The pandemic has been all consuming for most of 2020. With the benefit of a clearer understanding of the current environment, well-managed organizations are simply stepping back into their continuous program planning and evaluation cycle, a process designed to address the ever-changing global environment when required and on a timely basis.
Over the course of the past several months, we’ve been asked to provide support in a variety of ways. We thought we should take the opportunity to share, through a series of blogs, some of the takeaways and trends we see emerging. This first blog addresses audits.
Concern has been expressed by many of our clients about how suppliers have been coping lately and whether they remain capable of meeting contractual obligations. These businesses have been feeling the strain of the reduced volume of relocations and it is reflected in their service. This may well be the reason why we have been asked to perform several audits of both individual suppliers as well as relocation management companies (RMC).
Individual Supplier Audits
The purpose of these audits is to verify that each service performed was required and invoiced at the appropriate rate. Contractual fees are contrasted with actual fees or costs to identify gaps or potential cost savings.
Audits of household goods moving invoices, for example, include a detailed analysis of the tariff and a thorough verification of weigh scale tickets, bills of lading, inventory sheets, etc. to ensure precision and transparency through each process. Moving company invoices are usually based on complex tariff structures making it easy to miss errors or unrequired services. The audit report includes an action plan for correcting specific files, improving accuracy in future invoicing and ensuring proper verification of subcontractor invoices is also provided.
The individual supplier audit results can lead to decisions to replace the supplier and also to question the actions of the overseeing RMC.
RMC Audits (Outsourced Programs)
Corporations are questioning their long-standing reliance on outsourcing and are concerned that its value proposition has slowly been eroded over the years. This year’s global upheaval and its impact on resources and efficiency has only increased those fears.
A successful partnership with an RMC is based on trust that contract provisions and fee structures are adhered to and that any allowable degree of flexibility or discretion for unplanned circumstances is documented and used responsibly. It only makes sense to test this trust periodically through audits that serve to allay concerns, or provide the data required to implement corrective action.
These audits are conducted much in the same way they are for individual suppliers, that is, comparing the actual services performed and associated cost to the case requirements, contract scope and rates. The exercise also includes a review of hidden fees, such as referral fees, and an assessment of how, or if, they are of benefit to the client.
The audit reports provide clear evidence of service or performance gaps that may lead to discussions and negotiations for improvement, or a decision to test the market to determine whether they can be better served by another service provider. Some companies may also decide that it’s time to bring some of the services back in-house. On the other hand, the report may confirm that all is well and that little or nothing has to be changed; a much better headspace than constantly chasing that cloud of suspicion.
Whatever results audits produce, the outcome is a precise reflection of the health of the partnership with concrete data to feed into the planning and evaluation process.