In today's complex global logistics landscape, managing the supply chain requires more than just a Transportation Management System (TMS).
While TMS focuses on shipment execution, it's crucial to recognise that a comprehensive freight audit and payment (FAP) solution is equally vital.
By integrating these two powerful tools, businesses can establish a mature and successful logistics operation that optimises processes, ensures compliance, and drives cost reductions.
The Role of Freight Audit and Payment Software Systems
To achieve optimum efficiency in your global financial supply chain process, the implementation of a freight audit and payment software system is essential.
By leveraging such a system, businesses can unlock a plethora of benefits, including the identification of new efficiencies, compliance assurance, and cost reduction opportunities across their global transportation spend. However, to truly gain end-to-end visibility into this spend, a strategic partnership with a reliable freight audit and payment provider is paramount.
Let's delve deeper into the realm of freight audit and payment and explore how your FAP system can work harmoniously with your TMS.
A Brief History of Freight Audit and Payment
Before the deregulation of the transportation industry in 1980, payment terms were standardised, and freight invoices had to be settled within a matter of days.
However, with deregulation came increased complexity as shippers and carriers gained the ability to negotiate freight bill terms. Consequently, the need for comprehensive freight audit processes grew, especially with the advancements in technology over the past few decades.
Today, a robust freight audit and payment provider can gather substantial data regarding a company's transportation spend, enabling in-depth analysis and providing valuable business intelligence, including carbon emissions, carrier performance, and other essential key performance indicators (KPIs).
Transportation Management Systems
A Transportation Management System (TMS) is a software solution that empowers companies to optimise their global supply chain and logistics operations across multiple modes and regions. While a TMS primarily focuses on shipment execution, it plays a crucial role in ensuring efficient operations.
1. Shipment Execution
The primary objective of a TMS is to facilitate efficient shipment execution. It allows businesses to tender loads to carriers or logistics service providers through electronic interfaces, ensuring seamless communication and streamlined operations.
2. Load Optimisation
Load optimisation is another critical function of a TMS. By consolidating less-than-truckload (LTL) shipments into full truckloads and selecting the appropriate carriers and services, businesses can maximise efficiency and reduce costs.
3. Software-Focused Approach
Unlike managed services, TMS operates as a software-focused solution. It enables businesses to leverage advanced technology for improved planning, optimisation, and execution of their supply chain and logistics operations.
4. Basic Freight Audit
While TMS typically includes basic freight audit functionalities, it falls short of providing a holistic view of an enterprise's total transportation spend across their global network. This is where the integration of a dedicated freight audit and payment solution becomes crucial.
The Goal of FAP & TMS Systems: End-to-End Visibility
In order to control, optimise, and improve your supply chain, comprehensive visibility is essential. While TMS focuses on efficient shipment execution, a freight audit and payment system complement it by capturing and analysing crucial data related to carrier execution, costs, and potential areas for improvement.
By integrating an industry leading FAP solution with your TMS, you can achieve end-to-end visibility across your entire supply chain, effortlessly matching shipped goods with invoiced amounts, identifying outstanding charges, and anomalies.
Automating Data Capture for Standardisation and Centralised Intelligence
Capturing key data is only half the battle; standardisation and centralised intelligence are equally critical. This is where a dedicated freight audit and payment solution shines.
By seamlessly integrating with your TMS and automating the capture of data from various systems, it ensures that the information collected is standardised, cleansed, normalised, and connected. This centralised intelligence empowers businesses to gain invaluable insights into their transportation spend.
Benefits of Freight Data Capture by FAP Solutions
Implementing a structured freight audit process offers numerous benefits that can significantly impact your bottom line. Let's explore the advantages of regular freight audits performed by robust FAP solutions.
1. Uncover Unnecessary Costs
A comprehensive freight audit process validates freight data, allowing you to identify and rectify excess charges. For example, it can reveal unnecessary detention and demurrage fees incurred due to storage or delays in container return. Additionally, by cross-referencing invoice fees, a freight audit can alert your accounts payable team to unexpected accessorial charges, such as reweighing. By adopting a structured FAP system, you can reduce costs, improve return on investment (ROI), and optimise your supply chain.
2. Reveal Missing or Incomplete Data
Establishing a solid FAP process within your supply chain tech stack enables end-to-end visibility and helps uncover missing or incomplete data. Identifying information gaps early on allows you to fill them promptly, saving time, money, and potential contract issues. With complete and accurate freight data, you gain valuable business intelligence that propels your enterprise to new heights of operational excellence.
3. Increase Efficiency
The freight audit and payment process serves as a powerful tool for uncovering operational inefficiencies within your supply chain. By replacing manual processes with technology-based solutions, you can enhance efficiency across multiple departments and your supply chain as a whole. This, in turn, leads to lower transportation costs, reduced carbon emissions through route optimisation, and more effective utilisation of your team's time, thus maximising your bottom line.
4. Future-Proof Against Invoice Errors
Freight billing errors are inevitable, but catching and rectifying them early on is crucial. By implementing an internal FAP solution that audits all invoices, you can calculate shipping costs accurately, pay freight bills on time, and streamline payment services.
Additionally, detecting invoice errors provides valuable insights into logistics operations, allowing for necessary adjustments and optimisation. By staying proactive, you can prevent future errors and ensure smooth operations.
Leveraging the combined power of a Transportation Management System (TMS) and a freight audit and payment (FAP) solution is vital for optimising efficiency and achieving end-to-end visibility.
By embracing FAP solutions, businesses can unlock new opportunities for cost reduction, compliance assurance, and process optimisation.
The seamless integration of TMS and FAP empowers enterprises to gain comprehensive insights into their transportation spend, uncover inefficiencies, and make data-driven decisions for a successful logistics operation.
Embrace the power of FAP solutions today and propel your supply chain towards unrivalled efficiency and success.