This article was originally published by Parcel Media on May. 2, 2019.
Parcel auditing is a necessary task for shippers in today’s rapidly growing parcel market. It ensures that shippers pay the correct amount for their shipments, determines whether their shipments are delivered on time, and creates valuable information that the shipper can utilize to further cut their shipping costs. Without an accurate auditing system, shippers stand to lose a significant amount of money due to billing errors as well as the valuable data created by the audit.
The main purpose of a parcel audit is simple: ensure every package is billed correctly and delivered by the promised time. Carrier billing mistakes are common, especially when either a new contract or general rate increases are established; utilizing a parcel audit saves shippers money and gives them peace of mind that they are paying the correct amount for shipping. While the purpose of a parcel audit is simple, the auditing system is anything but. Between multi-year contracts including amendments, multiple shipping accounts, and a host of other variables, creating an accurate parcel audit is a complex task that must take all facets of a shipper’s parcel network into account.
1. The first step of an accurate audit system is assessing carrier contracts. Most contracts span multiple years and will include amendments. Correctly inputting a shipper’s contract into the audit system is the first step to creating an effective audit because this information will be used to ensure the carrier billed the correct amount for each package. This is an important step for many reasons, but first and foremost, it helps the shipper identify any due credits for billing errors the carrier has made.
2. The next step is including authorized shipper account numbers. Many large parcel shippers will use multiple shipping account numbers, and a carrier may offer different discounts for each shipper account number, which must be included in the audit system. To make their audit even more robust, shippers can add their shipping locations, purchase order information, authorized shipping personnel files, and even scan data. Ultimately, adding this information helps shippers track shipments and ensure validity; however, an experienced analyst can also use this data to identify opportunities for network improvement, such as the most common and costly errors.
3. Finally, for the best possible audit, shippers can include their order data, which allows auditors to dig even deeper into a shipper’s network by understanding shipping transactions from within the very box being shipped. Once again, this step can be helpful for a variety of reasons, but a common benefit is the ability to quickly identify which products are simply not profitable when shipped.
Any audit system will provide a shipper with data about their parcel network, but a quality parcel audit looks to a variety of information to identify parcel network challenges and opportunities, putting that data to use through consistent reports that help shippers track the effects of their parcel network. Creating such an auditing system is not easy, but doing so will ensure that a shipper is paying the correct amount for each package, and the data gleaned from the audit can help a shipper cut their shipping costs and provide better shipping service to their customers, literally impacting customer satisfaction. At the end of the day, parcel auditing is necessary for today’s parcel shipper, and it has far more advantages beyond just ensuring packages are billed correctly.
Daniel Britton is a Strategic Solutions Engineer at Green Mountain Technology (GMT), a Parcel Spend Management service provider for shippers with over 10 million parcels per year. In this role, Daniel partners with customers to provide our strategic Parcel Spend Management solutions – Network Optimization, Spend Analytics, and Contract Management. He has a Bachelor of Science in Industrial Engineering from the University of Arkansas.