Transportation Audit and TSM Software Explained

Companies that require coordinating shipments are usually familiar with transportation auditing. Whether it is a retailer, manufacturer, or consumer packaged goods (CPG) company, understanding all aspects of the supply chain is critical to cutting down on waste and improving operating procedures.

Shippers that review their carriers, shipping needs, and transportation procedures make data-driven decisions and ultimately improve productivity, which is why regular transportation audits are essential to the supply chain. Read on to learn about transportation auditing and how the right TSM software streamlines the process.

The Trax Transportation Spend Management (TSM) software is designed to provide enhanced visibility into the supply chain. Through the delivery of data-driven insights, Trax TSM software gives enterprises control over transportation spend.

What is a Transportation Audit?

A typical transportation audit may involve three areas of review — current shipping needs/the market, existing agreements or procedures, and a review of data useful for forecasting. The three areas are independent, yet they each contribute to the overall analysis and resulting business decisions.

What is reviewed in an audit should align with a company’s goals. Those objectives will shape the nature of the audit.

The output of an audit should identify short and long-term goals.

Types of Transportation and Freight Audits

Since transportation bills are incurred globally, the government performs certain transportation audits, including the General Services Administration (GSA) and the Department of Transportation (DOT). However, other types of transportation and freight audits are completed either internally or by a 3PL request to identify bottlenecks or other operational inefficiencies.

Let’s review all of the types of transportation audits and freight audits.

GSA Transportation Audits

The General Services Administration (GSA) Transportation Audits Division identifies and recovers overcharges as well as assesses debts for transportation bills. The Transportation Audits Division is tasked with overseeing prepayment audits for transportation services around the world. In addition, the division conducts post payment audits, collects overcharges, and handles Transportation Service Provider (TSP) claims.

DOT Compliance Audits

The Department of Transportation (DOT) conducts compliance audits to ensure that fleets follow all safety protocols outlined by the Federal Motor Carrier Safety Administration (FMCSA). There are three types of DOT compliance audits - off-site investigations, onsite focused investigations, and onsite comprehensive investigations.

During an off-site investigation, a safety investigator (SI) reviews the carrier-provided documents remotely. The goal is to identify specific safety concerns and compliance issues. Onsite-focused investigations are similar in that the SI is looking at a specific issue, but the difference is that they will visit the carrier’s office and perform the investigation on site.

Rather than starting with a narrow focus, during a comprehensive audit the SI takes a holistic approach to reviewing all safety operations, which may include interviewing employees and performing thorough vehicle inspections.

Those types of audits may be useful for certain types of transportation companies and may sometimes be mandated to ensure compliance.

Other types of audits will be conducted at-will on a regular basis to ensure best practices are being followed and areas of opportunity are regularly identified.

Logistics Audits

A freight or transportation logistics audit looks at a company’s logistics and transportation operations, then determines how efficient the current systems and processes are. The goal of these types of audits is to provide meaningful insights and recommendations for companies in the supply chain through the collection of transportation and logistics data. Logistics audits can be either outsourced or performed in-house, depending on the use case.

Auditing and Assurance in the Transportation Industry

Conducting regular logistics audits is more important than ever when companies need to know what is going right or wrong. This may rise in importance before a government audit, such as the aforementioned GSA transportation audit or a DOT compliance audit. Audit and assurance are usually associated with finance but can be extended into various functions within a transportation or supply chain company.

The best way to not only conduct a single audit but to have ongoing insights into the health of a company's operation is through transportation spend management software.

Auditing for Transportation Companies

Transportation spend management (TSM) is a complex dynamic within a company. The systemization of managing transportation spend is a tech-fueled endeavor, supported by transportation auditing and similar reviews. The practices allow leaders to analyze and optimize financial and operational performance both internally and in the network as a whole.

During a regular transportation audit, auditors delve into finances, operations, and business strategies. When performed accurately, auditing for transportation companies can uncover the following benefits:

Financial Savings

Auditing in transportation, specifically in freight, cuts down on unnecessary detention charges and accessorial charges. By identifying any issues like shipping delays or re weighing, transportation leaders establish financial stability.

Operational Efficiencies

Accurate forecasting of supply and demand is possible when a company conducts accurate audits. This alleviates scheduling concerns that occur as a result of the bullwhip effect in supply chain.

Strategic Planning

Understanding which areas need improvement allows transportation companies to set new near and far-term business goals. From optimizing inventory to keeping up with the pace of the market, meaningful and actionable insights are revealed by a transportation audit.

To complete a transportation auditing process, the right TSM software is vital. Tasks like rate auditing and duplicate auditing are optimized through the use of technology. Likewise, advanced software that includes a claims manager and accrual manager tools unlocks speed and accuracy.

Transportation Management Platform… and so Much More

Auditing is a great way to implement continuous improvement, a goal any competitor in this field should uphold.

The intent is everything: more than just an information gathering exercise, the right type of transportation audit can support the ultimate objective of reaching transportation spend management maturity.

Sophisticated technology, like the software and platforms backed by a leading TSM, derives more insights from the data than a manual process.

As a leading Transportation Spend Management System, the Trax product suite includes tools for every step of the journey to spend management maturity:

Cost coding
Rate auditing
Duplicate auditing
Accruals
Compliance auditing
Contract optimization
Service optimization
Rate manager
Carrier management services
Claims manager

By understanding what a transportation management system solution offers, global enterprises gain a strategic advantage in today’s market.

Trax tools offer the most capabilities in the industry, including data integration, data management, rate management, audit management, cost allocation, payment management, and reporting and analytics.