4 Common Mistakes Freight Audit Software Can Solve
The need for a global freight audit and payment solution continues to grow at a rapid pace.
This increasing appetite for clarity over supply chain operations is driven by the high levels of volatility that the global freight market continues to experience. Many shippers incur as much as 10% of total expenses on transportation management. In an environment where margins are razor-thin, shippers must have a clear view of how their freight costs are being allocated.
The solution to this challenge, for many, has been embracing regular freight audit and payment powered by Transportation Spend Management (TSM) software. Freight audit can lower transportation costs by recovering extraneous freight spend that’s caused by unnecessary charges, double billing, or other simple human errors. Freight audit is a powerful tool in enabling shippers to move toward better visibility of every operational element of their supply chain.
However, freight audit only works effectively when it’s implemented correctly. There are a series of mistakes that can occur during the freight audit process. In this article, we’re sharing an overview of what they are and how you can avoid them with the right freight audit technology.
At Trax, we provide industry-leading freight audit and payment solutions for global enterprises. Read more on how outsourcing freight audit can reduce risks and errors, and streamline operations with efficiency: Should You Outsource Your Freight Audit and Payment?
1. Relying on Bad Data or Old Data
The starting point to success in any type of audit is clean, accurate data. For freight audit, accessing that data is often a major challenge. To start, there’s the sheer quantity of data generated by a complex supply chain. Add in the reliance on disjointed legacy systems and numerous vendors and it’s extremely challenging to get an accurate read on performance data.
The knock-on impacts of this have huge implications. Without accurate data, shippers are essentially guessing every time they make a logistics decision. Procurement teams spend countless hours trying to collect and verify data in an effort to shed light on issues. At the end of the day, the entire process results in firms leaving money on the table while experiencing substandard efficiency.
Committing to a standardized data management process across the supply chain is vital to ensuring a successful freight audit. With accurate data as a starting point, audits are much more straightforward. Many shippers are adopting high-quality freight audit and payment tools such as Trax that serve as the foundation for a holistic approach to Transportation Spend Management.
2. Inconsistent Evaluation or Action Based on Freight Audit Data
It can be easy to cherry-pick certain shipments to audit but the reality is that this leads to an inconsistent approach that can cause you to miss major discrepancies. Instead of only analyzing certain shipments, commit to auditing every shipment, every time.
This consistency enables you to identify trends through month-over-month and year-over-year comparisons, ensuring you never miss an issue that affects your margins. Monitor the same metrics over time, including calculating cost to serve and invoice timelines.
By embracing these best practices, shippers can take major steps toward transportation spend management maturity. A consistent, comprehensive approach to tracking and analyzing freight audit data gives leaders much more confidence to make the right decisions for their business.
3. Performing Freight Audits Post Payment
If you’re conducting audits after you’ve already paid an invoice, it’s not going to be long before your relationships with carriers become strained. On-time payments are one of the keys to building strong carrier relationships and unlocking shipper of choice status.
If you’re seeking refunds or clarity over other issues after an invoice has been paid, you’re slowing the whole process down, and carriers will resent you for it. For the first time in decades, shipping markets are increasingly favoring carriers. That makes it vital to maintain strong relationships with your key partners.
Instead of performing audits after you’ve paid an invoice, take a proactive approach. To do this, many shippers outsource their freight audit processes to a third-party provider with a proven track record. Automating this process brings several benefits, including lightening the workload of your internal AP team and having an independent third party to arbitrate any disputes.
Solutions like TraxPays and TraxPays+ enable shippers to pivot their audit process to be more proactive.
4. Not Learning From the Findings of Previous Freight Audits
Ultimately, any freight audit is fruitless unless you actively take the learnings from it and use them to improve your processes going forward. If issues persist, it’s important to understand why this is the case and to actively share that information with leadership.
Unfortunately, it’s all too common for shippers to perform a freight audit, correct the issues, and then act like nothing ever happened. This approach achieves little and causes problems to repeatedly occur. Instead, shippers should work with carriers to proactively address the issues flagged by audits.
At Trax, our goal is to help shippers get to the root cause of all freight audit issues. Identifying the problems isn’t enough –– you need the insights required to tackle them head-on and resolve issues quickly.
Over time, your goal should be to completely eliminate mistakes from your supply chain. By actively leveraging the output of freight audits, leaders can design and implement meaningful solutions that eliminate issues over time.
The Right Freight Audit System Yields the Best Results
Freight audits are a crucial element of the wider transportation management process, unlocking new efficiencies, promoting compliance, and enabling significant cost reductions across supply chains. However, achieving this level of visibility into global transportation spending demands a sophisticated approach.
Trax empowers organizations with complex global supply chains to have greater control and visibility of their cost structures. Our cloud-based Transportation Spend Management platform and analytics suite dramatically simplifies the freight audit process, helping shippers streamline costs while maintaining strong relationships with leading carriers.
The platform is used by hundreds of global customers tracking over $22 Billion in freight spend.
Interested in learning more about how Trax can help you optimize your transportation spend? Request an initial consultation today.
Trax is the global leader in Transportation Spend Management solutions. We partner with the most global and complex brands to drive meaningful optimizations and savings through industry-leading technology solutions and world-class advisory services. With the largest global footprint spanning North America, Latin America, Asia, and Europe, we enable our clients to have greater control over their transportation performance and spend. Our focus is on your success.