What is a Transportation Audit?
When summer temperatures begin to rise, planning for the upcoming fiscal year really starts to heat up, as well.
Around this time every year, most retailers are spending time preparing stock for the upcoming holiday season. Meanwhile, manufacturers are typically ramping up production rates. And the distributors that allocate all that seasonal merchandise are lining up shipments and drafting contracts.
Within all of that busyness, one critical role demands attention from each of them… the carrier.
The efficiency of the carrier who transports all of this freight between locations is absolutely critical to pulling it off in time. This is why many large companies trust an experienced 3PL to complete a routine transportation management audit.
A transportation audit is performed for reviewing carriers, shipping needs, and transportation procedures currently employed within a companies supply chain. With this data in hand, shippers can better plan and make decisions regarding their current needs.
In this blog post, we are going to look at why most large-scale companies trust a 3PL to perform this essential service for them. Additionally, we will talk about how they actually go about helping shippers uncover areas of waste and turn it all around before winter!
How 3PLs help Shippers Achieve Optimal Logistics With a Routine Transportation Audit
A 3PL should have one primary objective; improve the efficiency of their client’s supply chain.
And while there are a number of methods, procedures, and areas that a 3PL will target to achieve it, audits are a key tool. When a 3PL performs an audit for you, they are looking at various areas in your supply chain. More specifically, they are focusing in on any area first that shows signs of weak points. They suss out these weak points, analyze them, discuss them with you and then go about applying appropriate fixes.
Let’s take a look at a few of the benefits you will get from a 3PL transportation audit…
Negotiations with carriers
Frequent shippers trust their 3PL to negotiate shipping contracts for shipping rates and surcharges that are usually reduced based on volume.
However, a 3PL goes much further than the simple volume-based shipping discount. They work with carriers in several modes from parcel to multimodal to find the best deals within their client’s budget. They are able to do this a whole lot simpler than you may be able to in the given time-frame. That’s the raw power of a strong 3PL network.
Once a carrier has been selected, the 3PL handles all the negotiations, paperwork, and permits on your behalf.
Managing accessorial charges
One of the leading cost inhibitors to achieving supply chain optimization are unexpected accessorial charges. Many 3PL’s have strong relationships with carriers, which permits them to further negotiate or eliminate several common extra fees.
When shippers go about this themselves, the results are lackluster in comparison. Most of the time, carriers will cut or significantly reduce fees for partners they work with regularly. This type of relationship and access to budget-friendly prices just takes time.
Time that your 3PL has spent working with them already!
Some shippers find it cost-prohibitive to internalize their shipping and receiving operations. They trust a 3PL to manage their warehousing and off-site hosting of freight – which not only saves them a lot of money, but tends to produce more accurate inventory control, and expedites the process of moving freight.
They can relax while the 3PL researches, compares, locates, and acquires storage on their behalf.
Yet another process that takes a fair amount of time and money to make happen with any level of viability, Storage and warehousing, in general, is not cheap. Again, herein lies the power of a 3PL network.
What is the Goal of a Transportation Audit?
The benefits we went over above can significantly help any sized shipper improve their supply chain operations. However, these benefits are different for every company. Depending on the industry, demographics, and sales numbers these needs will vary just a bit.
But, that’s the entire purpose of a transportation audit. To find issues and areas that can be improved upon to optimize the efficiency of your freight shipments.
The typical transportation management audit consists of three independent areas of review:
Reviewing current shipping needs
The first item that creates a baseline of discovery for any audit is reviewing the needs of any service. This important first step permits the 3PL to customize the audit for each client – so they can accurately determine whether their operations are operating on the up-and-up or can use some improvement.
Analyze their needs for the future
It’s always suggested to plan for future growth in any industry. But this is exceptionally critical for supply chain operations. If a business experiences growth in sales, but does not have the bandwidth to fulfill, the company will not satisfy new customers. The transportation management audit will consider this important attribute in any audit.
Inspect all current agreements and procedures
Finally, once they have a baseline of understanding of the shipping and receiving needs of every client, they will ‘take a look under the hood’ of their supply chain network. This includes reviewing all current contracts, shipping rates, surcharges, and the carrier’s performance.
It’s important to state that these three items are just the tip of the iceberg.
A professional 3PL will always customize the audit to meet the needs of each client – based on their specific logistics needs. They will work with you to discover opportunities for improvements, ways to eliminate waste and show you how you serve can better serve your customers.
Want to discuss opportunities for a transportation management audit before you head into 2020? Reach out to our team here at Redwood Logistics!