Auditing 100,000+ logistic transactions in seconds
Overview of the Business
What is a 3PL?
A third-party logistics provider (3PL) offers businesses outsourced logistics services, including transportation, warehousing, and order fulfillment.
Our client is a 3PL (“Client X”) that processes thousands of orders daily, which translates into thousands of boxes shipped daily by Couriers. The Couriers charge Client X for each shipment and Client X in turn charges this amount to its customers. This means more than 100,000 financial lines per month.
Auditing Courier shipments is indispensable and manually is impossible.
This Case Study is technical on the logistics side. Here are some important terms:
Logistics operator: A logistics company that stores and ships inventory for their clients. They are also called a 3PL.
Courier: A logistics company that delivers small packages to buyers. For example, DHL or Fedex.
Labels: The printed shipping labels that are used to ship a package through a courier.
Invoices: In this case study, invoices are the amounts the couriers charge to the logistics operator.
Charges: In this case study, charges are the monetary amounts that the logistics operator charge to its clients.
The Challenge
70% of Courier shipments have some type of discrepancy.
This accounts for 20,000+ issues per month for Client X.
Data Journey
A logistics operator (3PL) has with multiple freight Courier suppliers (DHL, Fedex, etc.).
The 3PL's clients choose different couriers to ship their e-commerce orders.
During the day thousands of shipping labels from different couriers are used.
Each label is charged to the client.
Each label is invoiced by the freight couriers to the 3PL.
Issues faced by Client X (the 3PL)
The Couriers' pricing depends on package weight.
The Courier mistakenly charges the 3PL Labels that don't exist and were never shipped.
Due to the amount of Labels, some are not charged by the 3PL to the client just because of the sheer size of the operations.
Some labels are mistakenly priced below cost, creating negative margins.
Painpoints
Auditing courier freight billing is painful because:
There is no standard info:
Every courier company invoices in a different format.
Every courier company has different pricing schemes.
There are multiple data sources:
While courier invoices via email, the logistics company bills clients through an ERP.
Platform users are not technical:
Finance and audit departments have a high learning curve towards technology.
Large percentage of data needs to be conciliated manually:
Supplier and client negotiations cause changes in invoicing and fees, therefore data need to be updated constantly.
The Solution
How we solved for weight and invoicing discrepancies
We created UIs to view, audit and act on concise discrepancy pain points such as:
Couriers invoicing more weight than it was shipped
Couriers invoicing at rates that were not agreed upon
We developed for users from different areas of the company considering their individual needs, experitise, and tasks (i.e. finance, operations, management). This allowed individual users to see the information relevant to their area of expertise and act on it by correcting the discrepancy individually after negotiating with the Couriers.
How we solved for profitability
Before the solution implemented by Base Labs, calculating profitability was chaotic due to the amount of Waybills (100,000+ monthly), Couriers, Transactions, and billing.
Base Labs created top to bottom views to analyze the profits globally. We also created more detailed views, allowing management to drill down on specific data points and answer questions to create concrete actionables increasing profitability and efficiency across the company.
UI of Discrepancy Breakdown
UI of Profitability Breakdown
Results
Reduced Audit Time: Lowered the average time to audit by 53%.
Saved Man Hours: Saved the client's finance department over 36 hours of manual work per month, equivalent to nearly one full work week, previously lost to inefficient processes.
Enhanced Efficiency: Streamlined multiple workflows, improving overall operational efficiency by 30%.
Tech Stack and Architecture
“I love that I don’t need to think anymore about the audit itself and just look at the automated warnings. Now, I can spend my time where it matters most: acting on that information.”
