Organisations with freight shipments can conduct a Freight Audit internally, or externally with assistance from a freight consultancy that specialises in this service.
The benefits of an outsourced freight audit process are generally the same as any outsourcing of specialist work to, for example, an IT specialist, or Marketing Agency. It is typically a faster service, more cost-efficient process using superior systems to maximise automation and to leverage niche system smarts that go beyond what internal resources can access, e.g. an TMS system and / or use of spreadsheets.
Inhouse Freight Audits:
Conducting a Freight Audit internally would of course be quicker to implement and may initially seem like a low-cost option. There are however many pitfalls that can reduce their impact such as:
- No niche Auditing Software; not all cost & system discrepancies are uncovered
- SAP, FMS systems, Excel is inferior for levels of accuracy and efficiency
- Insufficient strategy deployed; lack of process
- Difficult to scale across all locations, divisions, carriers, and systems
- A lower level of automation cannot capture all potential savings and some errors will continue moving forward costing the business and watering down the impact of the Freight Audit
- Staff turnover, promotions, leave leads to a drawn out, inconsistent process, an inherent lack of communication and a ‘stopgap’ approach
- A limited understanding by all stakeholders on carrier systems and processes and inability to connect with the right person within the carrier organization may negatively impact any rebate negotiations and system improvements moving forward
Outsourcing
Opportunity Costs
Outsourcing extends the capacity of your Logistics, IT, and Accounting departments at a fraction of the cost of hiring staff, and also allows your internal team to focus on core responsibilities; leveraging their skills & experience to drive your business goals.
Objectivity and Compliance
It is best practice to have external auditors spearheading the process to ensure objectivity and if the review is for a public company in particular, to make sure they have no ties (e.g. shares) with the company. Such is the case for larger scale audits, but principle holds true for this narrower focus on freight as well.
Expertise
Outsourced specialists will have a higher level of expertise and understanding of the market to optimise the results. They will also be conducting Freight Audits as part of their core work on a regular basis across all modes of transport and for a wide variety of industries.
Network
A Freight Audit company should have in-depth knowledge of all carriers’ processes and be able to gain access to key staff members for effective negotiations on any claims and for troubleshooting errors with them for improvements moving forward. This is key for getting the most out of this type of project.
Resource Issues
When you outsource you don’t have to worry about missing the project’s deadline or deterioration in the quality and outcome of the project due to internal resource issues. The specialist consultancy has the ability to scale and the redundancies built into their resources due to the fact they are regularly operating multiple similar projects across their clientele.
Turnkey Freight Management Solutions
In the example we are discussing today Freight Audit specialists may have a range of solutions that dovetail with the Freight Audit, such as:
- Ongoing Carrier Invoice Reconciliation service; for continuous monitoring; an automated process that ensures for each invoice going forward you again, only pay what you should
- Business Intelligence Reporting; particularly helpful post reconciliation to ensure that the freight cost reports reflect your true costs; and so you have accurate guidance on designing business goals; clearer visibility and control
- Freight Cost Recovery services and reporting to ensure you capture the freight cost component of your sales orders from your customers
- Freight Benchmarking to assess the strengths and weaknesses of your freight rates against industry standards
- Freight Profiling and Benchmarking can improve the results of future Freight RFPs or Tenders by providing your organization with a clearer picture of your freight costs and activity and how to improve with regard to service matching and obtaining the best freight rates for your profile as well as maximising the potential freight cost reduction available, and to the consignment level.
Conclusion
So, the benefits of outsourcing your upcoming Freight Audit will ensure:
- a comprehensive review of your freight invoice and costing data,
- to a granular level that captures all errors and overcharges,
- that you can take advantage of their automated, niche systems
- to save time and money in the project and ‘take all money off the table’
- you can leverage the expertise of agents that can glean all potential insights from the data
- a positive impact on the negotiation process on rebates and process improvement implementation with your carriers
- as well as taking advantage from an ongoing auditing process A.K.A. carrier invoice reconciliation
- and any other related services they have available for assisting your organisation with your freight optimisation goals.
If you would like to know how our outsourced Freight Audit services can assist with this important freight cost reduction task please contact us to arrange a consultation to assess your requirements.
Related Articles:
What is a Freight Audit (and Why Should you Conduct one)?
Freight Audit Checklist – 10 Steps to Best Practice
How to Source the Best Freight Audit Companies
Freight Audit: Credit Notes, Payment Process, and Logistics Errors