transportation management companies

In most organizations around the globe, transportation and logistics are under increasing pressure from two fronts. On one end, the sales organization demands faster and efficient delivery to their customers. On the other hand, the finance organization is always looking for ways to control expenses with an eagle eye visibility on payments. To drive such efficiencies, supply chain and logistics organizations need to find a balance between cost and service while working with Logistics Service Providers (LSPs) and freight forwarders across the globe. A great opportunity to drive both service and reduce costs, lies with streamlined invoicing, auditing, and timely payment of freight bills.

According to industry reports, today a large portion of the freight audit is outsourced. Freight invoices are complex given region and language nuances. As business grows, this complexity grows exponentially, which makes it harder to audit and track transport payments and overall logistics spend. Outsourcing is delegating the process of receiving invoices on a common platform, data extraction from invoices, check and validate rates, transaction & PO data and then finally proceed to payment through a payment software. The complications which frequently occur are:

  • Dealing with multiple carriers with specific processes, SLAs, pricing methods and payment terms
  • Processing relevant information from a plethora of FBA paperwork
  • Resolving errors arising from missing data, incorrect rates, unclear master data, duplications, adhoc / accessorial charges and sometimes unavoidable human errors
  • Training and allocating resources to carry out these cumbersome tasks
Whether these processes are done in-house or outsourced to third parties, the common theme that emerges is complexity and heavy human capital investment to carry them out. The solution, a robust freight audit process. A well-structured, well-maintained and seamlessly integrated system with tight process controls can lead to a lot more benefits than accurate freight audits and timely payments. It provides the most valuable resource in today’s date – accurate and in-depth data, critical for management reporting and analytics.

If your organization is currently running freight bill audits manually and wants to leverage technology to automate the process, what are the best practices that you should follow? Let’s have a look:

  • Tight process controls – A lot of cost overruns in freight audits happen because there are too many stakeholders, too many systems and SOPs are not well defined / followed. While automating the FBA process, it's critical that the new system is built for local, while adhering to global standards. These controls will drastically reduce errors in terms of duplicates, having clear master data, capturing any accessorial charges and adhering to well-defined payment terms.
  • Digital Invoicing – Another key aspect is to gradually move from paper, pdf invoices to digital invoices. An FBA system should allow carriers to generate digital invoices directly on the platform, capturing all important details and checkboxes for key supporting documents. While initially it is critical for an FBA system to have OCR capabilities to read and extract relevant data from paper / pdf invoices – the roadmap should be to capture these in digital form to minimize OCR dependencies and reduce the overall carbon footprint.
  • Stakeholder Collaboration – Critical to driving process controls and digital invoicing is to ensure that carriers and other important stakeholders can collaborate on the process. Having a carrier portal ensures that carriers can upload invoices directly into the portal, capture any comments, and have visibility on the status of the invoices. They should be able to track why a particular invoice got rejected and when they should expect a payment of their last invoice. Carrier collaboration is also critical to track milestones and reasons for delays and detention, say at a port or during loading. Ideally an FBA system should also be able to capture proof of delivery (PoD) information so that any damages and shortages can be tracked.
  • Intelligent Audit Workflows– The capabilities and completeness of the system defines how intelligent an audit process can be. An ideal solution should be able to seamlessly integrate with any upstream or downstream system, say to capture, transactional data and PoD, respectively. All types of master data is crucial, such as - rate cards, penalties, detention charges. In addition, workflow management helps define what and when an invoice gets rejected, manage rules for auto approvals to increase the first-time match rate (FTMR), and workflows for freight provisioning and dispute management.
  • Data driven decision making – All decisions, be it operational or strategic are driven by analytics, which in turn is possible only through rich underlying data. Ensuring having the right data, not only for Freight audits, but for the complete logistics value chain ensures that the right decisions are taken at the right time. This data can help source better, look at opportunities to optimize transport and ensure that the right freight payments are happening at the right time.
At Pando, these are the 5 best practices we drive for each new customer and track for all our ongoing engagement for Freight Bill Audit. Through this we have been able to drive substantial cost savings, productivity improvement, improve carrier relations and other benefits for our customers!

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