An estimated 80% of shippers overpay because they fail to compare service levels and properly observe transit times. Furthermore, researchers at Texas AandM recently found that the humble traffic jam, bane of shippers the world over, cost the U.S. economy a staggering $121 billion in 2011, while also burning through an extra 2.9 billion gallons of fuel.
In order for companies to keep shipping costs at a manageable level, they must perform regular freight auditing to ensure they recover overpaid freight bills or receive fraudulent or erroneous bills. Unfortunately, the average shipping department deals with a truly massive volume, and freight auditing can quickly create a mountain of paperwork or spreadsheets.
So how do companies deal audit freight bills in 2015? There are three common approaches:
- Manual Match: When companies pay in-house employees to manually process invoices and freight audits.
- Software Solutions: Other companies pay a licensing fee for software that helps manage the process.
- Outsourcing Freight Auditing: Still other companies opt for controlling transportation costs by outsourcing freight bill audit and payment.
Some companies find manual matching has a high burnout rate for employees and is increasingly error prone over time. However, for companies with a manageable number of shipments to keep track of, manual match might be their best option.
As with most software-based solutions, the goal and efficacy of freight auditing software is based on how much time and/or money it saves the company in the long term. Furthermore, software might catch errors human workers can miss, while also building up a wealth of data to help improve processes over time.
Audit Outsourcing Firms
For large companies, one of the best ways to reduce shipping costs is to simply outsource freight auditing and other transportation services to an expert third party. As with all outsourcing decisions, companies should do a cost benefit analysis to see if outsourcing is the right decision for their bottom line.
In order to cover the cost of freight auditing, some companies reduce costs elsewhere, such as by switching to cheaper packaging materials or increasing their shipping and handling fees. Ultimately, no matter which of the big three approaches a company chooses, managing freight claims and successful freight auditing is a necessity to keeping shipping costs from sinking a company.