Forever, businesses have relied on either in-house audits or external audits utilizing their accounting firms, (or a combination of both), to “audit” their operations. The audits of course are meant to validate that the company’s logistics and supply chain expenditures fall “in line” with their business operations and that their operational costs are “not out of control.” While the company’s internal and accounting firms perform these audit services, the real question is, do they have the required expertise to truly assess whether the company is actually receiving “the best value” for their supply chain and logistics dollar?
It can be said that in some cases, these audits merely validate what the company spend reports say is actually being spent. While that “audit” is important, it doesn’t always tell the story that needs to be told. Some accounting firms advise their clients that the “audit” results confirm that the logistics spend is within an acceptable percentage of total sales for the business in question. But does the audit enable them to advise their clients on exactly what they should be paying based on what the market conditions are at the time of the audit? Probably not!
Resource: Learn how auditing works!
In other words, a true evaluation audit would be based on providing a strong benchmark analysis comparing the company’s actual logistics spend stats with a deep dive into many different areas including, analyzing all of the client’s service provider and carrier contracts; evaluating the contract terms and condition language for any anomalies, along with a comprehensive analysis of the specific pricing provisions, including current service provider discounts and incentives and any rebate arrangements, etc. But, more importantly the audit must always include a true a comprehensive benchmark analysis of similar competitor businesses, as well as all current service options to evaluate if better service and lower cost options are available.
Here are some facts every company should be aware of:
Fact: All transportation and logistics service providers publish rates, rules, and fees INDIVIDUALLY!
Again, the true value of any audit is the ability to benchmark what a particular company is spending and provide advice to that client on what they actually should be paying. The only way this can be accomplished is if an audit consultant is utilized that has access to logistics and supply chain data that is collected from dozens of competing businesses covering literally millions of actual transactions. This is the best possible process allowing the audit consultant to provide the information required to make a meaningful analysis of a client’s logistics and supply chain spend.
Fact: No two transportation and logistics service providers publish the Same Rates, Fees and Charges!
No two companies are alike and no two rates, fees or accessorial charges are the same. It shoud be the job of the audit consultant to have a complete understanding of the rate structures of each transportation and logistics service provider used by the company and find the right fit for each client. Whether it’s international deliveries, large size parcels or something unique, there is a “right” service provider, or service providers for every company. Knowing the strengths and weaknesses of the service provders enables the audit consultant to match a company’s business with the right shipping organization to maximize efficiencies, take advantage of savings and finally, truly manage cost structures.
Fact: Most transportation and logistics service providers play the Discount Game!
Some transportation and logistics service providers may be better than others in terms of service and pricing. Knowing a company’s specific shipping patterns provides the information and leverage needed to negotiate the best rates and services for every business. Identifying that supplier and playing to their strengths by providing them with the comprehensive shipping information leads to lower costs and greater operational agility.
Fact: Simply put, Shippers are being charged Whatever the Service Provider Thinks They Can Get them to Pay!
For many shippers, if they think they are getting the best price and service, think again, that is unless of course they have completed this Comprehensive Benchmark Analysis. Without this Benchmark Analysis, negotiating on their own will get a company the lowest price the shipping company believes it will take to get the business. Some shippers may be happy with that price, but it does not mean it is the best price in the current ever-changing marketplace. It’s perhaps the best price, but in A SINGLE COMPANY MARKET.
Good information is important! All the information is critical! Knowing a company’s “true” needs and the needs of transportation and logistics service providers gives the audit consultant access to all the information, enabling them to evaluate all current contracts and to provide advice on obtaining the ability to receive operational improvements and cost optimization at the same time.
Resource: Check out this video to learn more about how the transportation and logistics industry has changed over the years.
Fact: Almost Everything is negotiable. You just need to know what is the Best Deal available and how to get it.
At ICC, we make money by saving our client’s money. We negotiate the BEST DEAL for every client based on our 45+ years of industry experience, our consulting expertise in the field and access to all of the most relevant information and resources. Our clients make even more money because the BEST DEAL provides VALUE to their business in the form of efficient, effective, reliable service at the lowest possible cost.
Resource: Learn more about how we partner with our clients to help them achieve their goals.
Give us a call today and start getting the BEST DEAL tomorrow.
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