correct rating, and meeting service level guarantees but more importantly using business intelligence tools to compare and pose “what if” scenarios to their current methodology and often change that—leading to further reductions in costs and manual work.