Freight Audit Savings

When most in the business world hear the word audit, it sends shivers down their spines. It has been a headache, a necessary evil, or otherwise for years. Within the supply chain, freight audits are quickly becoming one of the best ways to curb unnecessary costs, maximize efficiency, and drive business growth.

In 2022, transportation management spending surpassed $2.3 trillion, an astounding 19% increase over the prior year. Even incremental improvements can have an enormous impact on such a large scale.

If freight audits provide all of these benefits, why do many still consider them an uphill battle?

The answer to this question is simple — data. Growth in today’s supply chain means an ever-growing amount of data that must be sifted through, either manually or through freight audit and payment systems (FAP), that leverage AI and machine learning.

At Trax, our goal is to help global organizations improve how they manage transportation spending, with the help of cutting-edge technology. We view technology as an essential component that can help simplify the complex challenges that are all too common within supply chain management.

Invoice Auditing

As we mentioned above, the word “audit” evokes mountains of data and paperwork because it has been a 100% manual process for decades. Technology is turning the tide, even if the fundamental structures are the same. 

What is a Freight Invoice Audit

A freight invoice audit is ultimately the process of reviewing the invoices that carriers issue to shippers for their services, putting them under the microscope, and looking to ensure accuracy based on pre-negotiated services and associated costs.

Think about the number of invoices your organization receives weekly, monthly, or yearly. 

If every shipment has an invoice, and your company handles 100,000 shipments a year, that is 100,000 invoices that need to be audited

The goal here isn’t to induce anxiety, it is to make it clear that this is a huge component of any organization operating within the supply chain.

The challenge is that auditing freight invoices isn’t always comparing apples to apples. Multiple fees, accessorial charges, and regulatory components based on which market you operate in all add layers of complexity to the process.

Still, organizations undertake freight audits to cut costs and improve their bottom line, even if the process requires an army of auditors and devours resources.

Common Items Found

So why go through the trouble of a freight audit if it is so complex? Again it all boils down to reducing costs and maximizing profits. As the process improves, several common errors can quickly be uncovered. Some of the most common issues found include:

• Incorrect charges
• Duplicate charges
• Incorrect weight or dimensions
• Misclassified goods
• Late deliveries or pickups
• Consolidation errors
• Accessorial charges

With a manual process, it can be difficult to pinpoint all of the intricate charges simply because human error is part of the equation. By implementing a freight audit and payment system, technology can quickly and accurately identify errors, making it easier to pinpoint where you are losing money and take corrective action.

Expense Auditing

If invoicing is one side of the coin, the other is expenses. Expenses are simply part of the game when you are trying to move freight and keep customers happy. With a manual auditing process, invoices and expenses are traditionally siloed out because they each require dedicated teams and resources to manage properly.

While the siloed approach might work, it is inefficient at best. Information gaps and delays in getting the appropriate data impact the decision-making process. Errors that might not be uncovered until months after the invoice has been paid are instantly recognized when the process is centralized – saving your organization time and money.

However, the auditing process goes beyond the dollars and cents component, directly impacting carrier and vendor relationships. Improved transparency leads to better communication and stronger relationships because all of the parties involved are in the know. Additionally, corrective action can be taken when a carrier consistently invoices incorrectly, or the partnership can be dissolved accordingly.

Intelligent Automation

As more of the process of getting your products from the manufacturer to the end customer becomes more complex, the need for technology intensifies. Shipping goods across multiple modes of transportation means dealing with multiple hand-offs, with each having its own processes and interdependencies.

To manage the auditing process as your business scales, you are ultimately left with two options – increase your labor force or leverage technology.

Here are five benefits of leveraging automated freight audit technology over manual audits.

Error Detection

Manual processes are fraught with human error. Even the best-trained auditors aren’t as accurate as AI-based systems. With technology, even the smallest discrepancies are quickly and accurately identified, allowing action to be taken immediately.

Improved Visibility

As we said before, so much of supply chain management is siloed, and technology has the ability to consolidate processes. This leads to fewer information gaps, better data management, and improved decision-making.

Rate Change Updates

Rate changes are a constant challenge that shippers are forced to juggle. In recent months, inflation and consumer demands have seen rates fluctuate wildly from one week to the next. With a manual process, organizations are completely reactionary, especially when working across multiple markets or modes of transportation. Technology can automatically update based on real-time rate changes, resulting in more accurate audits.

Shipping Costs Analysis

Knowing where your money is being spent and where you can improve is essential to scaling your business. Intelligent automation streamlines benchmarking, allowing you to easily identify which carriers within your network are performing.

Instant ROI

Implementing any freight audit system will take time and resources, but it pales in comparison to the amount of time needed to train new team members and up to speed as your business grows. Once the system is up and running and data starts pouring in, results are only a few clicks away.

Transportation Spend Management With Trax

Wrangling transportation management spend doesn’t have to be an exercise in futility. With technology at your fingertips, you can easily take in data, manage rates, contract and compliance, improve visibility, and automate the carrier payment process.

The more the process becomes centralized, the easier it is to identify areas of improvement and scale. Through intelligent automation, you can easily shift from being reactionary to proactive in how you manage the audit process, improving your customer service experience and vendor relationships.

Since 1993, Trax has been dedicated to helping global organizations simplify the complex challenges of the supply chain. That dedication has helped our team be recognized as an industry leader in freight audit and payment technologies. 

To learn more about our freight audit and payment solutions and other offerings, visit our website or request a consultation.