Third-Party Logistics (3PL) services have become essential in today’s business landscape, with 90% of Fortune 500 companies relying on these partnerships. Retail giants represent approximately 30% of the 3PL market, leveraging these services for cost savings, operational efficiency, and scalability during seasonal surges. However, many 3PL firms still operate with outdated systems and integration issues, leading to potential billing errors. This retailer engaged PRGX to implement Contract Management and stop 3PL leakage across their global operations
0.1-0.5%
Cash Recoveries Achieved
67%
Of 3PLs Use Outdated Technology
58%
Of 3PLs Struggle with System Integration
Challenge: Mapping Complex International Logistics with Strategic Contract Management
The retailer faced significant challenges in maintaining visibility across their 3PL operations, particularly for Goods Not For Resale (GNFR) that can include heavy displays and equipment. With rapidly changing retail features and seasonal volume increases, the complexity of managing logistics contracts can create substantial risk for billing inaccuracies and missed savings opportunities.
Despite having good auditable data, obtaining comprehensive information proved challenging, especially on an international scale. The organization needed a strategic framework to ensure contract compliance across all moving pieces of their 3PL operations.
Solution: Navigating the Contract Management Route to Value
PRGX implemented a comprehensive contract management program that addressed different aspects of the Contract Management Services continuum over a 9-12 month period. Through this holistic approach, PRGX identified and corrected multiple billing errors, resulting in 0.1% to 0.5% cash recovery on total turnover.
Our approach streamlined logistics management through three key phases: Contract Compliance audits that uncovered billing discrepancies across rates, charges, and allowances; Contract Optimization that leveraged these findings to strengthen future agreements; and Contract Monitoring that implemented ongoing verification to prevent future errors and ensure compliance.
Breakdowns Identified:
- Incorrect application of lane rates
- Invalid insurance charges for different cargo
- Volume discounts not paid
- Excessive margin on international freight
- Duplicate payment and aged credit notes
- Fuel increase allowances mismanaged
Key Learnings:
- Strong support and governance required for claim optimization
Rev Up Your Results with PRGX Contract Management Services
Go beyond just fixing contract inefficiencies to create smarter supplier contracts with PRGX Contract Management. PRGX applies over five decades of experience to deliver a unique blend of personalized expertise and secure AI technology for 6x ROI.
Managing complex 3PL relationships or facing other logistics contract challenges? Chat with an expert about your unique goals, or watch a demo to learn how your contracts can actively make you money.
How Much Can You Recover?
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