The freight audit, an important aspect of effective freight management, involves examining, adjusting, and verifying a company’s freight bills. 2021 marks the end of another business cycle for countless businesses with shipping centers across the world. This would also necessitate analyzing 2020 freight claims.
In legal parlance, a freight claim is a demand by a shipper or consignee to a carrier for financial reimbursements for damage or loss of a shipment. Learning to analyze your freight claims is an important precursor to a ‘higher profitability’ business model.
For any business, at the end of the day, a penny saved is a penny added to your profits. Therefore, hiring a service provider for your freight audits is the smart way to go in today’s economy.
Why Freight Claims Analysis Reveals Insight into Profitability
As reported by Inbound Logistics, market research suggests that up to 30 percent of all freight invoices are incorrect. And, freight settlement processes are convoluted, expensive, and prone to errors.
Performing a freight audit is a challenging and tedious endeavor requiring specialized expertise as well as considerable time and effort. However, what most businesses do not realize is that if done right, logistics is a domain of business that offers the highest opportunities for cost-cutting and savings.
Automating the process using intelligence will help you identify opportunities for cost reduction. It will also expedite the freight audit process, pushing your margins to unprecedented new heights.
Freight Audits Also Show Indicators of Strong Versus Weak Carrier Partnerships
If you’re shipping globally, you need to know who your best carriers are. Carrier services that do not deliver the expected performance or tend to return more invoice errors shouldn’t be in your business lineup.
But with so many carriers involved in the logistics process, the management and negotiation processes require meticulous and concentrated efforts that are often overlooked or sidelined. As a result, there are many disruptions in the supply chain that go unnoticed.
Hiring a freight audit service that remains in daily contact with your LSPs and vendors to identify and correct these supply chain disruptions has become a commonly practiced solution and prevents many unnecessary delays and costs in processing shipments.
How Does an Audit Help?
An audit means tracking and accessing all data faster and with advanced analytics. The events of 2020 saw the explosion of eCommerce like never before, resulting in a dramatic increase in the volume of goods passing through carrier networks. On the other hand, the advancement of technology-aided analytics has made data more accessible and companies more flexible.
This is because technology has always been the cornerstone to improving all logistical operations including managing supply chain disruptions and responding to fluctuations. Knowing why and where the issues occurred is key to solving the problem and bolstering efficiency.
Proper analytics and automation have not only reduced the need for human effort but also improved the rate at which inefficiencies are resolved.
Recognize Stressors Will Come With the Major Extremes of Too Much Volume or Not Enough Volume
Freight constitutes one of the largest portions of a firm’s overhead costs. It is only fair to say that these costs would also involve losses arising out of natural disruptions in the supply chain and the freight claims that emerge from it.
The periods during which you will most experience the sting of these costs is during periods of high volume and low volume. When you’re transporting a low volume of shipments your carrier requirements are lower but if this is not clearly communicated, you will be charged for hiring a larger service.
Conversely, when you have a large bulk of goods to ship there are higher chances of loss, damage, or overcharge. Automating your freight audits and claims management will help you deal with fluctuating business cycles as efficiently as possible.
Think About the Outside Influences, Like Driver HOS and Regulations
There are multiple externally sourced influences in the supply chain that you cannot control or foresee. For instance, changes in the driver’s hours of service, their terms, union problems, etc.
At times there may even be domestic changes in transportation regulations that affect your shipping partners in their home locales. All of these influences can cause delays and mistakes in the delivery process causing a chain reaction that goes all the way up to affecting your cash flow.
This is why most companies today take advantage of supply chain automation to overcome operational challenges that lead to freight liabilities.
Capture Freight Claims Data, and Guard Against Excess Claims with the Right TMS Solution
Opting for TMS Solutions is the best way for you to regain autonomy over your firm’s cost structure where freight is concerned. According to Inbound Logistics, using an intelligent freight audit and payment services provider can optimize a shipper’s supply chain to recover upwards of 10% in savings.
In the world of big data and rapid digitalization, the smallest of decimal points matter.
