September 8, 2022

Best Ways for BCOs and Forwarders to Gauge their Cost of Goods Sold

Best Ways for BCOs and Forwarders to Gauge their Cost of Goods Sold

Freight costs are usually the largest expenses for shippers and BCOs. It is crucial for businesses to learn how automation and digitization can help lower freight costs that impact your cost of goods sold (COGS). In other words, it is the direct cost of producing goods sold — materials, labor and overhead. To help tip this equation more in favor of BCOs and freight forwarders, automation and digitalization can be valuable tools in regulating the costs of monitoring, tracking, auditing and more.

How does Cost of Goods Sold and Transportation-In work together?

One crucial part of the cost of goods sold is the cost to have freight delivered, also known as transportation-in costs. With many companies having to coordinate with multiple carriers, it can become a convoluted variable in the equation and one area where money can be conserved with an improved system of automated accounting. Replacing manual work with automation saves time and the ability of an automated system to spot incongruity in areas such as packing, storage time and delivery paths can save money. Improvements on how fast and efficiently the freight is delivered will affect the cost of goods sold and, in turn, the profit margin for businesses. It also satisfies the customer by providing a product that reaches them faster. 

The Benefits of Automation in Costs Management and Freight Forwarding Operations 

The adoption of automation can provide numerous boosts for a freight business. It can  eliminate manual processes and labor expenses. That saved revenue can then be reinvested into expanding business verticals. Other benefits to using automation are that it allows the shipper to have greater visibility on their loads and helps companies efficiently streamline their supply chains. With the Cargowise automated finance compiling and monitoring system you can make improvements in these areas:

  • Speed — Perhaps the most significant benefit of automation for costs management and freight forwarding operations is the transformation from unstructured data to digital cloud-based databases. Automation eliminates time consuming repetitive tasks like  manual data entry for invoices. In just seconds, freight managers can view every touch point of a load from pickup to delivery.  Automating processes helps companies become more competitive  and reduce labor costsFor example, when Rose Containerline integrated Expedock, they were able to reduce their OPEX by more than 80% by optimizing their data entry, extraction and auditing process. Automation also cuts down on mistakes because there are less chances for human error.
  • Scalability — The ability to increase or decrease size, scale and cost has always been crucial to a successful venture. With automation in cost management and freight forwarding operations, those up or down tendencies can be compiled and visualized at a rapid rate. They can instantly see if a product is doing well and moving along well or if there are speed bumps that need to be maneuvered around to reach a higher profit. It lets them stay ahead of the game and respond quickly to changes in application and system processing demands. 
  • Adaptability — One of the keys to survival is adaptation, and an automation system can allow companies to see where they can make adaptations in different ways. The elimination of physical data entry frees up time for employees to move on to other tasks that are not as banal. It also provides them with motivation because they are no longer tied to the over-and-over-again duties and can find greater job satisfaction. Automation also allows a company to make adjustments much earlier in the process to both its manpower numbers and labor costs. With fewer hours being needed for those tasks in that process, it can reduce the use of overtime and hasten the need for bringing on new employees to perform those no-longer-needed tasks.
  • Predictability —The above three items can have almost real-time consequences, but that doesn’t mean automated systems can only help in the here and now. With an automated system, it’s much easier to look at tendencies over longer periods of time. That more rapid assessment of data can help predict whether to order more or less product in the future or how to handle certain types of shipments  For instance, one vendor might be shipping things slower than others but delivering the product at a cheaper price. If the automated system reveals how successful one vendor is at a lower price, the company can predict how long it will take and choose the more cost-effective option when there is enough time to still reach the customer prudently. 

Execute Automation Upgrades With Best Practices and Procedures

For automation to be successful and beneficial in costs of goods sold, there are practices and procedures that are vital to reaching that goal. Here is a step-by-step process of what automation can be do to assure positive results:

  • Start out by selecting technology, like Expedock, that does not require a change in its management. The AI and automation of Expecock work just like your team’s flow providing a seamless transition. Expedock is the only automation company in the freight market that can guarantee 99.97% data entry accuracy. 
  • ⁷Conduct an audit and review with automation to see where the company stands and to determine whether the financial statements are consistent with generally accepted accounting principles. Audits and reviews help maintain internal control and help detect and prevent various kinds of fraud or irregularities in accounting.
  • Search for problem areas that need to be addressed. It’s key to have a concept of what areas can likely be improved and/or be streamlined to heighten cost effectiveness, and automation makes those problems jump out and say “fix me.” 
  • Identify areas where you can bolster already-strong points and shore up weaknesses. Knowing where to improve isn’t just solely based on areas that are glaringly underperforming, there’s also knowing where and when to tweak a successful product to make it even better. With the grander scope that automation delivers, it’s easier to see the bad spots as well as the areas that just need a little polishing.
  • Embrace technology and innovation as much as possible. — Upgrades and updates are part and parcel with the times. AI and automation, like Expedock’s, are the latest and most up-to-date ways to stay in tune. For example, Expedock’s invoice/accounts payable automation offers line items auditing, lump sum reconciliation of multiple invoices and batch invoice processing.
  • Train and on-board team members and 3PLs adequately. Automation is only as good as the people that run the systems and input the information. With Expedock automation, there is less than 1 minute staff time required on the system per document.  
  • Integrate existing systems and processes. Automation helps freight forwarders and BCOs streamline their existing systems to run more efficiently, eliminating the need for manual processes.
  • Carry out routine checks to ensure smooth operations. With automation missing accruals or monthly statements is a thing of the past. Expedock has got you covered with digital technology that automatically keeps tabs on payroll to provide visibility for management and accountants and ensuring there are no lost costs or late payments.
  • Keeping the communication lines open. It’s much easier to have all the parties on board and conversing when the automation system makes all the intricacies easily identifiable and understood.  

The Many Benefits of Automation

Time wasted is money lost. That’s where Expedock’s app on Cargowise comes in to save the day with its automation and digitalization cost monitoring. 

If you're a freight forwarding company that has not unlocked automation on Cargowise, your accounting operations team is estimated by to be missing out on 40%-80% in labor savings. 

But that’s not all, automation allows you to jump from the arduous unstructured data age to a streamlined, more accurate computer process that will make jobs easier, increase efficiency and help pinpoint troubled areas. It can help improve the work structure, cut down on errors and unshackle employees from the tedium of data entry. In short, it’s the freight forwarders’ trifecta: lower costs, increased productivity, and reduced delivery times. But also with a view to the future that includes the ability to quantify and qualify data to indicate possible ways to improve on service and deadlines.

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