Freight audit firms tap into Big Data


16 By John Jeter


More than 7 billion people every year now move more than one zettabyte’s worth of information—the equivalent of 150 copies of Freight Business Journal delivered every day to every person on the planet. They also traded $17 trillion worth of merchandise worldwide last year. With the internet transporting the former and the global supply chain moving the latter, and with numbers as ginormous as these, it’s an Amazon-sized jungle out there. That’s especially true in the


world of freight invoicing. And in that mind-boggling space, something’s bound to get lost: the consumer. “Think about it,” Hannah


Testani says during an August podcast where she touched on the importance of logistics companies to satisfy and retain customers up and down the supply chain. “When you go home and find that your package has been mashed into your mailbox along with all your other mail, it’s not a good experience as a consumer.” Testani is COO of Intelligent


Audit, one of dozens of Freight Audit & Payment companies worldwide that do just that: review invoices


their client


shippers receive to ensure all the charges on the bill are valid. These days, that means


deploying technology that must keep up with increasingly complex transactions in ever- expanding numbers. One FAP, for instance, Cass Information Services, processes more than 34 million invoices annually for its 300 shippers.


An intricate business


Invoice auditing’s multilayered intricacy involves such issues as real-time tracking of carriers’ shipments, dealing with trucker shortages and capacity challenges, and drilling down to transportation costs at the SKU- level. At the same time, executives


say FAPs are looking at how their in-house technology and, more importantly, Big Data can be deployed to better serve the folks who drive logistics in the first place: every consumer with today’s click-and-buy, next-day e-mindset. “Previously, shippers never


looked at how many customers were being lost due to delivery exceptions or a poor delivery experience,” Testani tells podcast listeners before telling FBJ: “Shippers are increasingly looking for sophisticated global technology providers who can help them truly understand their transportation spend, monitor carrier performance, and arm them with the tools required to cut costs and reduce time-in-transit while improving customer experience— all of which seem to be in contradiction with one another.” You’ll find no contradiction


there from Steve Beda, EVP, customer


solutions at Trax.


“The biggest shiſt in the FAP sector is more focus on data management and the rich analytics


that result from


augmented data, than simply a core audit of carrier invoices,” he says. “While audit remains an important part of the value proposition, there is great long-term value in generating what we call Transportation Spend Intelligence as part of an overall Transportation Spend Management strategy.” In other words, in addition


to its bread-and-butter work processing, polishing, and proving payment of carriers’ freight bills, Trax, like Intelligent Audit, is pulling more value from so many petabytes of invoicing data. (Just how much data? A zettabyte is composed of 1 million petabytes; one petabyte contains the rough equivalent of 20 million four-drawer filing cabinets filled with text.)


Great expectations


While FAPs improve their management of Big Data, their


clients are expecting even more from all that potential—and from the FAPs harnessing it. “Shippers are demanding


more visibility to complex spend and wanting to more control over transportation spend in general,” Beda says. Last year, executives


manufacturer’s other crucial distribution channels, namely Walmart and Target. IA helped negotiate new contracts between the manufacturer and its carrier partners, while also adjusting volume forecasts and creating volume incentives.


cited


a 1970s study saying shippers overpaid $7 billion a year to carriers. Nowadays, FAPs typically save


shippers 3-5%


in their annual transportation spend by catching inappropriate accessorial charges and service levels, recurring billing errors, and even shipping labels with the slightest inaccuracies. Additionally, FAPs say they


streamline shippers’ own bookkeeping shops. “Trax has also invested in


making the core FAP process more efficient by automating workflows, using online, web- based collaboration tools that were traditionally performed using email, phone, and yes, sometimes even a fax machine,” Beda says. For instance, customers use


Trax data to drive Requests for Proposal, thereby improving contract pricing and RFP compliance. That “optimization strategy” saved clients 5-15% in the last 12 months, Beda says. Another case study illustrates


how FAPs are flexing their technological and Big Data muscles to help clients beyond their core green-visor auditing operations. In this instance, a global


manufacturer of children’s toys sought out Intelligent Audit. The problem? Toys “R” Us closed down, leaving the manufacturer scrambling. Now what? “In


order opportunities to identify to capture lost


business,” the case study says, “Intelligent Audit evaluated all transportation going to each individual toy retailer around the world—analysing both frequency of shipments, as well as types of SKUs.” The result: A decision to


open pop-up locations in high-demand markets, while remaining mindful of the


Tectonic technological shiſts


While tectonic technological shiſts appear to be creating a consultative space within the FAP sector, Craig Cameron, vice president, sales and marketing at A3 Freight Payment, says: “A3 has chosen to remain focused on our


Issue 7 2018 - Freight Business Journal


///FREIGHT AUDITY + PAY


and off. CT’s TranSaver, now more than 30 years old, operates along the lines of a co-op, whereby shippers collaborate for stronger buying power from participating carriers. The second program is FreitWeb LCR, which stands for Least Cost Rating. The interactive portal, integrated with TranSaver, lets shippers shop carriers, plan shipments, and allows users to populate and print a standardized bill of lading, and tender the shipment online. In making a specific point


about current trends in the FAP sector, Allan J. Miner, CT’s president, cites increasing capacity constraints in the trucking industry. At the same time, those limitations help drive shippers’ demand for the company’s technology to rate- shop and tender their loads. “CT has also seen an increase


core competency of


providing a reliable, customized, freight payment solution for complex shippers, rather than trying to maximize revenue opportunities at the expense of our customers/core business.” He mentions a new client, a


manufacturer that partnered with a company specializing in last-mile delivery; the manufacturer’s newly expanded distribution model now included shipping and product installation. “Rather than traditional


transportation invoices, this solution produced invoicing that contained installation charges, management fees, warehouse


fees, and other


associated charges,” he says. A3 simplified all that, creating


a customized Electronic Data Interchange, or EDI, feed for the new partners. The program, among other value-added bells and whistles, validated installation codes at the product/SKU level. “Prior


to A3’s involvement,


the manufacturer had no audit of these charges and limited reporting,” he says. “In the first two weeks, A3 identified over $25,000 in billing errors.” Likewise, CT Logistics also


prefers to hew to its tried-and- true freight audit and payment business model; aſter all, it’s worked well for the company since 1923. Nowadays, of course, the company provides its own distinguishing services through two unique applications, online


says Tom Zygmunt, marketing manager at Cass. He and other execs are


girding for the tamper-proof database technology known as blockchain, which actually is based on the old-fashioned general ledger. Blockchain allows automated invoice calculations through a series of chronological “blocks,” with verified data accessible in real


the company’s global revenue, whichever is larger.” While regulatory pressures,


truck shortages, and rising rates continue pushing shippers to find ways to cut their transportation spend, Friedman concludes that the consumer must remain the focus— “recognizing that transportation is a service, not a commodity business.”


in benchmarking carriers’ rates and bid negotiation services due to higher truckload costs and less equipment commitments to clients,” he says. At the same time, technology


that’s even more esoteric in handling Big Data will impose yet further demands on FAPs.


Disruption technology


“Many of the challenges faced by shippers today help drive the need for more information that they can receive from a freight audit and payment provider,”


time. “Although


still in its


infancy, blockchain has been characterized as a disruptive technology that, if widely adopted, could enable a giant leap forward in supply-chain collaboration and automation,” says Zygmunt, whose company joined the nascent Blockchain in Transport Alliance. “Without the totality of


transportation information, you cannot achieve the next level of savings for your client,” he says. “New technology continues to enhance the presentment of critical information in formats that are most useful and timely. All this e-wizardry still leads


back to the consumer, who not only expects ever-faster service but also demands privacy. Here, another new twist faces FAPs: the European Union’s General Data Protection Regulation, or GDPR, which took effect in May. Harold Friedman, senior


vice president, global corporate development for Data2Logistics, says the rule shiſts ownership of “personally identifiable information,” or PII, such as names, addresses, ID numbers, and so forth, from the business that collects and hosts that data back to the customer. Shipping invoices, he says,


“may at times include PII. The fact that they do requires compliance. GPDR comes with a big stick. Non-compliant organizations can face heſty fines of €20 million or 4% of


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