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What is a Parcel Audit?
A parcel audit is the process of systematically reviewing parcel shipping invoices with the purpose of finding billing errors and inaccuracies. Why?
For many, parcel auditing is one of the first steps toward mitigating costs by identifying which parcel carrier charges are truly owed vs. which need reconciling and elimination.
Typically a parcel audit helps you identify:
- Rating errors – a standard rate audit looks to confirm whether or not your parcel carriers are billing you accurately based on the terms within your individual parcel contracts.
- Billing errors – parcel audits typically seek out billing errors that can be disputed and reversed quickly (such as unexpected assessorial charges that are the result of the carrier vs. you the shipper), as well as database adjustments that could impact future or recurring shipments (such as customer address corrections)
- Late deliveries – a standard parcel audit will also investigate existing late deliveries to recoup expenses, as the Big Two and other carriers may allow for credit requests if the original delivery window was missed without adequate cause.
- Deviant shipments – a standard parcel audit may also consider deviant shipments, wherein the auditor is looking to understand any invoices that indicate one or more shipments deviating from a specified timeframe’s anticipated shipping activity (such as duplicate or missing/invalid shipments).
A Best-in-Class Parcel Audit
An effective parcel audit can actually be more than cost mitigation, but can also be a step toward strategic parcel spend management. A best-in-class parcel audit seeks to utilize higher levels of data to provide insights that help you make strategic decisions about your parcel network.
A best-in-class parcel audit will:
- Seek to understand the components of your parcel network that aid or hinder your parcel contracts, and vice versa. (e.g. Consider do your existing DCs and existing carriers support one another?)
- Go above and beyond with your data to verify decisions that lead up to your invoices – a strategic component that seeks to understand how the health of your parcel network is reflected in your invoices.
- Utilizes various component of your parcel network data to validate, verify, and help forecast your parcel network, including:
- Full Carrier Contracts
- Authorized Shipping Accounts
- Shipping Facilities
- PO Information
- Authorized Shipping Personnel
- Package Movement Data
- Order Files (WMS/TMS/OMS)
Put Your Parcel Audit to Work with 3 Critical Steps
Parcel auditing is a necessary task for shippers in today’s rapidly growing parcel market. Without an accurate auditing system, shippers stand to lose a significant amount of money due to billing errors as well as the valuable data created by the audit.
Validation and Verification: Making the Most of Your Parcel Audit
Validation looks at “Did I get what I paid for?” whereas verification looks at “Did I request the right thing?” A common factor seen in the attempt to answer these questions is the utilization of a parcel audit. A traditional parcel audit can help to shed light on two issues regularly seen with high-volume shipping.
Parcel 101 Video Series: Components of a Best-in-Class Parcel Audit
In this video, GMT'S VP of Operations, Gwen Rhines, shares the components that are needed for a best-in-class audit and how it sets the stage for Parcel Spend Management.