Carrier Invoice Reconciliation
If you have started with a ‘Post Freight Audit’ as the method for kicking off your reconciliation of carrier invoices then, after that has been completed, we strongly encourage you to keep this process up via what we at Freight Controller call a Carrier Check process.
Reviewing all carrier invoices on a weekly basis moving forward will ensure patterns of overcharge issues have been effectively dealt with; that they are not rearing up again. This is the case with any changes that the carrier has to make as that is outside the shipper’s control but also to ensure that your warehouse staff are correctly implementing any changes you have made to your warehouse guidelines going forward.
A Carrier Invoice Reconciliation (CIR) process (such as our Carrier Check system) also ensures that no new issues crop up unexpectedly. Things change; nothing is static. A carrier may update their systems which leads to incorrect charges; warehouse staff under pressure may find loopholes that might enable them to get through the day’s orders but will have consequences elsewhere such as in cost.
We see a CIR process as a type of insurance. You have health insurance, closer to the topic, you may have transport insurance for lost or damaged consignments; a CIR process is just another type of insurance. Rather than needing to do another big Freight Audit in the next year or two, you have a process for ongoing auditing with smaller credit note amounts that are quickly and easily processed, along with processes for reviewing for any troubleshooting requirements.
Freight Business Intelligence Reports
Best practice would also suggest that, in concert with a Carrier Invoice Reconciliation process, you should use your captured reconciled freight data to build reports on freight activity and costs to assist with your freight management optimisation goals.
The Business Intelligence (BI) Reporting is arguably more valuable than the reconciliation of carrier invoices, although it does rely on that first step for true costing accuracy in reporting.
Reports that are created without a reconciliation in place, (particularly with regard of course to costing), may not be accurate and could lead to poor decision making that leads to a decline in your freight management outcomes. They can be dangerous.
Just as a pilot in a plane must constantly re-check their instrumentation to course correct to ensure that they fly from say, Melbourne to Canberra, and not overstep and end up in Sydney, you need to regularly re-calibrate to accurately assess that you are truly moving in the right direction.
Reporting on your freight activity and costs enables the distribution business to create a continuous improvement methodology.
Furthermore, the BI Reporting enables you to glean all insights from your data to further reduce your costs via highlighting your current weak areas and giving you the confidence to implement measures for improvement. This is where the more important value mentioned above lies. Shippers who make the most of this reconciled data through relevant algorithms and KPIs will find the actionable outcomes will reduce their freight costs by another 5-30% on top of the savings uncovered in the Auditing and Reconciliation of carrier invoices.
Implementing a CIR and BI Reporting process greatly enhances the initial audit and will become an invaluable tool for your Supply Chain, Finance and Freight Departments.
The Freight Audit project gives you visibility on your costs and aligns people and systems across your own organisation, your carriers and any relevant freight consultants. The CIR / BI process gives you control by using true cost data to optimise your freight processes and therefore control your outcomes.
If you are part of an organisation that is always striving for visibility and control of your freight activity and costs, always striving to optimise your freight spend and to provide the best customer service and competitive models for your clients, then an ongoing Carrier Invoice Reconciliation & BI process should be equally important to you.