The world of small parcel shipping is complex. It is challenging to navigate through the web of multiple surcharges, tiered pricing and contracted delivery guarantees . Especially when there is zero visibility into the true cost of shipments. It makes a strong case for an in-depth, continuous shipping audit process.
However, it is shockingly common for businesses to overlook the complexity that FedEx or UPS invoices present. While staying acutely aware of billing discrepancies, mounting overcharges, latent errors in their shipping invoices, businesses continue to resist incorporating a systematic shipping invoice audit.
In our work with businesses, we find that there is a gap between what an audit process is assumed to deliver and the actual value-add it brings.
Here we dispel some of the common myths about auditing FedEx or UPS shipments.
- My in-house logistics team will suffice: Yes, No, maybe. Your logistics team may have an internal mechanism to comb through each and every FedEx or UPS invoice thoroughly. Despite their relentless efforts, there is a good possibility that they miss out on at least 50% of the errors. Yes, you read it right. A large chunk of the errors is likely to go unnoticed. This is mostly due to the monotony and complexity of the invoice audit process.
- We never run into issues with FedEx and UPS deliveries: You have never had any issue with deliveries or shipping rates. Have you? Are you monitoring the on-time delivery performances of your carrier? Do you compare this month’s OTD with that of the previous month? Is there a dip or spike? The following image trace the change in percentages of delayed deliveries for UPS and FedEx deliveries in the run-up to the holiday season:
- My business is not interested in claiming shipping refunds: Shipping refunds for late deliveries make up for 10% – 12% of the shipping costs. FedEx, UPS, and DHL charge a premium for services that come with an on-time delivery guarantee. So if you are not claiming refunds for service failures, you are letting go of the money that you are entitled to. Although a thorough FedEx or UPS invoice audit will bring to surface more cost optimization avenues, it does cost you time and effort. Recovering refunds for delivery delays is the most straightforward method to reduce your shipping costs.
- I trust my shipping carrier: Sure the carriers are trustworthy. Especially global carriers such as FedEx, UPS, and DHL. But applying the right accessorial charges or base transportation charge in compliance with your SLA can get tedious even for behemoths like FedEx and UPS. It is impossible to apply charges with 100% precision. Moreover, FedEx, UPS or DHL do not automatically offer credits for service failures. You have to submit claim request to recover refunds from FedEx, UPS or DHL
- Small parcel audit will end my relationship with shipping partner: If you are an eCommerce business owner who ships frequently and in large volumes, the relationship with your shipping partner is critical. Your shipping partner needs to align with the company’s culture, must understand your customer’s and must make sure that delivery promises are kept. Most businesses shy away from auditing FedEx or UPS invoices fearing a rift in their current relationship. But on the contrary, FedEx, UPS or DHL expect you to hold them accountable for on-time deliveries. When businesses monitor their invoices and measure on-time performance, FedEx and UPS are able to improve their service multifold.
- Auditing shipments are limited to collecting service refunds: Refunds, although essential, form a small part of your savings on shipping costs. Much proactive analytics can help you unearth cost savings even before your business incurs them.
For example: Say your business is shipping through FedEx standard as well FedEx priority overnight to the same location. A deep dive into delivery performance may bring to light that both have the almost identical delivery speed to that particular destination. Wouldn’t you opt for the less expensive option? The savings would be huge.
Surcharges and base transportation charges are not set in stone. A thorough audit of these charges will aid your team to negotiate and win a significant discount on these charges.
- Auditing shipments is time-consuming: Yes they are. That is why at AuditShipment we have automated the entire audit process for FedEx, UPS and DHL shipments. This offers an efficient yet effortless process to our customers. All you need to do is simply link your FedEx, UPS and DHL account. Our AI Engine takes over to churn out revenue optimization strategies, delivery mode recommendation on top of automatically disputing carrier errors and winning refunds.
- Auditing shipments is expensive: Is it? Let’s get this cracking. Shipping is the second biggest expense for your eCommerce business. There is no escape from the costs associated with shipping. So you should grab even the tiniest opportunity to cut back on your shipping expense.
- Parcel Audit is an overhead function – As an e-commerce business, customer delivery experience is your bread and butter. If you are not closely monitoring, measuring and incrementally improving on-time delivery rates, your business is in serious trouble. Your competitor may step up the speed of order delivery. In that case, your customers will not think twice to switch over. Auditing your FedEx, UPS and DHL invoices is directly tied to your brand reputation and customer loyalty.
- Annual one-time parcel audit is enough: Your FedEx, UPS, DHL shipments need to be audited continuously. Only a systematic auditing process can result in maximizing the savings on your shipping costs. Given the dynamic nature of the FedEx, UPS and DHL rates and the accessorial charges, it is critical to building a process. You could leverage the summation of all the findings, unbiased delivery metrics, and key insights to drive a hard bargain during contract negotiation. Still, the audit process must be consistent to validate the soundness of the best practices and ensure compliance with SLA.