Parcel Auditing 101: Who’s Guarding the Hen House?

Automated Small Parcel Audit Holds Vendors Accountable.

There are three distinct challenges senders face when working with small parcel delivery services, any one of which can cost considerable time and money that could be used elsewhere in the sender’s business. First, finding and implementing an efficient strategy for parcel bill auditing is a beguiling challenge, made altogether more challenging by the lack of streamlined tools to make such audits.

Second, filing claims for damaged or missing parcels is a long and arduous process (commonly 8 pages of forms for EACH parcel) sucking time away from more important duties for staffers. There has simply been no easy way to file claims for senders, so countless otherwise legitimate claims go un-filed.

Lastly, one of the challenging aspects for large volume parcel senders is negotiating a reasonable contract for services that doesn’t leave too much money on the table. The carriers have controlled all the shipping data leading to an asymmetrical advantage for the provider. There has been no advocacy for the sender and no ability to level the playing field…until now.

This article will deal only with the first of the three components of Complete Parcel Management—small parcel bill auditing, while claims-filing and contract negotiations will be discussed in later articles.

One of the time-consuming functions in business is discovering and applying the best way to match a product or service against its corresponding invoice. That process is fairly easy for physical products—if an item is faulty or damaged, it is immediately obvious and can be reported to the vendor for credit or replacement.

However, when services like small parcel delivery are rendered, the performance of those services are not as easy to monitor. When small parcel delivery is billed, it is relatively easy to match the invoice with service ordered, but quite difficult to match the service rendered against promised performance. So, most companies do nothing to track performance, crossing their fingers that they are being invoiced fairly and correctly for services performed and at promised levels.

Promises Made. Promises (not always) Kept
The three major parcel shippers—UPS, FedEx and DHL—offer to reduce or refund shipping costs when a parcel is not delivered, delivered late or billed incorrectly.

However, it’s not automatic. Unmet performance promises are gladly reimbursed when called out, but rarely do the parcel shippers voluntarily reimburse on their own. Actually, never. So the sender is left with the responsibility of looking over the shoulder of their parcel vendors.

Traditionally, there have been very few realistic auditing options for senders. Every shipment must be checked, verified and INDIVIDUALLY filed for refund. For some, a typical week can require auditing thousands of invoices, only to find the roughly 4% which call for a claim. And after the 4% are found, each requires individual attention from someone in the sender’s office. Few companies have the time or personnel to keep a close eye, so invoices are paid even when promised services aren’t fully rendered. And thousands of dollars are unnecessarily spent.

Automated Parcel Auditing utilizes big-data technology to automatically check shipments against their service promise and automatically files claims for reimbursement, which leads to an automatic reimbursement of shipping overcharges.

The key word is “automatic”.

Technology to the Rescue
With the need to squeeze as much savings out of operations as possible, companies are looking under every rock to find waste. Until recently, there was no easy solution for auditing small parcel invoices, and as long as the package arrived, most just declared, “no harm, no foul” —even if not on time. But the truth is there often really is a “foul”. If a sender pays for specialized overnight service and the parcel is delivered late, the up charge for that specialized service is still invoiced even though promised performance levels were not delivered. That’s a foul that is almost never called. Further, end-users (most often customers) often call out the sender for missed performance, leading the sender to issue credit to their customer. The end-result is a double-expense for senders who can often ill-afford a further eroding of margin.

Customodal’s OPTIX is an automated small parcel auditing service that utilizes Big Data to run diagnostic checks on customers’ small parcel shipments by measuring for billing accuracy and delivery promise without any intrusion into company workflow or servers. It simply is not affordable for individual companies to build the kind of databases utilized by OPTIX and would cost too many labor hours to try to do manually—the very reasons so many dollars go unrecovered for most companies. All OPTIX needs is the company’s FedEx, UPS and/or DHL account access or login (your choice) and permission to act as a third party on the company’s behalf.

OPTIX Parcel Audit gets all of the refund credits available within your small parcel vendor accounts. Each shipment receives a comprehensive, 40-point audit, automatically triggering any necessary actions with the carriers to secure 100% of the refund credits due the sender.

Guarding the Hen House, a 21st Century Example.
Not only is OPTIX non-intrusive, it is quite effective. One Customodal client’s web-based operation ships nationwide, nearly all of which goes out as individual small parcel— their single biggest expense.

Parcel auditing has been an important focus for the company—even going so far as to formally assign to an employee the time-consuming task of checking all parcel shipments against their corresponding invoices. They had grown tired of issuing credits to their own customers for unfulfilled shipping promises that were out of their control, yet powerless to find an efficient remedy with their small parcel vendors. Throughout their 10 years of operation only a small amount of revenue was recovered compared with the staff time committed to the task.

Customodal was invited to introduce OPTIX screening to their FedEx and UPS accounts. In the first six months, OPTIX found nearly $1900 in reimbursements to the client—all without incurring any labor cost. Their staff person was able to be assigned new, more valuable duties and overall efficiency increased while adding dollars directly to their bottom line.

Other senders have seen similar results. $1,344 saved in first 6 months, $720 in 4 months, and $1,056 saved in 3 months. These are real numbers that would have gone unnoticed were it not for OPTIX.

“OPTIX Parcel Audit gets all of the refund credits available within your FedEx, DHL and UPS accounts. Each shipment receives a comprehensive, 40-point audit, automatically triggering any necessary actions with the carriers to recover all qualified performance reimbursements.”

Henhouse Protected. No Ruffled Feathers.
One of the best features of services like OPTIX is the fact that there is no need to fight for money back. All functions are handled through sophisticated software, with no need for angry confrontation— or any confrontation at all. Keeping in mind that UPS, FedEx and DHL are not deliberately defrauding anyone, (after all, their written pledge is to reimburse for non-performance), they are happy to credit any and all monies due back for their underperformance. Perhaps they could have long-ago installed the same kind of auditing software to take a little better care of their customer, but with today’s sender-side auditing services, there is no need.

Which leads to one final point. Since the Big 3 carriers do not provide an auditing feature for their customers, shouldn’t every company that uses UPS, FedEx or DHL use a third party service like OPTIX to ensure they are not only paying for promised services, but actual services received?

Customodal is a new breed of innovative 3PL primarily serving the Manufacturing sector for over 15 years with a full menu of Professional Logistics services including Customodal’s FLEX, EXACT and OPTIX services. For more information about the full suite of Customodal innovations, click Customodal.com or dial 800-445-6577.