How software supports damage management

Stefan Seufert, CTO/Vorstand EIKONA AG
Employee stands in warehouse and uses digital software to report damage to insurance company.

The processes in logistics along the value chain are designed for high processing speed. This is especially true in the area of distribution logistics, where goods are supposed to get from production to the recipient as quickly as possible. Even if they occur rarely - measured in terms of the quantity of goods - incidents of damage are the order of the day. Efficient supply chain management therefore also includes the automatic control of damage processing. Software can considerably streamline damage management.


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Even though statistically losses in the area of transport logistics are well below one per cent, costs can be reduced by optimising damage management. After all, insurance costs are among the highest external costs in the logistics industry. Digital damage management for automatic control of damage reporting in all cases of damage considerably reduces the liability risk. Software takes over the guidance of the processes with predefined workflows. These ensure process reliability and prepare decisions according to the IFTTT principle: if this happens, the next step must follow. In this way, the claims management software ensures both the exact documentation of claims and completeness and efficient processes by checking all the information.


Organisational issue

Why software makes damage management more efficient

The tasks of damage management are divided into several sub-areas in a freight forwarding company. This is because damage to products can occur both during handling in the warehouse and in transit. Which transport damage do freight forwarders handle at which points? Clarifying this is the assignment of damage management. Because by definition it is associated with the following tasks:

  • Damage assessment
  • Description
  • Documentation
  • Damage report
  • Claims settlement

One of the basics of efficient damage management is to determine the time of damage as precisely as possible in order to be able to determine the person responsible. Increasingly, the goals also include informing the customer at an early stage. After all, in many sectors of the economy, companies depend on exact planning and can thus avoid consequential damage. Therefore, forwarding companies should improve damage management with workflows through software.


Traceability

Systematise damage management with software

Damage management always moves between liability and settlement. Because damage to goods occurs again and again due to the abundance of goods movements despite the greatest care in the execution of services, all companies involved are insured against the greatest liability risks. It is therefore important to be able to identify as precisely as possible who is responsible for the area in which damage occurred. For example, did the damage happen on the transport routes in the warehouse during handling? Or was it already triggered during picking by the warehouse technology used in warehouse logistics? Perhaps transport damage to the goods occurred due to insufficient load securing or packaging that was too weak? That is why the insurers of the parties involved carefully check who was liable when the damage occurred. For the most part, insurance companies also use software for this purpose in claims settlement.


Claims processing

Improve damage management through workflows in the software

In order to be able to protect themselves against unjustified regulation claims, many forwarding companies use technical solutions with which they document the condition of the goods when liability is transferred. These include, for example, cameras on hall ceilings and gates. They use these to record the cargo hold directly after opening the trailer or swap body. In addition, they make further recordings directly during the incoming scan of each package, that show the condition in which the goods have reached the freight forwarder. If damage to individual products is noticed during the further course of handling, it has become established practice to use software with a predefined workflow for recording damage on the mobile devices used in hall scanning. This software also directly captures photos of the damage. It is thus ensured that damage is precisely documented from the earliest possible point in time and can be reported to the client. In distribution logistics, this is usually the supplier. In procurement logistics, on the other hand, the consignee himself has ordered the transport. The client decides on the further use of the goods and must report the damage to the insurance company. A damage management software can therefor support both the recording of the damage and the subsequent transfer to the relevant bodies.


Being prepared

Digital claims management helps to meet deadlines

For the settlement of claims, in addition to comprehensive information, it is also necessary to observe deadlines that must be met when reporting claims. Here, too, software supports the employees responsible for claims management. Because they already have decisive time advantages through the digital recording of damage. In addition, their IT systems are ideally linked in such a way that they directly relate all data to the customer orders for the purpose of speedy processing. This applies both to individual damaged orders and, even more so, to the accident of a truck in road traffic. As long as only material damage has occurred, quick information is decisive here as to whether the freight forwarder can avoid further damage by violating delivery deadlines. This is often only possible if the damage report is made directly on site via a mobile app or a web app and it can then be checked immediately whether orders for which fixed dates or time slots were booked were also part of the tour. Another important function of the software is to keep the driver and dispatcher calm and to ensure that no important tasks are forgotten by precise instructions in a digital workflow. All agreed steps and measures are also automatically linked to the consignment concerned, so that dispatch and receiving operations can maintain an overview at all times.


Also equipped for any other exception

Digital claims management can do more! Because it is designed to control situations that deviate from the intended process flow. These include, for example, the delivery of an incomplete shipment or missed delivery deadlines. In such cases, the forwarding partners must agree with each other how they want to handle the process. Even if the recipient cannot be found, goods cannot be collected or acceptance is refused, order processing cannot simply continue. For these exceptions, however, alternative workflows with action specifications can be prepared in the IFTTT system and anchored in the software. The solution also protects against liability risks if the dangerous goods check reveals that a good is not in conformity with the system and therefore may not be loaded onto the main run. In procurement logistics orders, the controlling company must then determine the further procedure together with the client. In this way, the software for damage management with workflows for regular exceptions also protects against liability risks and financial damage in further areas


Conclusion

Improve liability claims management via software

Damage is inevitable in logistics. For freight forwarders and logistics service providers, it is important not to be thrown off track. If they use damage management software, they benefit several times over from more efficient processes: they save time when recording damage and can send data and reports to partners or insurance companies more quickly. This significantly improves communication between the partners involved. Moreover, it can also be carried out quite simply in several languages via predefined workflows. And finally, all claims can be recorded, processed and closed digitally. With this structured procedure, the forwarding companies also succeed in only having to accept liability for those cases of damage for which they themselves bear responsibility. This further reduces their costs because the number of settlements influences their insurance premium. Finally, without IT solutions, it is difficult to provide proof of this, for example in the case of insufficient packaging. Claims management software digitalises this step. Digital damage management therefore also helps to clarify the liability issue.


Stefan Seufert
Stefan Seufert
CTO

As a design guru, the software developer delves into logistics service providers' requirements like no other. He is passionate about exchanging information securely and efficiently and thus speeding up the physical logistics process.


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