20 Mar Freight Audit Results: How to Overachieve
Most shippers understand employing a freight audit is one of the easiest ways to start saving money. Results can vary across the industry, but a normal audit ROI will range from 2 to 6%, capturing hard-dollar savings from service failure guarantees, rate errors, and erroneously billed invoices. If you consider the carrier’s duplicate-bills a legitimate source of recovery, the freight audit results can easily reach the double-digits.
According to a recent report on 3PL-use and global freight management, freight bill auditing and payment is outsourced by 1 in 3 shippers. Value added services, like a freight audit, continue their upward trajectory due to innovations in technology, expertise in the industry, and attention to detail. To realize the very best results, consider the following:
1. Organization Leads to Better Freight Cost Savings
A global freight management initiative would see that all carrier agreements are stored online for ease of review and use. The right freight audit partner can provide this. An online transportation contract manager will help shippers maintain organization and oversight of freight contracts and audits across a global supply chain. Delivery and explanation of new carrier agreements should be owned by the shipper. Execution of the audit policy is the responsibility of the freight audit company.
2. A Freight Audit Must Dig Deep
The process and practice of a freight audit varies greatly across the industry. With no standardized controls, each freight payment firm is free to implement their own practices that may, or may not, be in a shipper’s best interest. This can produce inferior freight audit results. Without a degree of oversight during the implementation process, a shipper may receive a very cursory review when they thought their auditor was digging deep into each invoice. This “gap” in the freight audit policy can result in thousands of dollars in missed freight cost savings opportunities.
3. Roll Up Your Sleeves
The man (or woman) who rolls up his sleeves is rarely in danger of losing his shirt. And so it is with an effective freight audit. Yes, outsourcing does mean increased efficiency and workload minimization. However, an exceptional freight audit requires occasional oversight by the shipper. No one knows your business and shipping model better then you. Don’t expect an auditing partner to know all the unique nuances and custom services negotiated with the carrier. Presumably, you’ve been the All-Star negotiator and pressed the carrier for preferred discounts and rates. Now that you’ve got them, and assuming their outlined in your freight contract, work with your auditor to customize the freight audit for maximum return.
Working with your freight payment company to exact a freight audit based on your carrier agreement is the equivalent of casting a net to its utmost extreme, reeling in freight cost savings across a wide berth of opportunity. Anytime a new agreement, addendum, or renewal is negotiated with the freight carrier, shippers must deliver that document to their auditor. Allocate sufficient time working directly with your freight payment company to identify rules and compliance checks to validate the rates and terms of each contract.
The Super Charged Freight Audit
I think we can all agree that no single contract is the same as another. Amendments, fine print, addendums, and annotations all play a factor in how a bill is calculated and the shipper is billed. Freight audit companies that offer services on a contingency, sharing in the freight cost savings found, lack incentive to pinpoint and remedy billing issues that may occur redundantly. A freight payment provider that implements a specific number of ‘audit-points’ without shipper input or oversight is likely missing opportunities.
At SSI we partner with each client, developing custom audit policies. The SSI freight audit produces better data for analytics, more freight cost savings, and peach of mind.
For more information about the type of freight audit that leaves no stone unturned, download our white paper on custom freight bill auditing.