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AP Automation: The Answer to Saving the Logistics Industry from Drowning in Paper

01 .11 .2021
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Operational processes in the logistics industry might seem easy to explain: Something must be shipped from Point A to Point B, and sometimes via Point C. However, the process in accounts payable can become quite complex to ensure deliveries are completed with ease.

The Complexities of the Logistics Process

Regardless of what needs to be delivered—a massive machine or thousands of face masks—the process is essentially the same and involves multiple parties:

    • The company picking up the container from the customer's facilities and taking it to the closest train station or harbor

    • The carrier transporting it across the country or even overseas

    • The company responsible for the last part of the journey, which involves picking up the container and delivering it at its destination

Let’s say an organization wants to transport goods from North America to Europe. This is where logistics providers comes into play because they can support the company in managing the shipping process with maximum efficiency. 

The logistics provider, in turn, first contracts with a local company to pick up the organization’s goods and deliver them to a shipping port in Los Angeles. Another contract is then arranged for a shipping company to transfer a 40-foot container to a via point in Hamburg, Germany. For the final step, the logistics provider contracts a transport company in Hamburg to pick up and deliver the goods to its final destination in Vienna, Austria.

The process itself seems simple, but the paper trail associated with it can quickly turn into a tsunami. Think about the types of documents that need to be generated in the above scenario:

      • A customer order for shipment

      • Three to four different purchase orders for various service providers

      • A bill of lading for customs in the U.S., Germany and Austria

But it doesn’t stop there.

Remember that shipping container? To optimize the cost of shipping, it was also filled with goods from several other customers, all of which are going to different final destinations. To manage that process, the logistics provider must contract a warehouse in Germany to split the freight for the various locations. This creates the need for an additional set of critical documents, such as customs documents and purchase orders.

And of course, all service providers want to get paid for their services on time, so they quickly submit all necessary billing documents with their invoices. This is usually handled as a collective invoice for several shipments, and (assuming there were no other problems along the way) it’s one last headache the logistics provider must handle as part of the financial settlement process.

As you can see, what began as a seemingly simple transfer of goods can leave AP departments drowning in documents.

Automation to the Rescue

Without an intelligent scan and workflow solution, the only way to manage these processes is by assigning more people to help with the problem. In other words, massive staffing and massive costs.

If you take a closer look at the supplier and customer documents, you can see the shipping number (found on those customer and supplier documents) is one of the most important references. This isn’t usually the case for other industries. The shipping number is the unique key to how logistics companies organize and reference their orders.

This is precisely what keeps many logistics companies from embracing AP automation. Their orders are organized and referenced in a distinct way—and they’re afraid the system simply won’t be able to handle the process accurately—which could lead to all sorts of chaos for their business and their customers.

What logistics providers don’t realize is that automation technology has come a long way. Indeed, an intelligent software solution—such as our xSuite Invoice Cube solution for AP automation in SAP—can establish a relationship between all relevant positions on the documents and thus perform a 3-way match. Through customization, this standard process in accounts payable can be adapted to the specific requirements of the logistics industry and documents can be matched based on the shipping number as a reference.

No matter which ERP system you may currently have in use, an AI-powered AP automation solution from xSuite can help logistics providers optimize all steps required for data capture and data storage, while intelligent workflows automatically route complete documents and divert any erroneous documents for clarification. Additionally, our integrated archive stores all your data and relevant documents so they can be found quickly and effortlessly.

By implementing an automation solution, paper archiving—and the abundance of paper in general—can become a thing of the past (and logistics providers can breathe easier).

If you want to find out more about how xSuite can prevent your AP department from drowning in paper—whether you’re in the logistics industry or not—click here to book an introductory call with one of our solution experts.