The packages that you ship using FedEx® and UPS® are guaranteed to arrive on time or you’re owed a shipping refund. The problem is that most companies simply don’t have the time or resources to filter through guaranteed dates, actual delivery dates, zones, carrier exceptions and the hundreds of pages of invoices received each week from the carriers. For many companies, the choice is made to leave these proverbial refunds on the table – and the major carriers most likely bank on the fact that a vast majority of shipping refunds won’t be researched, leading to an estimated $2 billion in unclaimed refunds each year! But there is an alternative – a way to receive your deserved shipping refunds without investing internal company time. By looking at some of the pitfalls to self-auditing, especially for smaller and mid-sized 3PL companies, outsourcing becomes even more attractive.
Why Internal Auditing Fails
Understanding why internal auditing of freight invoices fails becomes quite apparent when looking at a typical, real-world warehouse example. A common scenario that shippers run into is the discovery and examination of a package that gets delivered late. For most fulfillment firms, it begins with an angry call from the customer, letting the account rep know that their customer isn’t happy because the package hasn’t arrived at its destination at the appropriate time. You know the call – oftentimes exasperated by the fact that the package is late for a special occasion!
Your customer service and warehouse team dive in both feet by researching the package, attempting to track it and find out why it didn’t get there in time. The clock is ticking as the angry customer awaits a response. Was it a delivery issue on the part of the carrier? In times like these, it’s cumbersome to have such a critical part of the business in the hands of other companies. Oh, but wait, upon further inspection, your team uncovers that the package was delayed due to an incorrect address entered by a warehouse staff. While you won’t have to fill out the shippers’ documentation for a shipping claim, the realization hits like a ton of bricks that you’ve spent valuable time researching just one package only to find out that not only was it late because of an incorrect address, the carrier has charged you an additional $10.00 for this address entry mistake (not to mention that you’ll have to offer the customer some sort of compensation for the mistake)! By the way – all of this time spent researching shipping issues is during the middle of the day on top of all of the other duties and functions that need to be completed as well.
Do You Have Enough Time in the Day?
The important question to ask is how much time do you and your team have in your weekly duties to take on the audit of your carrier accounts making sure that all charges are correct and that you are not owed money? Is there additional time to perform this function above and beyond the standard time to perform day-to-day tasks as well as plan for any emergencies that seem to strike to frequently in the world of logistics? Furthermore, would it make good use of your staff’s time to manually track and audit each package – a process that has proven to suffer from human error while resulting in a net negative to the company’s bottom line?
So What is a Parcel Auditing Company Anyway?
You’re too busy to perform a daily tracking of all shipments – making sure you audit each parcel confirming it gets to its destination on-time. Who has time for this?
Parcel auditing companies secure refunds for all late packages shipped using your FedEx® and UPS® account(s) on a weekly basis. These companies can track your guaranteed parcels and notify you when credits/refunds have been applied to your account(s) due to the packages arriving late and ultimately secure these credits/refunds on your behalf. In addition, they supply you with additional value added tools including address correction, customs delay notices, package and cost management to help control logistic and financial operations. Typically, these companies operate on a performance-based model in that they only invoice for a percentage of the savings after they are credited to your carrier account – significantly reducing any inherent risk of using their service.
Does This Really Work for Actual Companies?
The best way to see the potential time and cost savings in action is to take a look at a real world example. For example, RCS Audit is just such a company that operates a small package control and recovery solution and has helped many clients take advantage of the shipping refunds process and save legitimate money. One of its clients had previously been serviced by a package-auditing firm, which failed to secure refunds on more than 0.5% of total packages. The client felt that it was not worth the time to continue the audit. Shipments are handled by both major carriers and include all main carrier service types of both air (express) and ground. The client maintains three carrier accounts.
Without changing any operations, the Client’s account was activated within 3 minutes and the auditing began. The first week auditing resulted in securing a failure rate of 7.1%; identified 10 incorrect address and 31 Customs Delay notices. After the first 8 weeks of auditing, the Client is enjoying an average secured failure rate of 4% with an air spend reduction of 12%. First eight week hard dollar savings was $8,694.00.
It Only Makes Sense
Unfortunately, your company gets the blame for the late package. By using a small package auditing service, you can make sure that your carrier account is credited for those late packages. Late packages, even when caused by FedEx® or UPS®, become your problem and now you can take control. Even the most well intentioned fulfillment companies have a hard time keeping up with all of the tracking and paperwork required to consistently battle the shipping refunds process. By utilizing the very outsourcing strategy that they employ with their sales pitch to prospects, they can unload on this administrative burden and save money in the process.