Case Study
Krones AG has outsourced its freight audit to Solvares Logistics, significantly increasing the quality of its accounting. The detection of invoice discrepancies has quickly led to high savings in freight costs. The audit-proof process also provides data for tenders, offers, and negotiations with freight forwarders.
Krones is growing and growing – and not only in its core business of filling and packaging technology. Many long-term global developments support this trend. The growth of the world’s population, the increase in the consumer-friendly middle class in emerging countries, and the migration of people to the cities are increasing the demand for packaged beverages.
Unloved mammoth task
These trends are reflected in the logistics expenditure of the listed mechanical and plant engineering company: As early as 2015, the annual costs for worldwide transports with all modes of transport amounted to 100 million euros – associated with around 150,000 invoice items. The range of services extends from spare parts shipped throughout Europe by courier to filling plants transported worldwide. On average, 150 documents have to be checked per day and, if necessary, complaints have to be made to the freight forwarders. A mammoth task that was not very popular with the employees concerned.
“The invoice control used to be in the hands of a two-person team, which could only work on a random basis due to the quantity,” recalls Caroline Stuhldreher, Project Manager in the Logistics department at Krones. “We wanted to increase our quality in this area and were looking for an external solution that, as a neutral body, could check all invoices for their accuracy,” adds Thomas Wander, Head of CPL Logistic Operations at Krones AG.
Data protection as a criterion
After an intensive selection phase with various providers, Krones decided on the professional freight audit from Solvares Logistics. “Solvares Logistics not only uncovers any invoice errors, but also takes over the clarification and settlement with the freight forwarders,” reports Stuhldreher. Another important criterion for her was data protection: “We took a very close look at the processes and found that Solvares Logistics handles sensitive invoice data very carefully.” In addition, the Head of Auditing at Krones AG had already had good experiences with Solvares Logistics’ services elsewhere and served as a positive reference. Last but not least, the geographical proximity also spoke in favor of the cooperation. While Krones is based in Neutraubling near Regensburg, part of Solvares Logistics is based in Nuremberg, just 120 kilometers away.
The switch from internal to external invoice verification was carried out in several steps. First, the large logistics service providers that generate the most sales revenue with Krones were targeted. The freight forwarders were very cooperative, especially since many were already familiar with the procedure from other customers.
Solvares Logistics has set up an interface for each service provider to convert the invoices into a precisely defined Excel format. The Excel data is then imported into Solvares Logistics’ IT system and compared with the conditions stored there. “We had formed a small, joint project team that worked together very efficiently. Even today, the experts from Solvares Logistics are at our side when we have requests for adjustments,” praises Wander.
Savings in the millions
The completely paperless process has been running flawlessly since 2017. In the first year alone, invoice discrepancies amounting to 288,000 euros were uncovered. By 2019, 70 percent of the freight forwarders commissioned had already been integrated into the process.
At that time, the identified discrepancies or freight cost savings amounted to 1.3 million euros. Since then, the error rate has fallen because the hurdles and misunderstandings are systematically uncovered and eliminated. “We do not assume that any freight forwarder deliberately invoices incorrectly,” emphasizes Stuhldreher.
However, the benefit of professional freight audit is not only in the costs saved. “This is also a compliance issue, because after all, it involves a lot of money. With Solvares Logistics, we now have a secure process, which is not least pleasing to our auditors,” explains Wander. In addition, Krones now has a database with all invoice information, which is used for tenders and the calculation of new projects. “We can now enter into new negotiations with freight forwarders very specifically,” says Stuhldreher. In such discussions, the complaint rates of past invoices also play a role.
Optimized offers
The collected data could bring further benefits in the future. “Together with Solvares Logistics, we are currently looking for a way to simplify our quotation system on the basis of mass data,” says Wander, describing the ongoing considerations.
So far, the calculation for the transport of a filling plant has been based on individual freight invoices from the past. In the future, the anonymized mass data from Solvares Logistics’ entire wealth of experience could also be used in order to get as close as possible to the actual costs.
Conclusion
With the professional invoice verification by Solvares Logistics, Krones AG has a convenient and audit-proof process that pays for itself year after year due to the freight costs saved. In addition, the collected data ensures a high degree of transparency and provides an ideal basis for tenders, offers and price negotiations. Last but not least, the takeover of the audit and the direct clarification of discrepancies with the freight forwarders by Solvares Logistics relieves the employees of Krones.