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Understanding FedEx & UPS Audits

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Navigating the Logistics Maze: Understanding FedEx & UPS Audits

In the world of logistics and supply chain, efficiency is the key to successful operations. Businesses rely on FedEx and UPS to deliver their products swiftly and safely to customers around the globe. However, with the complexity of shipping contracts, service agreements, and surcharges, it’s easy for errors to occur, leading to overcharges and unnecessary expenses. That’s where FedEx and UPS audits become a company’s secret weapon to cost savings and optimization.

Understanding the Basics

A FedEx & UPS audit is essentially a thorough review of shipping invoices to identify billing errors, overcharges, and discrepancies. These audits are typically conducted by third-party companies, specializing in parcel auditing services. The goal is to ensure that businesses are paying the correct amount for their shipping services and to recover any refunds owed due to billing errors or service failures.  Finding the right company to perform the audit is essential. Look for a company with experience and a proven track record of success in uncovering invalid charges and billing inaccuracies.  

How It All Works

The audit process involves several steps:

  1. Data Collection

The auditing company collects electronic shipping data from the business, including tracking numbers, and complete shipment details. This information provides a comprehensive overview of the company’s shipping history and expenses.

  1. Analysis

Experienced auditors, using sophisticated analytical software, analyze the shipping data to identify potential billing errors and overcharges. This includes examining factors such as incorrect weights or package dimensions, improper service charges, late deliveries, and all billing discrepancies.

  1. Claim Submission

Once errors are identified, the auditing company submits claims to FedEx and UPS on behalf of the business. These claims outline the specific errors found and request refunds or credits for the overcharged amounts.

  1. Refunds and Credits

FedEx and UPS typically have refund policies in place for billing errors and service failures, but they must be claimed in a timely basis in order to obtain refunds, so timing is of the essence.  Once the claims are processed and verified, the carriers issue refunds or provide credits to the business’s shipping account.

  1. Reporting

Throughout the audit process, the auditing company provides detailed reports to the business, outlining the findings, refunds obtained, but more importantly, potential cost-saving opportunities for future shipments which can be significant.  

Remember: Not all logistics consultants are created equal.

UPS audits

Benefits of FedEx & UPS Audits

Cost Savings

One of the primary benefits of conducting FedEx and UPS audits is cost savings. By identifying and rectifying billing errors and overcharges, businesses can reduce their shipping expenses and improve their bottom line.

Improved Accuracy

Audits help businesses ensure the accuracy of their shipping invoices, eliminating discrepancies and billing errors that can arise from complex rate structures and surcharges.

Time Savings

Outsourcing the audit process to third-party companies saves businesses valuable time and resources. Instead of manually reviewing invoices and tracking down errors, they can focus on core operations while experts handle the audit process on their behalf. It also gives businesses the opportunity to leverage years of experience and expertise that audit companies have in-house, for their own benefit, without the expense of hiring.

Performance Monitoring

Audits also provide valuable insights into carrier performance, including on-time delivery rates, service failures, and areas for improvement. This information enables businesses to make informed decisions about their shipping strategies and carrier partnerships– as well as creating data for additional optimization through parcel carrier negotiations.

The video below gives a fast and easy explanation on how audits work and why they can be so valuable to a business. Take a look!

Conclusion

In today’s competitive business landscape, every penny counts. FedEx and UPS audits offer a proactive approach to managing shipping expenses, ensuring that businesses only pay for the services they receive. By partnering with experienced auditing companies, businesses can streamline their shipping operations, reduce costs, and enhance overall efficiency. In the complex world of logistics, audits provide a valuable tool for navigating the maze of shipping contracts and tariffs, ultimately leading to cost savings and improved profitability.  Ready to get started and see immediate value? Reach out to our parcel carrier experts and get started.  

 

Deal

Was the deal you struck, the deal you got?

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Each and every day shippers and their freight carriers negotiate pricing agreements and contracts in good faith.  The goal of course is to create a long-term business relationship that benefits both parties.  The shipper receives the services it requires and the freight carrier receives adequate compensation to provide those services and to also generate a profit so they can continue to invest in equipment, technology, and improved services to meet the ever-changing demands of their shipper customers.

But, once the negotiations are finalized, how does a shipper really know it received the rates, discounts and incentives it negotiated?  Well, of course the pricing agreement or contract would contain those rates, discounts and incentives, so there is the proof, right?  Wrong!  While the contract might in fact have all of the correct rates, discounts and incentives the shipper negotiated, absent a comprehensive audit of the actual shipping invoices from the date the new agreement became effective, a shipper really does not know if the new pricing provisions were actually put into the carrier’s billing systems correctly.

In a real life example, one of our clients recently entered into a new contract agreement with its major carriers.  The negotiation was supposed to bring substantial savings to the client however after just a few weeks of the new invoices being submitted by the carrier for payment, the client felt that it was not saving money, but was actually paying more for their “normal” shipping activity.  The client engaged our company to perform a comprehensive Financial Audit to ensure the rates the shipper negotiated were in fact being charged correctly by the carrier.

Our Financial Audit of this client’s actual shipping invoices involved validating that all pricing aspects of the new contract were being charged properly by the carrier.  We re-rated every shipment to validate the accuracy of the carrier’s base rates; that the applicable discounts were correct; and that every accessorial fee was charged correctly.  The Financial Audit we performed also involved re-rating every shipment to validate that the Custom Dimensional Weight Factor the client had just negotiated was correctly applied to each and every eligible shipment.  (To be perfectly honest here, the computer actually re-rated all of the shipments, but I guess you knew that!)

The audit results were quite revealing, because the client’s concerns were in fact validated.  Many of the revised pricing provisions the shipper negotiated were not properly uploaded in the carrier’s electronic invoicing system.  The carrier did not apply many of the newly negotiated surcharge percentages.  Therefore all shipments subject to the revised surcharges were being overcharged.  The audit also provided some very interesting findings that would have gone undetected without the comprehensive audit process having taken place.  You see, the shipper also did not sign away its right to file claims for late delivery refunds, however for some reason the carrier inadvertently marked the account as having signed such a waiver, preventing the client from filing claims for refunds they were in fact entitled to.

Over a 180 day period, this Financial Audit identified over $100,000 in carrier invoicing errors for our client and they are now in the process of receiving a full refund from the carrier for these excessive costs.  Needless to say, our client now knows they actually “got the deal they struck!”

Supply Chain Flexibility in a Post Coronavirus World

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The many effects of the Coronavirus continue to change on a daily basis.  While reports of new cases in China have been declining, (and that is certainly good news), that is not the case in many other countries, including the United States.

Every country around the globe that has been affected, or could be affected by the Coronavirus is instituting a full court press in an effort to not only contain the spread of the virus, but to ensure the safety of their citizens as well as its economy.

Looking at the business side of this crisis, Global Supply Chains must now address the elephant in the room.  And, what is that elephant in the room? Can companies that rely solely on China, or any other foreign nation for that matter for their businesses life support, continue to do so in the future? 

Several years ago, there was an awful lot of noise about the need for companies to begin re-shoring efforts and bring manufacturing back to the United States.  And, what wonderful benefits that would be for the US workforce and therefore for the US economy. If only it were that simple!  

Simple or not, the best time for companies to take a hard look at their global supply chains to protect them from future global disruptions is between yesterday and tomorrow.  Yes, that’s right, today is the day to act!

And, let’s be honest here, simply moving our suppliers and/or manufacturing from foreign countries to US suppliers and manufacturers does not by itself guarantee there will no longer be any supply disruptions.  

But what companies must do, if they haven’t already done so, is analyze how they can make their supply chains more flexible, giving them immediate options to shift suppliers and/or manufacturing, if and when necessary.  Having said that, no one is saying it will be an easy task to achieve, but it certainly is one that must be analyzed.  

Another area global supply chains must look at now is where can a company achieve reductions in operating costs to help offset the loss of revenue companies will definitely experience.   Remember, operational cost reductions immediately fall to a company’s bottom line and therefore will have a positive impact in helping offset the loss of revenue from declining sales.

Transportation and logistics expense are an area a company must continually look into to see if they are leaving any money on the table.  This is never a one and done process and should be looked at continually throughout the year, every year. Here are some cost reduction areas a company should be continually evaluating.

Comprehensive Invoice Audit Processes

All companies must ensure they have a comprehensive freight invoice audit processes in place.  These processes should include an invoice pre-audit process, where invoices are audited prior to payment.  This can be done of course in-house or through the services of a Third Party invoice audit firm.

Whether a company audits their invoices internally, or outsources that function it should always engage a post-audit firm that will “audit the auditor.”  In other words audit the invoices after they have been audited the first time.

A comprehensive pre and post audit process can yield savings of 2-5% of a company’s annual freight expense, so this can have a significant positive impact on the corporate bottom line.

Comprehensive Freight Cost Benchmarking Services

All companies negotiate with their transportation and logistics service providers usually on an annual basis.  But very often the rates they receive are the rates the service provider believes the shipper will be happy with.  Being happy and ensuring your company has the most competitive rates for the services being offered are two separate and distinct things.

Without an independent third party benchmark analysis no company can ever be completely assured they will pay the most competitive rates with each and every one of their transportation and logistics service providers for the services actually provided. 

The financial impact on a company’s bottom line by having their rates benchmarked by an independent third party can yield enormous savings in excess of 10-40% of a company’s annual shipping expenses.  These independent third parties are not necessarily better negotiator. They will ensure however their clients will now be able to negotiate from a position of strength based on providing the comprehensive analytics necessary to ensure “the best deal.”   

So, the big question global supply chains must answer today is, is your company doing everything it can to soften the financial blow of the current Coronavirus outbreak?  If not, you’re company is definitely leaving money on the table. Call us today and speak with one of our logistics experts and we will help you “find the money you never knew was missing!” 

Five Step Plan to Lower Freight Costs

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They say, what goes up must come down and we believe that includes shipping costs!

Here is a Five Step Plan to rationalize your current transportation costs and use that data as a starting point to reduce those costs. We caution in advance however that this plan will require not just time on your part, but a commitment from the various key stakeholders within your organization. Ideally, this should include the most senior people in the organization. They need to understand the value of this mission and how it could positively impact the company’s bottom line. Follow these steps, commit to your savings goals, and you can do this.

Quantify Your Savings Goals:
Any cost reduction process must begin with goal setting. Ask yourself: How much do we WANT to save? How much do we NEED to save? Is there a delta between the two, and if so why? A sound knowledge of transportation cost structures is the key to successfully benchmarking costs and achieving savings. If your firm does not have the expertise to thoroughly understand the various cost structures, (including of course the assessment of accessorial fees and multiple surcharges), it may be time to outsource these services to a qualified Third Party. Remember in any negotiation, Knowledge is Power!

Identify Your Baseline:
What are your true transportation costs? Many costs may be hidden; perhaps your topline freight invoices don’t always reveal the whole story. For example, freight terms dictate how freight costs are captured, reported and expensed. In some cases firms purchase goods on a delivered basis. In many of these cases suppliers bury transportation costs in their product pricing, therefore masking the true cost of these shipments.
Transportation companies frequently overcharge shippers on invoices, and will make refunds ONLY when overcharges are detected and claims are filed for recoveries. Make sure your company has a comprehensive freight audit process in place to help find the money you never knew was missing!

Review and Update Your Supply Chain Strategy:
Supply chain economics change frequently; so should your supply chain activities. Many sourcing decisions that favored off-shore manufacturers for years are getting revised today. Similarly, consider consolidating fewer smaller deliveries into larger consolidated deliveries to reduce costs and improve efficiencies at the receiving dock. Remember there are hard savings in dollars, but equally important are the soft savings achieved as a result of process improvements. While we are on this topic, this is an area of savings that almost never gets the attention it should.

Develop and Track Key Performance Indicators, (KPI’s):
This is a mirror image of step #2, focusing on your internal processes. Here you’ll be measuring your basic transportation expenses across various platforms and materials: costs by product, by weight, by origin, destination, across various shipping modes, and so on. Settle on the number of KPI fields necessary to properly evaluate the success or failure of your initiatives. Do not overcomplicate the process by including metrics that have absolutely no value towards tracking and attaining the savings goals.

Initiate Your Cost Reduction Program:
You’re probably saying: sure, it’s that easy? Just like that! Well it can be just like that and here’s why: If you clearly establish your company’s current total cost of shipping, then you can clearly identify your cost reduction goals. Now you know exactly where you are and where you need to be to attain the realistic savings your company deserves.

A word of caution before getting started; you should never attempt to tackle this process alone if you are not absolutely sure of your starting point, (AKA current costs), and have clearly identified through a Comprehensive Benchmarking Process, where your company should be in terms of shipping expenses. Carriers will see right through your attempt to reduce costs without a clear and concise process and comprehensive documentation that proves beyond a doubt, that your company is entitled to the savings you are requesting.
Remember, there is help out there to make these negotiations simple, quick and more importantly, 100% successful, we are here to help.

Do You Hear What I Hear? How Will the “Noise” of 2019 Impact Your Business in 2020?

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Every year at this time, business leaders take a look back at their plans and goals for the current year to see how well they were able to stick to those plans and how successful they were at attaining their goals.  Some years they hit home runs and some years they completely strike out. In any event, the exercise of taking a true “no holds barred” assessment of their company’s performance is most critical.

In addition to this insightful business assessment, these same business leaders should evaluate how “noise” from the current year impacted their 2019 business decisions, and, if this “noise” will impact their 2020 plans and goals as well.   

A look back at 2019 presents a variety of “noises” that may have impacted many business decisions, some perhaps for the short term, some for the long term, and some not at all.  

In 2019, there were a number of major “noise” events, including many trucking failures that impacted both the Truckload, as well as the LTL segment of the industry.  At first blush these business failures brought fears of the “R” word returning…..RECESSION. That’s because the transportation industry has traditionally been a bellwether of things to come.  When the industry is in a downturn, which trucking closures would surely indicate, it sends signals that the economy is about to slow down.  

However, the actual trucking failures we experienced in 2019 apparently came about due to several carriers over extending themselves financially; several having unprofitable contracts with major shippers and, even some trucking business owners just wanting to move on and do other things.  

Actually, the numbers of trucking closures in 2019 were in fact significantly higher than they were in 2018, so it appeared these carriers were dropping like flies, when in reality the industry remained fairly stable.  

Another loud “noise” heard in 2019 was the “trade war” between the US and China.  This was an almost daily, up today, down tomorrow and vice versa effect on businesses around the world.  And it obviously did impact many business decisions and it certainly did impact many company financials as well.  

Now, there is word that an “initial” trade deal between China and the US has been agreed to by both parties, and the imposition of new tariffs that were supposed to go into effect last week are now on hold, perhaps temporarily, perhaps permanently.  We’ll know the answer to that question sometime in 2020 for sure.  

The “noise” heard on this front was and is a very complex one for all businesses involved in the Asia/US trade lanes, and what company isn’t impacted.  We suspect there will be a lot more trade war “noise” in 2020 and perhaps even beyond 2020.  

And what about the “Retail Apocalypse” or the “Amazon Effect” how have these “noises” impacted business decisions in 2019 and how will they impact business decisions and business goals in 2020?

And last but not least is the new USMCA trade agreement between the US, Canada and Mexico.  This is the trade agreement that is scheduled to replace NAFTA. From what we hear, (at least at this point), this new trade deal is in fact a real win for all countries involved.  Now that will truly be an amazing fete, if it is finally implemented.  

What all this “noise” means is that all businesses are operating in a new daily business disruption environment that constantly challenges the status quo.  Businesses need to listen to the “noise” they hear, try to assess if the “noise” is really something that will impact their businesses either positively or negatively and then make wise business decisions based on their own gut feelings of the facts, not the “noise.”  

How will your company react to the “noises” it will hear in 2020?  Will you make business decisions based purely on the “noise” of the day, or will you attempt to wait and digest the various messages coming from the “noise” and make sound business decisions based on facts.

At this time of year, we want to wish you a Very Happy Holiday Season and a New Year filled with health, and happiness.  

Success concept

Three Key Principles to Achieving Logistics and Supply Chain Success

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Today’s logistics and supply chain leaders are constantly implementing strategies to manage their daily challenges to ensure their businesses succeed.  We believe there are three core principles that must be adhered to in order to ensure that success is in fact achieved, and here they are:

  • Constant and Never Ending Improvement – Unlike creating a work of art, to be successful in business a company can never be “finished” with their logistics and supply chain improvement processes.  It is a constant work in progress. There must be ongoing and creative initiatives to continually seek out and implement improvements throughout the logistics and supply chain areas of the business.  Improve today and continue improving tomorrow and every day thereafter. It is never a one and done process.

If attitude dictates altitude then all members of the logistics and supply chain teams must truly buy into the process to achieve success.  They must feel it and do what is necessary to not only achieve success today, but more importantly, to work towards continually improving every aspect of their operations.  

  • Create a Plan with Capable Teams to Implement Those Plans – Having a plan of action will always make teams work harder and help them stay focused on their core missions and competencies.  There must also be total cooperation and buy in collectively from all teams. Teams must also learn to work collaboratively. Remember, it’s all about the “Yes.”  Yes, we can be successful if we make this operational change; yes, we can be successful if we implement these new business strategies; yes, we can be successful if we on-board this new 3PL business partner or implement this new software application.  

Teams must be relentless in their goal in achieving success by building high performance teams and encouraging everyone on those teams to be the best at what they do.

  • Continually Challenge the Status Quo – By challenging the status quo, logistics and supply chain teams will ensure they are in fact the “best they can be.”  Logistics and supply chain teams must continually strive to be creative, persistent, entrepreneurial, and always profit minded.  They must focus on key business drivers and never forget that they are in fact in the sales game; selling to their customers, continually selling to management and selling to each member of the various teams.

The logistics and supply chain teams must not be afraid to take risks, they must be willing to positively communicate ideas; they must not be afraid to challenge one another and, they must become change agents so they can create an amazing future for the business.      

We’re sure there are additional principles to achieving business success in the areas of logistics and supply chain management and we’d love to hear about your team’s experiences.