Friday, March 25, 2011

Proof of Delivery Problems?

A Proof of Delivery or POD is a receipt showing the date and place of delivery to the consignee, and the signature of the person receiving the shipment. Why is a POD important? Without a POD, the consignee can dispute the delivery and refuse payment. Without a POD there is little or no recourse. I have seen instances where Proof of Delivery was disputed years after the delivery had been made. This was done under the guise of an audit. PODs for a number of shipments, supposedly chosen at random and POD were requested. If the PODs were not provided, the consignee intended to take a credit for the shipments in question. I witnessed a dispute involving several full truck loads of merchandise. I've heard similar stories from other manufacturers.

I hear of losses from POD related issues again and again. The problem costs companies substantial sums. Eliminating this problem, or even significantly reducing it can have a big impact on the bottom line.

For a company with a gross income of $100 million and a net profit $7 million and a loss of $1 million due to proof of delivery issues, eliminating the losses due to POD issues could raise the profit to $8 million, an increase of 14%.

So where is the real problem? If you examine these losses, you will discover that POD disputes raised in a timely manner are not the problem. POD disputes that arise later create the big problem. Let us assume that a dispute is raised 3 months after a deliver was supposedly made and the POD cannot be found. The next step is to contact the carrier and request the POD. By now the POD may be in a box stored in a garage or other storage facility. Retrieving the document takes time. If the POD can't be located, then the carrier may check with the driver. The driver may no longer be with the company, or may be an independent carrier. Even if the POD is located, the cost is considerable in time and labor. If it's not found or perhaps not properly signed, the shipment may be a write-off. This can be a costly problem.,

To eliminate POD problems you need to have a POD for every shipment. But how do you accomplish that without making the process complicated or costly? Apply procedures similar to those used to manage your receivables. When you ship merchandise, you have created an outstanding POD. Think of an outstanding POD the way you think of an outstanding receivable. You pay close attention to aging reports for receivables. Consider a similar aging report of outstanding PODs. When a POD is received, the POD is no longer outstanding. It's a simple matter of monitoring the PODs that are past due.

How do you collect and monitor outstanding PODs without increasing your costs? It is the responsibility of the carrier to provide PODs in a timely manner. Payment to carriers for shipments should not be released unless you have valid PODs for those shipments.

The new POD process can be integrated into existing your procedures. When a shipment is made or a bill of lading is generated, produce an outstanding POD. Invoices from carriers without corresponding PODs should not be accepted. Carriers want to be paid, and quickly. Make payment contingent on the POD.

When a POD is requested, you will have the POD. The outstanding POD aging reports will give indication of any potential problems. When a problem is indicated, steps can be taken to proactively resolve any issues. Implementing a well designed solution and managing it properly will reduce losses. I have designed and successfully implemented such solutions which also incorporated document imaging to store and retrieve the PODs electronically. PODs could also be faxed directly into an automated system. A web site for carriers to monitor their outstanding PODs will prevent unnecessary calls regarding payment. If they haven't been paid, the should make sure the POD is not outstanding.

There are initial costs to implementing an effective POD solution, and there will be some ongoing costs, both easily offset by the savings.

1 comment:

  1. Proof of Delivery is one of the business processes for which organizations most commonly seek more efficient, cost effective and responsive document management. So this issue must be address for better service.


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