Check your Freight Auditor’s shipment data – Part 1

Collecting and cleaning historical shipment data is one of the most time consuming tasks in a freight RFP process. It is also one of the most important tasks in the RFP process. Historical shipment data forms the basis for shipment profiles, analysis baselines and modelling. The data is often divided over multiple locations, available in various formats and has a wide range of quality standards. Companies that use a Freight Audit & Payment (FAP) vendor often have an easier job in collecting the data. A FAP vendor can be a single source for actual shipment data and shipment cost. This sounds like an ideal situation, but be careful, there are still many things to look out for.

In this 2 part article we will give you a checklist that you can use to check your auditor’s data (and that of other sources) before you use it for freight RFP’s. Here is part 1 of the checklist.
 

Check 1 – Does the data cover the whole scope of your RFP?

This seems an open door, but FAP vendors do not necessarily cover the whole range of carriers or shipment lanes for which you might need data for your RFP project. FAP is still not a fully global service, so it might be that your vendor does not cover certain regions or trade lanes that are included in your RFP. Also a lot of the spot buy freight activities and inbound freight activities are often not part of the service contract with a FAP vendor. Be clear about which carriers, services and shipment lanes are covered by your FAP vendor before you start your tender project. Any gaps that you find need to be covered via other data sources, which often proves to be a time consuming process.

Check 2 – Is your data categorized correctly?

Freight Audit companies receive shipment- and cost data from your carriers. It is the FAP vendor’s task to categorize the data correctly. But it is your task to set the requirements for this categorization. Data needs to be categorized in such a way that it can be easily grouped and sorted. Each shipment should be categorized on correct mode, direction (e.g. inbound, outbound), type (e.g. return, inter company, etc.), region, etc. Now, this seems logical, but it is not a given that this not always the case. A shipper and the FAP vendor need to ensure that during the implementation process of the FAP services clear categorization rules are established. Wrong or no categorization can lead to data that is meaningless. You can imagine that Parcel data that is categorized as Air data needs a lot of rework before you can use it for a RFP project (if you can find it at all if you run a query to extract all your Parcel data, when it is wrongly categorized as Air). A FAP vendor has its main focus on receiving data that can be used to audit invoices, the quality and categorization for later reporting is often a secondary priority. However, getting the data right is a top priority if you intent to use it for more than auditing.

Check 3 – What data items are included in the data set?

 

FAP data is not necessarily the same as RFP data. In a FAP data set you will also find rejected duplicates, credit notes and other audit related items. These types of financial data items can pollute your data set. Data pollution in a historical shipment data set is very risky. Duplicate shipment data in your data set can mean you overstate your actual shipment quantities. Keep in mind that a FAP vendor’s primary focus is to report on financial audit results. This means their data set includes all audit findings such as duplicates, overbillings, wrong billings, unauthorized billings, etc. If you do not comb through a downloaded data set from your FAP vendor and manually clean the data you run the risk of creating a wrong shipment profile for your company. A misrepresentation of your company in a RFP can be very risky and potentially costly. 

 

Check 4 – Quality of the carrier’s data set

When you use a FAP vendor you need to work with your carriers to ensure that you get the maximum number of data elements that the carrier can provide. Invoice data is not necessarily useful as shipment data for a RFP. In a RFP you need a lot of details about each shipment. If a carrier only provides the FAP vendor consolidated shipment data in its invoices, your data set stored with the FAP vendor is often less valuable or even useless for a RFP. When you appoint a FAP vendor you need to be very clear about what you expect to be able to do with the data. If you do not specify this in detail and do not work with both the FAP vendor and your carriers, you risk ending up with a lot of data that you cannot really use.

At the time of implementing a carrier into a FAP process ensure that the carrier can provide line item shipment data in the invoice feed instead of consolidated shipment data. Also ensure that your FAP vendor captures the data on line item level and not on consolidated level (which is often done as a compromise to lower processing cost).

 

 

In the second part of this article we will look at the remaining checklist items, being:

 

§  Data quality check

§  Missing data check
§  Oddball data check
§  Cost data split
§  Calculation check