It’s been nearly 35 years since FedEx transitioned to EDI billing, and not a single shipper today would accept what was a standard FedEx or UPS parcel invoice prior to 1990. Imagine a paper invoice summarizing hundreds of shipments with little to no information beyond dollar amounts owed. Do you trust these numbers? How do you verify their amounts? Does each amount correspond to an individual shipment – and, more importantly, do these amounts account for delivery errors or shipping credits? Even today, shippers often lack confidence in their carrier invoices practically brimming with shipment information by comparison. This was the impossible reality that ultimately gave rise to the Freight Bill Audit and Pay (FBAP) provider industry (wherein third-party experts help shippers audit and pay carrier invoices with accuracy) in the late 1990s. But did you know that FBAP providers are having more than a moment in today’s competitive parcel landscape – and their shining star isn’t necessarily their audit or pay services? In fact, in the 20+ years since, standout FBAP providers are joining shippers at the network strategy table and helping solve complicated and persistent problems. Why and how is this happening?
First, shippers expect more useful (decisive) data to guide their networks. Cleansed, labeled, and normalized carrier data happens to be a great data mine, and it has gained importance through the pandemic as shippers have had to rely more on carrier diversification and less on contract negotiation to achieve goals like cost mitigation and increased delivery speed. Though this was happening before the pandemic, 2020 really underscored the need for shippers to look inward as much as possible to overcome unforeseeable (sometimes global) supply chain bottlenecks. FBAP providers’ view of carrier data offers a number of areas to begin: which carriers are or aren’t performing, which zones are most problematic, which surcharges or accessorials are impacting your bottom line most?
This brings us to another important evolution for FBAP providers – shippers are looking for more cost justification and decision-making support from them than ever before. Instead of asking which carrier is right for them, shippers increasingly want to know which carrier is the most cost-effective or perhaps the best delivery experience provider for a particular package type, zone, or customer, too. On top of all these considerations, carriers have introduced new or adjusted existing fees, and those changes have come both swiftly and frequently. The incorporation of these fees requires constant updates to your rating logic and analysis of the larger network impact. This has heavily increased the importance of partnering with a FBAP provider that will verify and monitor such changes with you, as close to real time as feasibly possible.
Second, shippers are seeking to actually do something with their customer data, too – and when you combine carrier and customer data feeds skillfully together, you unlock newfound potential to analyze your network and identify winning future opportunities. Your understanding grows from assessing a shipment based purely on size/weight, cost, or time, to what’s inside the box, and – in some cases – the purchase intent that created the box. Many shippers use this combined approach to gain more accurate order statistics, ultimately helping guide and fortify their budget and inventory plans for the year(s) ahead. Some rely on this kind of approach for more timely compliance reporting, and others are using it to better understand larger components of their business, like order cycle times. Separate, these two data feeds already tell you a great deal about your network, your business, and your brand, but together you may find the missing ingredient to solving peskier problems that have seemed out of reach. Take package theft concerns, for example; many are starting to look to FBAP providers to gain some sense of the likelihood or risk of theft within a designated location. With such information in hand, shippers can choose to change the delivery options for a consumer in a high-risk area, opting for commercial pickup instead of residential delivery for example.
Third, shippers are creatively applying a blend of carrier, customer, and overall network data obtained from FBAP providers to gain better supply chain footing. Shippers are looking to FBAP providers to help provide a more holistic view of their supply chain network and make smart decisions. Shippers are asking questions like – does that data indicate an order fulfillment risk or bottleneck, can that data support (or demand) a distribution center change, or should I change my e-commerce shipping offerings (i.e. Express, Economy, or Deferred Delivery)? Take carrier diversification, for example, which became a significant area of focus for shippers throughout the pandemic. Shippers no longer simply want guidance on how to diversify their carrier mix, but now want guidance on how to also optimize that diverse carrier mix – just like they would a primary carrier.
Others are using FBAP provider data to optimize modes, too, by enabling their WMS/TMS to push particular shipments to LTL in the effort to reduce overmax charges. Some partner strategically with FBAP providers for box carton analysis at ship-from-store locations, reducing both errors and time. But shippers aren’t always looking to FBAP providers for guidance regarding their specific network. They’re also starting to seek guidance about the global supply chain, and how their network fits into it (or at least could be impacted by it). In addition to helping guide budget and inventory decisions, FBAP providers are beginning to help clarify the global supply chain to shippers and their executive leadership teams.
Shippers are ultimately looking for a wider range of tools to identify opportunities that could be leveraged to mitigate shipping costs or reduce delivery times, as well as increased data to help them understand their shipping network, their customer, and their overall business strategy better. In the past, shippers’ reliance on FBAP providers was largely limited to the scope of the audit – anything extra, such as opportunity identification or decision-making support, was simply a delight. Today, shippers have an all-hands-on-deck approach to utilizing every resource available to them, and the examples above indicate how their relationship with FBAP providers as evolved into something much greater.
This article originally appeared in the November/December, 2022 issue of PARCEL.