FMCG Freight Audit Case Study

September 28, 2015 Pieter Kinds

The business case of a global leading, fast moving consumer goods (FMCG) company that uses ControlPay's fully outsourced and web-based Freight Audit solution to optimize freight costs and visibility.

Clients details

Company: Global Fast moving consumer goods (FMCG)
Scope: EMEA, NA
Business units: 3
Sites: 15 plants, 8 rdc's
Shared Service Center: 3
Shipments: 5.1M yearly
Spend: 200M Eur: Road, Sea, Air, Parcel
Carriers: >100

Goals

FMCG Freight Audit Case Study

Vendor selection

Based on an RFP process, ControlPay was selected as global freight audit service provider. ControlPay scored high due to the ability to serve the client in all geographical areas, the capability and flexibility in interfacing with both client and carriers and the overall technology driven approach.

Set up

- Shipment transaction interfaces with 6 different ERP systems (3 SAP, 2 JDE, 1 legacy system)
- Carrier onboarding based on process per carrier
- Carrier invoice interfaces with 40 carriers
- Master data/rate set up
- Back check of all invoices of one-quarter
- Customer User training
- Business Intelligence, including Cost to Serve reporting

Freight Audit Solutions

FMCG Freight Audit Case Study

Results

Rate analysis uncovered several incomplete and unclear parts of many contracts, which were clarified during set up. Invoice back checking produced overbilling findings of different percentages per carrier (between 0% and 11.3%). Overall overbilling added up to 3.6%.
After implementation, overbilling found was reduced to 2.2%. As a considerable part of the scope is being processed on a pre-invoice/self billing basis, overbilling is avoided.
Effective extra cost management has lead to rejection of charges which have no approval record available. Reporting reveals extra cost occurrance per site, per carrier and per client approver. Further analysis of the related reporting has already lead to updating of rate agreements to formalise rates previously processed as spot rates. Next to that, certain extra costs were included to the automatic ratic, based on implemented logics, reducing the number of extra cost events.

Automatic account coding logics adds coding to 94% of transactions at first time processing at the start of the project, which has been increased to 97% after 4 months of processing. Missing account coding is being completed upon request of invoice auditors by means of an application based workflow, allowing accounts payable to feed back missing coding. Account coded invoice data files are processed overnight, delivering input for accounts payable. Payment data are fed back to ControlPay, allowing ControlPay to issue remittance notifications to carrier contacts, as well as on line payment status visibility. On time payment has gone up to 99.2%. ControlPay BI now contains invoice and shipment transactions from all ERP systems, but also transactions which were not being captured before. Each site and each business unit now has a view on how much they spend with each carrier, including all related shipment details. The data has proved invaluable in tenders the client has issued since the start of the project. Not only is it possible to create a solid base line for tenders, it is also possible to process tender feedback and calculate the cost impact of individual offers.

After 6 months of processing, the clients audit firm has visited ControlPay premises to conduct an extensive audit. Being audited based against ISAE3402 and SAS70 on regular basis, the external audit did not bring any significant deficiencies to light. The Return on Investment goals created at the start of the project have been achieved and exceeded. The overbilling goals have been reached. Next to that, data based invoice posting and considerable reduction of carrier queries due to provided payment information has released FTE resources in the accounts payable areas. Thanks to the consolidation process the amount of invoices to the client decreased significantly, with 40% to 112.000. This resulted in a low touch approach for both the logistics department as finance.

But beyond these first wins, the most valued achievement is considered to be the major improvement with regards to visibility and transparency on where the money is being spend.

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