{"id":10867,"date":"2019-05-08T16:22:43","date_gmt":"2019-05-08T23:22:43","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=10867"},"modified":"2023-01-18T16:23:42","modified_gmt":"2023-01-19T00:23:42","slug":"why-you-need-to-audit-parcel-shipping-spend","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2019\/05\/why-you-need-to-audit-parcel-shipping-spend","title":{"rendered":"Why You Need to Audit Parcel Shipping Spend"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”10868″ img_size=”full”][vc_column_text]With annual rate increases, accessorial charges, high fuel costs and dimensional pricing, the cost of parcel shipments add up. In this QAD Precision Report we look at the necessity of auditing your parcel invoices.<\/span><\/i><\/p>\n

If shipping is a critical component of your operations, so is controlling your supply chain costs. Transportation is a major factor in the final calculation of the cost of getting your goods to the end user. Rising fuel costs, capacity issues, dimensional pricing, unexpected accessorial charges and customs delays all contribute to rising transportation costs.\u00a0<\/span><\/p>\n

The true <\/span>size of the global logistics and transportation industry<\/span><\/a> is hard to pin down. However, estimates suggest it is worth between $8 trillion to $12 trillion annually. Other estimates find that the logistics industry represents around 12 percent of global GDP.<\/span><\/p>\n

How frequently inaccuracies creep into freight invoices is also disputed. This is partly due to different \u2014 and complex \u2014 pricing models and freight rates across different transportation modes.<\/span><\/p>\n

Some estimates suggest that <\/span>6-7 percent of freight bills are incorrect<\/span><\/a>. Others have argued that as many as <\/span>53 percent of invoices<\/span><\/a> are too high. Whatever the true percentage of freight bill errors, for large volume shippers, these costs can quickly add up.<\/span><\/p>\n

Why You Should Track Parcel Shipping Spend<\/span><\/h2>\n

Most enterprises understand the importance of tracking and auditing their transportation costs. But if small, express shipments have not been a core part of their distribution model, many have been slower to apply the same principles to parcel shipping. However, e-commerce has changed the way many enterprises reach their customers. Enterprises are supplementing traditional distribution channels with an increasing number of parcel shipments.\u00a0<\/span><\/p>\n

E-commerce has been the initial driver of increased parcel shipments for many B2B shippers. However, the global pandemic has accelerated this trend.<\/span><\/p>\n

Take automotive aftermarket parts as an example. Most aftermarket parts suppliers sell the majority of their products to dealer networks and authorized repair shops. However, it is no longer possible for every dealership to keep in stock every possible part. This is because around 30,000 different parts make up an average saloon car.\u00a0<\/span><\/p>\n

The average age of a car and light vehicle on the road is almost 12 years. This means that more and more of us are repairing our vehicles instead of replacing them.\u00a0<\/span><\/p>\n

In the United States, for example, the online market of replacement parts is forecast to reach <\/span>$19 billion by 2022<\/span><\/a>. This trend is echoed in other countries as well. German online shoppers spent over <\/span>\u20ac1.7 billion on car and motorcycle parts<\/span><\/a> in 2020.<\/span><\/p>\n

As smaller package shipping has grown, tracking the parcel shipping cost has become critical.\u00a0<\/span><\/p>\n

But even before we get to a time when same-day deliveries become standard, shippers have to deal with the express carriers\u2019 annual General Rate Increase, accessorial charges and dimensional pricing \u2014 all of which can have a sizable impact on carrier costs.\u00a0<\/span><\/p>\n

As part of their cost saving undertakings, shippers need to be able to easily identify consolidation opportunities; cut down on excess packaging; monitor accessorial costs; and invest in <\/span>transportation execution software<\/span><\/a> with <\/span>real time analytics<\/span><\/a>. Shippers need a detailed view of their freight spend, including parcel shipping with actionable insights into key performance indicators.<\/span><\/p>\n

The Pros and Cons of Outsourcing Your Parcel Auditing<\/span><\/h2>\n

Outsourced freight and parcel invoice auditing is a straightforward process. Here\u2019s an overview of how it works:<\/span><\/p>\n

    \n
  1. You send your freight and parcel invoices to your freight auditor<\/span><\/li>\n
  2. Your auditor compares invoices and bills with pricing agreements to look for errors<\/span><\/li>\n
  3. If the auditor does not find any discrepancies, they authorize the freight payment<\/span><\/li>\n
  4. Should there be a discrepancy, the freight auditor tries to resolve the issue<\/span><\/li>\n
  5. If the carrier has overcharged you, the freight auditor files a claim for you<\/span><\/li>\n<\/ol>\n

    The big advantage of outsourcing is that it is hassle-free, especially if you ship large volumes of parcels. Invoice reconciliation is a time and labor-intensive task. By using a third party, you free up resources to concentrate on your core business. On the face of it, this makes sense.\u00a0<\/span><\/p>\n

    The downside is that you must share your data with a third party and rely on them to process it.\u00a0<\/span><\/p>\n

    Generally speaking, your freight auditor will receive a file of your shipments and receive invoices from the carriers. They then match, audit, resolve discrepancies and pay the authorized invoices and\/or return an \u201cauthorized for payment\u201d file back to you. The vendor can generate reports for you, such as cost breakdowns by G\/L and sub-G\/L account. This will give you the fully laden cost of your shipments by line item.<\/span><\/p>\n

    Companies outsourcing freight bill auditing must also rely on this third party should they need to customize a report.\u00a0<\/span><\/p>\n

    What if you want to include additional data beyond what your vendor offers? Will they create and format data so that you can populate your data warehouse and run the reports you need? How much will they charge you for this service? How long would that take?<\/span><\/p>\n

    If your organization uses data-driven insights for decision-making, then an in-house freight bill audit and pay solution may be a better solution. With an in-house solution, you have access to all of the data: that\u2019s the shipping data; the freight invoices; the resolution details; the audit trails; and authorized payments. This data gives you more options and visibility. Simply put, you control all of your data to report on as you see fit.<\/span><\/p>\n

    The Advantages of Freight Bill Auditing Software Solutions<\/span><\/h2>\n

    Companies can bring parcel auditing in-house by leveraging a freight bill audit and payment solution. This will allow a company to easily audit their parcel spend without relying on time-intensive manual processes. A comprehensive solution should offer the following functions and benefits:<\/span><\/p>\n