Freight Audit may not be the sexiest aspect of transportation management, but that doesn’t mean it doesn’t play a critical role in helping companies effectively manage and control their transportation spend, as well as provide valuable insight to drive continuous improvement. The first step is understanding the value levers of freight audit and how to leverage them effectively to realize those benefits.
What are those value levers? “Assurance, Efficiency, and Insight,” said Stephen Craig, a partner at enVista in a recent episode of Talking Logistics. He defines each lever in the clip below, but in a nutshell, Assurance is about making sure you’re paying the right amount of money, Efficiency is about simplifying and facilitating all of the processes involved, and Insight is about “moving beyond providing reports and helping companies get value from this source of data.”
“While there are important challenges in the assurance and efficiency sections, the main challenge today is helping to drive insight into the organization,” said Craig. “We’re being asked to connect transportation data with data sets that have never been part of the equation before.” In other words, it’s the mash-up of transportation data with other logistics and supply chain data, such as inventory, purchase orders, sourcing, and merchandising, that is providing companies with new insights on where inefficiencies exist and where to find cost savings and other benefits.
Of course, business intelligence and analytics technology plays an important role here. “BI technology has advanced in the last few years and has really paved the way for companies to provide Big Data analytics to shippers,” said Sarah Riblon, who runs Product Management and Development for enVista’s Transportation Solutions service and the MyShipInfo audit solution. She explains further in the clip below:
“The analytics that a freight audit company can provide are unique because we receive shipment data from across all modes, and some of the systems at the [shipper] client sites are so segregated that to bring all of that data together is sometimes an insurmountable task for them,” said Riblon. “Then on top of that, we can connect data from other sources — shipment data, purchase order data, inventory and warehousing data — and [bring it all together] and provide it back to the shippers in such as way that they can analyze it and get a true picture of where their money is going, what their shipping network looks like, and where they should spend their time on [to realize benefits].”
So, how are companies leveraging the insight they’re gaining from these tools to drive continuous improvement and realize business benefits? Craig provides several examples in the clip below, including an internet retailer that started looking at inbound data and realized that some of the costs for expedited moves were not being allocated to particular buyers or product groups, which gave them false views of which products and buyers were the most cost effective and profitable.
I encourage you to watch the rest of my conversation with Stephen and Sarah (embedded below) for additional insights and advice on this topic.
The bottom line is that the value of freight audit goes well beyond making sure you’re not overpaying for freight. While that’s still important and valuable, it’s the insight lever that many shippers are reaching for today because it enables them to uncover new opportunities for cost savings and benefits; it also helps them to make smarter decisions faster. In response, leading freight audit companies are expanding their business model and value proposition. Auditing and paying freight bills is moving to the background as they become providers of business intelligence and analytics technology and services.