One of the biggest benefits to having freight invoices audited is the data that’s captured from bills during the process. The treasure trove of information can be used to help companies further improve their supply chain operations.
Greater leverage during carrier negotiations
Knowledge is power, especially when it comes to negotiating rates with carriers. Experienced professionals who negotiate with shipping companies tell businesses that the more data they can provide to the carriers across the table during the RFP process, the better pricing a company will receive.
Carriers like to know volume, shipping lanes, weight per shipment, classes, etc., for their own planning purposes. For parcel carriers such as UPS and FedEx, service levels (i.e. overnight or two-day) are important. When a company sits down to negotiate pricing, more specific information equals lower rates.
Also, with data in hand a company will know exactly how much it’s spending on different accessorial charges such as residential deliveries, address corrections, inside deliveries, weight and inspections, etc. If a company is spending a lot in any of these areas, it can focus on those charges during the negotiation process to get them reduced or waived. The last thing a company wants to do is spend a lot of time and energy attempting to lower charges that don’t have a big impact on the bottom line.
Using the right service levels for your parcel shipments
Many companies use overnight shipping when second day or ground shipments will suffice. This adds extra and unnecessary costs. With shipment data at one’s fingertips, the company will be able to determine transit times for shipments. Then it can select the lowest cost service level, saving money, while still getting packages delivered on time.
Companies that utilize freight invoice audit data also know how many shipments are delivered after the guaranteed delivery date and time. This is good information to have when negotiating with your parcel carriers. If the carrier isn’t living up to expectations, a company may be able to obtain lower rates or find another company that provides better service at the same price.
With the business intelligence now available as a result of the freight audit process, a company’s logistics department will be able to identify shipments made to the same consignee or customer within a short period of time. By consolidating these shipments, companies can further reduce shipping costs.
Without the data capture component to freight invoice auditing, it would be difficult for businesses to identify opportunities like this and adjust their operations accordingly.
Besides the obvious benefits of saving money by eliminating duplicate invoicing and overcharges, and reducing internal accounts payable costs, the freight audit process results in critical business intelligence that keeps a supply chain humming.