How improved financial operations unlock scenario planning

So you’re facing mounting pressures to streamline operations and cut costs — but where to begin? In our Parcel Scenario Planning whitepaper, we cover how transportation teams that use scenario planning are better positioned to anticipate disruptions, unlock opportunities, and make data-driven decisions. The reality is scenario planning is a necessity for every mode, not just parcel, today.

But you can’t do solid scenario planning without great financial operations. Financial operations, here, really refers to excellence in managing costs, billing, revenue, FP&A, contracts, risks, cash flow, and KPIs.

LTL freight runs the risks of high redundancies that drive up costs. If you’re not constantly monitoring your performance, you could be unnecessarily paying for multiple loads running the same route in a single day. With Loop, GILLIG identified a 25% reduction in same-day shipments via LTL consolidation. This would dramatically cut down the number of individual shipments and result in $352,832 in savings.

Parcel shipping, as we all know, is a volume game. So the little things, like incorrect packaging can add up, which scenario planning can help identify and address. This practice isn’t limited to parcel but is relevant for all modes. By running through different hypothetical scenarios, you can develop strategies that enhance operational efficiency and reduce costs.

The relationship between scenario planning and financial ops

Financial operations are all about managing costs, reducing risk, maintaining cash flow, and improving revenue. A key lever to meet these goals is scenario planning. Scenario planning analyzes your network to find ways you can reduce risk and cut costs while maintaining performance.

To scenario plan, you need:

• Shipment data — carrier, invoiced costs, service-levels, lane, etc. To know where to go, you have to understand where you’ve been. You want comprehensive freight and parcel shipment data, including linehaul, freight costs, accessorials, tracking SID, cost-per-product, etc. This insight tends to be locked in invoices, which is why complete invoice visibility and invoice auditing are so important. By meticulously reviewing invoices, you not only catch billing errors and overcharges but you collect important data.
• Cost allocation – across all levels: invoice, team, contract, network, etc. You need an understanding of how costs are allocated across shipment data. You have to trust your data to know that scenario planning is actually surfacing actionable opportunities. Segmenting down to a line-item level and analyzing it in aggregate (considering accessorial charges across carriers, cost of lanes across your network, service levels across a customer, and cost to serve customers) is essential.
• Self-serve analytics - baseline reports, carrier scorecards, advanced analytics, etc. There’s simply too much data to get by without analytics, where you can access quick and advanced reports that produce meaningful insights. Big data helps optimize carrier selection and identify cost-saving opportunities.

Some companies will build out sophisticated business intelligence teams that effectively forecast sales, manage inventory, and predict cash flow. However, building and maintaining these teams demands significant time, money, and resources, leading many shippers and LSPs to adopt out-of-the-box solutions instead.  

How to enhance financial operations

To appropriately manage your financial operations and execute scenario planning, you need three key things:

1. Complete supply chain and spend visibility to improve cost management.
2. Accurate audits to improve cost control and reduce the risk of losses.
3. Powerful analytics to identify savings opportunities that improve margin.

Complete supply chain and spend visibility

Supply chain data is spread across different stakeholders (carriers, suppliers, vendors), systems (TMS, ERP, carrier portals), and documents (invoices, receipts, BOLs), but to truly manage your costs, you need it centralized in one view. Without a view that has standardized data across carriers, lanes, facilities, accessorials, etc., you’ll never be able to understand your aggregate spend.

With this view, you want to keep an eye on:

• Cost per package / shipment: Tracking the cost associated with shipping each package (parcel) or shipment (freight).
• Carrier performance: Monitoring on-time delivery rates and related costs.
• Service level adherence: Getting what you pay for and what customers expect.
• Transportation costs: Rates with carriers; fuel surcharges; accessorial fees.
• Operational costs: Costs associated with warehousing, handling, packaging, and labor.
• Accurate billing: Ensuring adherence to contract terms and regularly auditing performance against agreed-upon metrics.
• Insurance: Managing policies to cover risks associated with shipping, such as damage or loss of goods.
• Financial risk: Monitoring and mitigating risks related to currency fluctuations, credit, and market volatility.
• Cash flow management: Managing the timing of AR and AP to ensure positive cash flow.

Getting this data is step one, but then you have to validate that the data is accurate.

Accurate audits

To get accurate data, you need to audit invoiced costs. Auditing invoice data is, to put it mildly, a manual process that can be vulnerable to human error. J.P. Morgan Payments researched the payments process for thousands of supply chain companies and found that 80% of invoices were manually keyed into a financial system. 80% in 2024 - that means a high risk of manual mistakes and inefficient workflows that lock up capital. It is understandable, then, that 20-25% of transportation invoices have errors. But this exercise can be a huge unlock, helping to identify cost-saving opportunities.

Fortunately, automation has a growing role to play, ensuring accuracy and efficiency in the audit process. Audit software can identify errors and discrepancies, saving time and reducing costs. For instance, one of our financial services customers, in its first week of using Loop, uncovered $60,000 in duplicate billed packages. Quite a fast return on investment.

Once you have great data, the fun begins. Now you can start exploring the data to find savings opportunities.

Advance analytics

Advanced analytics tools will take the results of your audit and other data to set baselines. Then it will look at patterns and trends to identify opportunities. Your exploration needs to look across all levels of your supply chain data:

• Invoice
• Team (facility, BU, etc.)
• Carrier (performance, contract terms, etc.)
• Network

When you do a data deep dive, you get great results. Loop worked with a F500 pharma company and found $3.1 M in savings in just a quarter. This was possible because of incredibly great financial operations that allow insights at every level:

• Invoice - $91K in incorrect payments from fraud and inaccurate invoices
• Team - 43 instances of unnecessary payments from teams using public rates
• Contract - $680K in parcel from negotiating top accessorial discounts
• Network - $2.4M in savings by switching volume and service levels from FedEX > UPS

Great analytics help you test hypotheses and understand how to take action.

Unlock success with streamlined financial operations and scenario planning

Effective financial management transforms operational efficiency, helps cut costs, and drives profitability.

To explore how Loop’s solutions can enhance your financial operations and support scenario planning, contact us for a consultation or download our comprehensive guide.