F500 D2C pharma company identifies $3.1M in savings with Loop

A $475 billion healthcare company, with a direct to consumer pharmaceutical branch, sends  high volume parcel shipments across the US. This meant their supply chain and financial data was spread across different carrier feeds and legacy AP systems. With no way to monitor their internal team, carrier, and network performance they were jeopardizing their financial, operational, and growth outcomes.

As they looked to grow their D2C revenue, they knew they would need better data to effectively manage costs in today’s turbulent market. They were looking for ways to:

• Stop overpaying on parcel shipping
• Improve carrier performance
• Maximize network outcomes

Disconnected data and manual workflows hurt growth.

Their D2C pharma practice sends tens of thousands shipments a month with varying service-level requirements and routes. With two national carriers (FedEx and UPS) and a handful of regional carriers, the AP team had to manage thousands of invoices with different contract terms and rates.

This company’s core focus is to keep their customers healthy. They do not have the subject matter expertise required to ensure their transportation spend was not draining their resources.

There were three core areas that the AP Teams struggled with:

Auditing thousands of invoices in excel

The AP Teams were managing thousands of parcel shipments out of an excel sheet... Yikes. To accurately audit, this meant trying to scrutinize the +10 components that make up the package level details across thousands of combinations of lanes, dimensions, service-levels, etc. More often than not, invoices were gut checked.

Navigating the nuances of carrier payments and claims

The small differences between FedEx, UPS, and regional carriers payment and claims requirements was an incredibly tedious workflow for their AP teams. FedEx’s technology is sophisticated enough that this healthcare company can request an adjustment on an inaccurate invoice. Whereas UPS cannot, so the AP team had to know to pay the invoice and then file a claim for a credit. It was a monthly nightmare trying to accurately close their books.

Making the most of each dollar spent on transportation

Finding out how to get the best service for the cheapest price in parcel shipping is a continual challenge. On top of that it takes years to truly master all the negotiation levers in parcel contracts (there are +40!). The Ops team was ill equipped to construct an optimal network and make carrier contract decisions.

The bottom line was that this company didn’t have control over their parcel costs and it meant unnecessary losses. They needed a better way.

To build or to buy, that is the question?

This healthcare company was at a crossroads, either they had to build an internal tool or bring on a partner that could help them manage their costs. To build an internal tool that can standardize parcel data, run audits, execute payments, and uncover insights is cost, time, and expertise prohibitive.

Building takes at least a year and requires expensive staff. At a minimum, you need an accountant, an engineer, a data scientist, and a parcel expert, which roughly adds up to $240,000 in salaries alone. Also, that cost only covers the initial setup and doesn’t take into consideration maintenance and improvements.

At the end of the day, this healthcare company needs to focus on growing their healthcare business. Not building an internal parcel audit and pay tool.

Instead of turning to audit and pay incumbents who use BPOs to execute manual audit workflows and often gate-keep their analytics, this company turned to Loop to see the impact of logistics-AI.

Logistics-AI connects data and uncovers savings at an invoice, contract, team, and network level

This healthcare company came to Loop because they knew they were having trouble identifying issues on their invoices and savings opportunities in their network.

Loop’s first step was to get this company a great baseline of their data. Loop can accept invoices and contracts in any format (PDFs, EDI, pictures, etc.). Our proprietary AI cleans and standardizes all the data so that it is usable. This means parcel shippers no longer waste time and energy standardizing carrier nuances like UPS’ Next Day Early AM Air to FedEx’s First Overnight.

After analyzing only a quarter's worth of data, Loop confirmed that there were errors at the invoice and network level, but we also uncovered opportunities at the team and contract level.

Invoice level - Loop identified $91K in unnecessary losses.

Loop’s AI uncovered differences between invoices and expected amounts, and it was able to spot fraudulent shipping transactions. This is a common occurrence for shippers. UPS’s shipping manifest API isn’t completely secure and allows hackers to legitimately ship their products at the company’s expense.

Loop’s precision means that every package, accessorial, and service cost is audited down to a penny. Using tracking numbers ensures a level of detail that is crucial for high volume parcel shipping, without it, manifested but not shipped, or duplicate billed invoices go unchecked. With Loop’s accuracy, $91,000 of losses could be recouped.

Team Level - Loop identified 43 instances of incorrect rates.

Loop identified 43 accounts within the company that were not shipping on corporate accounts, meaning they were overpaying with public rates. Loop helps manage internal team compliance and shipping guides so internal decisions don’t drain revenue.

Contract level - Loop identified $680K parcel savings.

Loop noticed that the company didn’t have discounted rates on their top accessorials. Paying public rates on frequent accessorials meant $680,000 in losses for that quarter alone (annualized that is $2.7M!).

This healthcare company isn’t well versed in logistics, so they wouldn’t have known to negotiate a 50% discount accessorials they commonly get, like residential surcharge or same day delivery attempt. But Loop’s self-serve analytics and in house supply chain experts helped identify this massive opportunity.

Network Level - Loop identified $2.4M in optimization opportunities.

The key to successful parcel supply chain management is understanding service-level by rate with the same outcome at a lower cost. But that answer changes by location,carriers, and volume, which is why allocating volume across parcel carriers is so challenging, and almost impossible without granular knowledge of your supply chain and spend.

But Loop’s scenario planning uncovered massive savings if this company shifted volume and service-levels with their FedEx and UPS contracts. Loop analyzed their current volume, discounts, accounts, accessorials, and service-levels. Then further analyzed their service-level performance to see if service-level was needed to meet the required delivery time. The result?

$2.4M in savings from shifting from FedEx to UPS under current contract terms for just that quarter. Annualized, this savings opportunity is $9.6M.

Shippers’ focus should be on the goods they’re shipping to their customers. But without a logistics solution for logistics problems, they are unable to make informed decisions regarding simple contract negotiations, let alone scenario planning.

Loop identifies $3.1M in saving opportunities in one quarter

With Loop’s initial insights across all four levels of their network (invoice, contract, team, and network) this company took an important first step in tightening up their core operations. But that’s just the beginning. To thrive in a turbulent market, they need to go further by looking at their cost per customer and cost to serve.

Unlock granular cost analysis to reduce overall cost to serve

Limited data and analytics make it hard to find anomalies and collaborate on issues to find resolution. With Loop’s centralized data and analytics, this healthcare company unlocked a great baseline of data to understand their shipment cost per lane, carrier, and package. All so they can adjust their network utilization to find ways to reduce their cost to serve.

For example, they can reduce costs at a customer level from a COGs perspective. Let’s say they have a 72 hour delivery service level agreement with their customers. This company might assume they need to pay for 3 day delivery every time. But, if some of their customers live close to the warehouse they ship from, then they might be able to pay for ground shipping. Meaning they achieve the same delivery time at a lower cost.

They can also reduce costs across all customers by introducing automation. For example, key employees could be re-dedicated to higher yield tasks as they move from processing roles to analyst roles.

Try Loop today to see how we can improve your cost management through great data.

With Loop, shippers get great data that automates workflows and powers insights. With access to self-serve data that’s both granular and big picture, shippers know where and how to boost margin. Moreover, they’re able to scenario plan effectively, resulting in a reduction in their overall cost to serve.

Learn more about how Loop can accelerate your supply chain here.