Analysing claims helps us spot trends and unlock valuable insights hidden in the data.
There is the old adage “the devil is in the detail” and this is particularly true when you are trying to discover the causes of loss and damage in claims data.
Unless you can quantify the impact of claims or identify trends you cannot improve the situation. One of the advantages of the FreightGuard Claims admin system is that it reports on a wide variety of variables. These include multiple claimant customers, commodities claimed, high claimant regions and general claims categories which help identify patterns of loss or damage.
In one of these reports, it became obvious that a particular customer of a freight company who consigned leather goods was being targeted. Let’s call them Buzzee Leather.
In the multiple claimant report, it showed that this customer was experiencing a high degree of short delivery. On average 8 claims per month. What made this more suspicious was that the claims only occurred between a Friday and a Monday and were only on 1 route. The route from Johannesburg to Cape Town. FreightGuard met with the senior management of the freight organisation and presented our findings. Over 2 months the freight company had paid out over R16,000 in claims to Buzzee Leather for short delivered items.
Our recommendation was to put in management controls at the Johannesburg branch that would weigh and monitor the cartons as they were offloaded into the branch and keep them under observation until they were loaded out on Wednesday for transmission to Cape Town, arriving there by Friday morning. The management controls were put in place and the goods were line hauled to Cape Town and checked in to the Cape Town branch in the morning, where they were sent out for delivery in the late afternoon.
Sure enough, on Monday morning the freight organisation received the news that once again the goods had been delivered with items having been short delivered. Having eliminated the chance that the short delivery was taking place in the Johannesburg operations we expanded the risk control measures to the Cape Town Branch. The same weight and monitor procedures were followed and the cartons were delivered once again late afternoon that Friday. The next Monday brought about the same result… freight had been short delivered.
Unbeknown to the warehouse controller, the cartons had been weighed and monitored. The weight of the cartons was the same all the way from Johannesburg to Cape Town. The vehicle seal had not been tampered with. Therefore, it was FreightGuards conclusion that there was pilferage occurring at Buzzee Leathers receiving depot.
The freight company was reluctant to rock the boat. Accusing a customer’s staff of theft is a highly sensitive subject, but the claims total was now in excess of R20,000.
There didn’t seem to be any other logical conclusion as the freight was now in a closed loop monitored system where the opportunity for pilferage was significantly reduced. The Managing Director of Buzzee Leather was offended by the suggestion that his staff were involved as most of them were long term employees who he believed he treated “like family”, but once presented with the evidence he agreed to the freight company installing a hidden camera in the goods receiving area.
On the next Monday, the management of the Freight company in Cape Town viewed the footage with the Managing Director of Buzzee Leather. When the cartons were received in the despatch area in the late afternoon they remained untouched until about 7:00 pm.
The hidden camera showed the warehouse controller approach the cartons. He had been with the company for 21 years and had volunteered to work the late shift every Friday afternoon. In a matter of minutes he opened the flaps and then removed 4 items from 3 cartons and then quickly resealed the cartons. When discussing the incident later with the management of the freight company Buzzee Leather ‘s MD was visibly upset.
“Do you know he was one of my first employees” he said, “he would have been the last person I would ever have suspected”.
We estimated that over a year Buzzee Leather would have lost close to R100 000 if the FreightGuard statistical analysis had not have been so accurate in highlighting the trend.
Hard times can push even the best of people to make choices they never thought possible. Although you can’t always guard against this, you can follow trends and statistics because unlike people statistics never lie, they reveal the truth behind the numbers, regardless of our perceptions.