How Varsity Helps Control Shipping Costs May 8, 2009
One of the benefits of Varsity’s shipping software modules are embedded features that help to control transportation carriers costs across the entire shipping process – before a package ships to after an invoice is received. We’ve highlighted the cost-savings benefits of some of our products below.
Ship Select: This module comes into play before the shipment occurs (many customers integrate ShipSelect into their order entry and even quoting processes). ShipSelect automates the carrier selection process for shipments of all modes including LTL, truckload, and rail.
ShipSelect is designed to automatically analyze criteria such as transit time, carrier preference, cost, mode, performance, and carrier service types to select the carrier based on the user’s particular criteria. This guarantees the optimal carrier is chosen for every shipment while conforming to routing guide requirements. By performing the carrier selection process upstream, this ensures that customer shipping requirements are exactly met at order placement time.
Ship Audit: This module comes into play after the shipment occurs and carrier invoices have been received by Account Payable (customers typically integrate Ship Audit with their ERP accounting processes).
Varsity Ship Audit Case Study
The customer is a parts distributor that ships more than 6,000 packages per day from 50 locations with monthly carrier charges typically exceeding $50,000. With this level of shipping volume and complexity, the company needed to get a better understanding of their charges. In the past, the company’s accounts payable department was responsible for reviewing weekly invoices covering 40 separate accounts. Without a dedicated staff, the manual review of individual shipments was impossible. Instead, bills were audited against estimated shipping expense and historical averages. Supplemental third-party auditing services reviewed accounts for other purposes.
To address these challenges and gain greater insight into their shipping expense, the logistics services team requested flat files from their carriers and licensed the ShipAudit module from Varsity.That solution could automatically identify rate and discount discrepancies, provide customizable exception reports and integrate with the company’s shipping and accounts payable systems.
The company established exception criteria based on package size, shipment method and service charge guidelines. Variances outside the company’s defined ranges could now be identified on an exception report. Using the company’s criteria, 4-5 % of shipment orders appeared on the exception report.
Carrier errors accounted for 1 ½ % of the exceptions, usually for residential fees or out of zone over charges. ShipAudit also automatically checked for duplicate charges and wrong account numbers and sent these discrepancies to a pending file for review.
ShipAudit enabled the company to gain control of freight expense across their organization, yielding
the following results:
- Shrunk weekly carrier invoice auditing time from18 hours to less than one, and expanded shipping accounts to more than 50.
- Eliminated third-party auditing expense.
- Identified internal shipping errors, and provided targeted employee training to reduce costly shipping errors.
- Identified billing errors and reduced carrier invoice expense by 1 ½ percent.
- Improved the monitoring of regional shipping activity. Regional freight revenues/expenses could be compared to catch disproportionate freight discounting.
- Gained access to shipping details that were previously only known to the carrier, for example, % of ground shipments or high activity shipping zones. The company could then negotiate carrier contracts that better matched its requirements.
The company’s shipping manager seemed to sum up the experience well: “We like working with Varsity because they maintain a close relationship with the carrier companies. With our dispersed locations, we have to have the most current shipping information. Adding ShipAudit was a simple process with immediate payback.”
ShipView Plus provides customers with extensive access to carrier shipment data as well as powerful tools to analyze and visualize information. Understanding how, where, and how much different DCs are shipping with various carriers is a snap. Drilling down into accessorial charges offers unprecedented insight into carrier costs.