A national shipper of industrial supplies and materials asked VTM how to get better access and visibility into their expected freight costs before the invoice was received and processed.
Further complicating their challenges, there were many new team members on the shipper’s finance and logistics teams, so a lack of institutional knowledge meant they needed extra flexibility in the design process to ensure it evolved as they learned their business.
In an increasing rate environment, they were facing several critical challenges that more timely and accurate accruals helped address:
Before working with VTM, lack of visibility and insights into shipment costs at the front-end of the process had broad impacts across the entire organization.
Logistics managers found out about a least cost carrier opportunity costs only after invoices were paid, leading to millions in potential savings by simply using the right carrier for the shipment.
Finance managers were constantly surprised with fluctuating demand for cash to pay carriers, often leading to payment delays while the team sorted it out.
Historically, the accounting team’s accruals used a basic average shipment cost multiplied by the number of shipments formula, so naturally it ignored lane-specific rates and the profile of products shipped (ex: multiple LTL FAK classes), leading to major over and under accruals each month.