How to conduct a shipping audit

Your workflows and processes are the tools your business depends on to maintain high standards in operation. It’s important to ensure they are continuing to work smoothly—without errors and being time and cost-effective. An audit and assessment of your shipping practices can save your business money in the long run and catch mistakes where funds can be immediately recuperated.

What is a shipping audit?

A shipping audit is the process of examining completed shipments for accuracy and opportunities for improvement. It should be completed periodically to ensure you’re getting the correct level of service from your shipping partners and money is not left on the table.

This type of audit must happen within the range of time your shipping partners accept corrections. Large-scale audits can be conducted at multiple points in the year, and smaller-scale audits should happen as more frequent check-ins. Audits may be performed internally, using data from your shipping software, or using an outside auditing company.

The goal of an audit is to identify any discrepancies between what was quoted for a shipment and what was paid. You can also analyze the resulting data, breaking down and categorizing costs to better understand where money can be saved by changing your shipping practices.

What to cover in a shipping audit

The data variables in your shipments, as organized by your shipping software, give a starting point for the audit and what to cover. Start by sorting invoices by carrier. Compare the rate expected and the amount paid, with any known adjustments factored in. If a mistake was made, it may be necessary to consult the rate quote provided by the carrier.

When discrepancies are compiled and you begin examining the sources of the errors, you will uncover additional areas, pointing back to your processes and workflows, to pay attention to across other invoices.

In general, an audit should cover:

• Shipment ID
• Rates
• Discounts
• Surcharges
• Accessorials
• Service level compliance

Additional shipment data captured by your shipping software will assist the process of investigating issues, for instance, showing a shipment’s delivery time or if there were any delays. As an example, you wouldn’t want to pay a carrier for expedited shipping if they weren’t in fact providing this level of service. The shipment ID is used to identify any duplicate invoices or invoices for non-shipments.

Other common shipping errors include problems with:

• Address
• Advanced shipping notice (ASN)
• Documentation
• Freight classification
• Packing and labeling
• Piece counts
• Accessorial charges

If any one of these details is missing or contains an error, it has the potential to result in a fee, as the customer must take time to sort through the issue or correct the mistake.

Lastly, receivers may charge shippers for non-compliance with their instructions and requirements for delivery. Consulting the receiver’s routing guide is an essential step for shippers to avoid these chargebacks or added fees.

Technology in operations exists to support employees in their day-to-day tasks. It assists with time-consuming, repetitive, or error-prone work or work that requires specific knowledge. The result is an increase in productivity, efficiency, and accuracy. An employee can complete a task in less time, increasing the capacity to get more done. At the same time, technology reduces errors, saving time that might have been spent correcting mistakes.

This all comes down to staff that can contribute more than they were previously capable of. Where attrition reduces the combined capacity of employees, technology increases their potential. It can enable a greater output compared to hiring more employees.

While it isn’t a direct replacement for employees, technology means staff is more effectively utilized. The right solution helps alleviate pressure on operations due to attrition and cover gaps caused by turnover.

Workflow and process improvements

The purpose of an audit is to use the data to make improvements to shipping workflows and processes, equipping employees to be more accurate and more productive in operations, saving time and money. While the audit itself is an investment of time and money, it doesn’t take long for the investment to pay off.

To learn more about the types of errors auditing can uncover, download our checklist on auditing and avoiding the most common shipping mistakes.