Danby Products had become a victim of its own success.
First established in 1947 as a maker of small electrical appliances, the Montreal-born brand was already a household name in everything from air conditioners and refrigerators to microwaves. But as sales began to surge -- particularly in the U.S. -- the transportation team behind North America’s leading supplier of compact and specialty appliances faced a related challenge.
It struggled to audit the growing piles of freight invoices.
One staff member had already been dedicated to studying the documents from a network of five drayage companies, four couriers, three warehouse providers and 14 core carriers. And Eian Campbell, the Director of Operations, personally contacted transportation freight representatives to discuss any reduced payments linked to the billing errors. With some troublesome transportation providers, this meant reviewing changes to as many as 20 invoices a week.
Every time an error was identified, Campbell was also left with the nagging question of whether something else had been overlooked. “It just got overwhelming,” he says. “We were tying up all our time dealing with freight payment issues rather than [focusing on ways] to execute things through the supply chain easier, cheaper and more efficiently.”
The answer emerged through DTA Services, contracted to audit freight invoices, pay transportation partners, and feed data through an online portal which offers quick answers about everything from a payment status to the reasons behind any deductions.
“We’re auditing every single invoice, which quite frankly our clients are not able to do,” says Glen Berg, vice-president of business solutions for DTA Services, which processes thousands of freight invoices every day on behalf of hundreds of manufacturers and distributors. “They don’t have the resources. They don’t have the time. They don’t have the people.”
The data that emerges is also fed through a series of computer-generated “dashboards”, which can generate customized reports by the week, month, quarter, year or two-year span. Customers such as Danby can review information such as the Top 10 carriers by dollar, weight or cost per hundredweight, along with vital data such as accessorial fees as a percentage of freight charges.
“You could really see their ears perk up when we started to speak about the benefits of DTA’s transportation analytics – in other words, the dashboards and the reporting capabilities,” Berg recalls of the early meetings with Danby Products. “They wanted to be able to take the large numbers and break them down into components such as the cost per customer, and the cost per shipment.”
It is more than a paper shuffle. The details can help to shape daily business decisions. For example, shipments of air conditioners which were being returned because of a cool summer in Western Canada were quickly rerouted to central regions, feeding big box retailers in sweltering areas of the U.S.
“We’ve changed our people from being data-entry staff into analysts,” Campbell adds. “We’re able to get data out of [the DTA] computer system that is helping us manage our business better ... By taking the freight audit and pay portion out of the equation, it’s allowing our supply chain staff to focus on growth, and to work with our transportation partners to make sure that we execute flawlessly any new business and any existing business that we have.” It means the transportation team can focus on finding ways to control costs in the supply chain, improve transit times, and adapt to a changing marketplace which increasingly involves online orders, exchanges of home deliveries, and direct shipments to stores.
It has also increased audit-related savings by as much as 5%, identifying previously unidentified billing errors, doubled bills, misallocated fuel surcharges and more. “Where I thought I was doing a good job and my team was catching them all, [DTA Services] are catching more,” Campbell says.
The first phase of the work involved a focus on truckload and LTL shipments, which account for about 80 per cent of Danby Products’ business, and reflected all the appropriate General Ledger codes. Couriers and a handful of remaining niche carriers will be shifted to DTA Services in 2014, giving Danby Products the chance to ensure charges for couriered freight are applied to the right customer, and accrue costs for the appropriate Profit and Loss statements. Drayage operations will represent the final step.
Perhaps most promising of all, the Canadian project is also expanding to include U.S. freight, offering a system that will reflect American class structures, discounts off tariffs, and cube rules. “In the U.S. we’re in rapid-growth mode,” Campbell adds. Danby Products may enjoy a time-tested transportation network in Canada, but now it is meeting growing demands in regions where it has limited experience. “We’re looking to have information in the dashboard to give us either early warning signs that our freight accruals are not large enough for [a new power retailer], or that we’ve overestimated.” This will lead to better forecasts and accurate business plans. Some of the biggest gains from the Canadian-focused dashboards have already emerged in the form of increasingly accurate accruals like these.
DTA Services has also maintained Danby Products’ tradition of meeting Net-30 payment terms. “Carriers were still getting their money within that 30-day time period,” Campbell says. The benefit of that commitment was not limited to the transportation providers alone. “It was important for us to get the right expenditure in the right accounting period, too. If you delay some of those payments it can really affect our cash flow,” he says.
For their part, carriers are able to log into a DTA Services portal to see when an invoice was submitted, how long it took to process, and when it was paid. “Carriers are always looking to be paid, and at DTA we strive to ensure they are paid within their terms,” Berg says.
The benefits have even extended well beyond the transportation-focused teams. Danby’s sales and marketing personnel, for example, are now able to explore freight costs by region and account with ease. They can see how much can be saved by consolidating a truckload shipment rather than relying on several LTL shipments. “It’s opened up their eyes to data that they hadn’t seen before,” Campbell explains.
“The reports are customized to each group’s finance requirements,” Berg says. Finance teams may be interested in payables or shipments by date, or accounting summaries by General Ledger. (The ability to track General Ledger entries by customer, requested by Danby, will be offered early in 2014.) They can see exactly how freight expenses are allocated, right down to the carrier, invoice number, shipping date, paid date, Purchase Order number, the cost of transporting goods, and General Ledger allocation codes. Accessorial charges such as fuel surcharges, waiting time, appointment deliveries and dangerous goods add to that. For their part, transportation teams can review shipping patterns with data about origins, destinations, drop ship locations, actual weight, cube weight, customer or supplier names, transfers between locations and other specialized information.
The data can even be used to audit DTA Services’ own performance. The Review of Services dashboard offers a virtual report card which tracks details such as the number of pro bills that were paid, overbilled shipments, and duplicated invoices. It also highlights the “reactive recommendations” from a dedicated client manager, including such things as reduced fuel surcharges identified in certain lanes, or other suggestions about ways to improve the business of moving freight.
“We provide clients with benchmarking exercises,” Berg says, referring to comparisons with customers in a similar lane. “We have databases full of information. We can look at Danby and look at what they’re paying for a particular weight in a particular lane.”
They are the details which can lead to different choices among transportation providers. Few changes were expected in Canada, where Danby Products had chosen specialized carriers that were equipped to protect products from damage. (“There are particular carriers that specialize in appliances, and their trailers are set up differently,” Berg says.) But Campbell still found savings here. Looking at shipments in Western Canada, for example, DTA Services highlighted new options for outbound shipments from Calgary to major destinations like Edmonton. The transit times were unchanged, and equipment was available when needed, but the costs were lower. “We just didn’t have the time or the computer programming experience to be able to do that,” Campbell says.
There are more gains to come. Courier invoices, while a smaller share of the business, still represent some of the most complex tasks for Danby Products’ internal auditing efforts. “Courier statements are extremely lengthy. There could be 50 pages for one week, and there could be 10, 12, maybe 20 shipments per page,” Berg says. “Imagine if you are on the receiving end and have to process that manually.” Now even the smallest couriers without EDI capabilities will be able to use DTA Services’ templates, offering Danby Products more insight into the freight invoices than ever before.
That’s just a Danby idea.