Tips on Choosing the right Freight Audit Company
Please note: this article is one of a series on the topic of Freight Audits. You may want to read these ones first:
We hope you agree that Outsourcing your Freight Audit is the right way to go to ensure that you take all the money off the table in a cost efficient, streamlined and comprehensive manner.
However, you’re probably already aware that not all outsourcing consultants are created equal. Most companies have tried outsourcing some aspects of their business such as IT or marketing, and many will have stories of how it went wrong, or didn’t live up to expectations, leading to a hesitancy to outsource again.
You may have even outsourced in the area of Freight & Logistics before and we have certainly heard from customers on moving away from freight forwarders & brokers (for example) to internalise their freight management as much as we have heard of a move in the opposite direction (moving from in-house management to outsourced).
So how do you find the right Freight Audit Consultancy for your company?
Freight Business Goals
Most companies do learn from any initial problems and go on to make better decisions on consultants they nominate to work with. The key to outsourcing is creating a strategic relationship between your business and the consultancy. This is established through effective communication to ensure clear goals between the two companies in this business partnership.
Look for a consultancy that will ask relevant, penetrating questions and be prepared to answer them fully and honestly; it can be tricky owning up to short-comings, but all companies have them. The more scoping upfront, the more likely they will meet your expectations.
Freight Industry Expertise
Make sure the company you partner with has extensive experience in the area you are outsourcing (in this case Freight Auditing). Look to their longevity in the industry and ensure they have deep rooted networks relevant to the market that they can bring to bear.
Consignment (Shipping) Manifest Data
Not all Freight Audit companies cross verify the three datasets of:
- the carrier’s freight invoice
- the carriers rate card(s) and Zone postcode file(s)
- plus the consignment data created by the shipper
Some only compare the freight invoice to the rate card making sure the appropriate rate was used. This is scratching the surface of what can be uncovered. Adding the manifest file data to the reconciliation process means you are checking a whole range of issues such as whether the charge weight is a mismatch because either the dimensions or weight do not align between shipper and carrier.
You can therefore do an in-depth audit that includes issues such as:
- Do the Zones & Rates match with the postcode?
- Is it actually your consignment?
- Do the items and numbers of items match?
- Does the Service match?
In fact, we would go so far as to argue that merely checking that the the carrier has used the correct rate is simplistic and of minor benefit. This is especially the case if you wish to use the analysis from the reconciled data to verify you are being charged correctly and that our warehouse operators are consigning cargo properly. You would be far better served by a comprehensive reconciliation.
Freight Audit Return On Investment (ROI)
Query them on similar projects that they have conducted and the results (ROI) of the project. Most well established Freight Auditors should have a range of testimonials and Freight Audit Case Studies that they can refer you to. ROI might also include post Freight Audit analysis of data with some Auditors that provides another level of freight cost reductions.
Freight Auditing Software and Processes
The more cost-effective service providers that can meet your goals will typically have the right niche Freight Auditing Software and processes in place such as:
- In-house Freight Audit Software & FMS systems for the shipper
- Service Level Agreements (SLAs),
- Knowledgeable staff to who follow customised processes for your SLA and have extensive carrier networks
- Tailored Reporting and Analysis outputs.
Having the right tech to implement where needed ensures you get an efficient automated process with granular data analysis capturing all relevant cost savings possible in the most cost-effective way.
A good consultancy should be able to explain the technology and processes involved, provide reporting examples, explain workflows and provide details on timelines and implementation requirements.
Related Freight Management Services
It is always helpful if they have a range of expertise in related areas of freight management such as:
- Freight Management technology systems
- Freight Benchmarking
- Business Intelligence Reporting
- Request for Proposal (RFPs); Tenders
Such vendors can enhance the service offering and can also become a preferred partner who knows your business well for any future freight projects that may logically spring from the Freight Audit project (ongoing Carrier Invoice Reconciliation services, for one).
Australian Freight Audit Company
A key consideration is the difference between the Australian companies and those who operate in other markets such as the US. For one, they’re operating in the same time zone.
Secondly, an Australian Freight Audit provider will obviously have an in-depth understanding of the market and relationships with carriers with which to assist their clients with troubleshooting of issues, negotiating payments and updating contracts if needed as part of the Freight Audit Process.
For example, someone without an intimate understanding of the services will see all airfreight as equal but there can be different operational decisions on two different air services with the one carrier that could lead to the warehouse operator making the wrong choice and paying more than they should. We’ve have customers who have overpaid when using an international Auditor for this type of reason.
Automation and Manual, Human Oversight
To expand on the above, another area of difference between Auditing services can be whether a company offers a completely manual service, or only automation, or a combination of both. What we believe is best practice is to combine the strengths of both areas. Automation will see thousands of con notes reconciled within minutes. Manual only is clearly going to take many man hours and is unsustainable. An expert with many years’ experience in the industry, who can analyse the results of the niche software system for, for example, post dispatching issues i.e. materials handling surcharges, residential surcharges, will ensure you claw back all potential overcharges.
Freight and Logistics Industry Changes
Make sure you partner with a company that is on top of the fast-paced changes happening in the freight industry at the moment, who can therefore guide you most effectively to stay in front of your competitors.
To summarise, the value-add services and flexibility toward adding (or not) components of those services as and when needed enables a distribution company to take control of the partnership as best suits their needs and philosophies.
That the Freight Audit / Invoice Reconciliation provider can assist with providing the technology requirements such as FMS systems at the warehouse if needed, and / or the systems needed for the automation of the freight pricing and overcharges, and reporting on errors in systems is another benefit for improving efficiency and costs of the process, enabling further savings for the customer.
Having these technologies available is cost efficient, and gives you access to the manifest data for a thorough reconciliation process.
Australian expertise obtained over decades across the breadth and depth of the industry ensures you are in good hands.
If you would like to learn more about our processes and systems for this service, please contact us for an exploratory meeting.