Building the business case for transportation auditing might be the most important thing a company can do in today's supply chain. As reported by Inbound Logistics, transportation auditing services possess the "expertise, technology, and processes to investigate a shipper's bills, compare the rates charged to those for which the shipper contracted, and ferret out mistakes and duplicate bills. Many also can compare a shipper's rates against its peers and identify steps to boost efficiency." Unfortunately, that value can be lost when companies are financially strapped and trying to keep costs as low as possible. Quite simply, keeping logistics cost auditing in-house might seem like a good idea. But there is a clear need to build a winning business case and know-how that aligns with corporate goals. Let's take a closer look at the simple steps to building the best business case for transportation auditing.
Any successful business case always looks at the ROI. However, transportation auditing ROI can be tricky. Inherently, transportation auditing results in a return on investment by making sure all unnecessary costs are uncovered and either recouped via a claim or by way of correcting a future action that resulted in the extra transportation spend. It's all subject to the variety of errors within a given set of invoices and the existing levels of optimization within the network. In other words, shippers with a high rate of invoice errors will derive a faster ROI, as CVS Health experienced when they saved $9 million after choosing Intelligent Audit as their shipping analytics technology and freight audit and payment provider. But there's another factor to consider. On average, freight invoice error rates sit around 80%. That means the overwhelming majority of all invoices have some type of discrepancy. And of those, 10% result in overpayments. Now, if the carrier frequently overcharges on invoices, actual savings could easily soar well beyond 10%. That's where the real value of transportation auditing rests. But again, there are additional opportunities for improvement.
CVS needed an industry-leading and experienced auditor with a technological backbone that was versatile enough to meet the changing needs of the company moving forward.
The best way to reduce transportation spend is to manage it strategically. Ergo, transportation network optimization, leveraging clean normalized data to understand where to optimize, is the ultimate way to reduce transportation costs. However, optimization depends on knowing where your shipments are, where they're headed, and the best way (read the cheapest) to get them delivered. As such, capturing data and analyzing your network is crucial, and the same concept applies to building a business case for transportation auditing. You must capture the data on your current processes, conduct a preliminary freight audit and analysis of transportation spend, and find those opportunities. That's where you identify the things that are going wrong and hand-pick auditing solutions, such as Intelligent Audit, that can solve them. Again, it's all part of building a strategic, long-term business case.
Increased insight through the use and application of data deploying a platform that provides transportation analytics that power auditing also has another advantage. They enable end-to-end transportation spend visibility. More visibility means your company can better manage profit margins by keeping costs low for consumers, keep employees' wages proper, and more. For example, a shipper will see immediate ROI by running a simple analysis that uncovers an opportunity to select a cheaper service with the exact delivery times for that shipment. This one decision alone could be the deciding factor on profitability, but without clean, actionable insights, this simple decision would be hard to estimate true cost savings potential. In the end, it's all about staying competitive. The business case should reflect how auditing makes that possible.
Another thing to consider is integration. A modern auditing solution must automate and simplify the auditing process. In turn, that requires integration with your existing systems, using API, EDI, or other connection methods. These seamless integrations further unify your overall operation and streamline back-office management. True technology companies enables its customers to reduce internal time and effort associated with back-office management while increasing efficiency all while providing a positive ROI to your organization. Thus, you can prioritize needs and focus on maximizing the customer experience.
Transportation auditing is an excellent way to add value to your business, but in-house auditing is costly and overwhelming — especially for startups and companies enduring the massive growth of e-commerce. Rather than trying to go it alone, let an expert and consultant learn your business from the inside and help you build the business case that will virtually guarantee C-suite approval for outsourcing transportation auditing. Request a consultation with Intelligent Audit to get started.
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