The term Fake News, virtually unheard of a couple of years ago, is now part of our everyday language thanks to the omnipresent President Trump. With a definition of the term that would include the use of misleading content, manipulated context or false connections, we present our take on Fake News in the relocation sphere.
Fake News – Cost Savings
Relocation Management Companies (RMCs) will claim they can reduce costs by pooling all client purchases and negotiating lower rates. From the client’s perspective, this seems logical, and from the RMC’s perspective, it’s the perfect marketing pitch.
The reality is that clients are not the winners in this service provision structure, nor are the suppliers. Service rates are negotiated to include the requirement that suppliers kick back a percentage of their invoice in the form of network fees, referral fees, invoicing fees, audit fees and other revenue claw-back schemes. Suppliers pay a stiff price for inclusion in a network of service providers, and RMCs end up with built-in revenue generating provisions that do not motivate them to manage costs.
These RMC-based service structures evolved as direct supplier network access and management became onerous for HR departments suffering the effects of downsizing. Suppliers have balked for years at having to pay these network fees, and to combat this practice, have made direct interaction much easier through simplified tariffs, independent auditing services as well as online booking and administration platforms.
Fake News – Quality Service
RMCs can demand higher quality service from supplier networks by committing to high volumes. A recent trend is to use single sourcing for an entire line of service. Again, on face value, it makes great sense to a corporation that with the promise of high volume, a supplier will ensure service excellence.
The reality is that single sourcing places employee relocations at risk of failure. These types of agreements ignore the fact that the relocation business is somewhat seasonal in nature and a single supplier could easily become overwhelmed during high demand periods. Once a supplier (e.g. a moving company) has reached capacity, it seeks assistance and may have to hire less than stellar suppliers, a slippery slope indeed. The results can turn into “moving company nightmares” as you may have seen on investigative reporting shows such as CBC’s Marketplace.
Fake News – Invoice Accuracy
Supplier invoice audits performed by RMCs will generate great savings.
RMCs are not incentivized to reduce costs given that the higher the invoiced amount, the more they receive in referral fees.
One area of real concern is “weight bumping” in shipments. Service standards are not always aligned with industry leading practices for proper weighing of transported goods. In order to ensure accuracy, shipments should be weighed at origin, on the day of loading, using certified scales for both light and heavy weights. Without proper oversight, a company is vulnerable to higher costs resulting from practices that may increase the shipment’s recorded weight.
In the context of relocation, Fake News is about the spin used to influence and have a message understood as intended. Like anything in life, it is important to peel away a few layers to fully understand the “real deal”.