Warehousing is a huge responsibility. If you own and operate your own warehouse, you already know that. Your warehouse plays a key role in your business, but in many cases, the warehouse is overlooked, or we tend to not focus on optimizing it so you can achieve the maximum efficiency rate possible. If your warehouse is not performing at a high level, it may be time for a warehouse audit. From inventory management to material handling, there’s a lot of moving pieces you have to keep your eyes on.
Nobody looks forward to doing a warehousing audit, it’s an essential task for running a successful supply chain and business. Regardless of how small or large the warehouse is, it’s a time-consuming process and must be done properly so you can improve efficiency and save money in the long run.
In this post, you’ll learn the several benefits of conducting a proper warehouse audit, and how to eliminate the need to do it on your own by partnering with a 3PL.
What Is A Warehouse Audit?
A warehouse audit is a broad term that can apply to auditing any part of a warehouse. The types of audits include:
- Inventory audits
- Policies and procedures audits
- OSHA audits
- Shipping and logistics audits
- Accounting audits
- And more
Warehouse audits don’t follow a typical schedule. You definitely don’t need to do them daily or weekly, but they can be done as frequently as monthly or quarterly depending on the size of the warehouse and the current resources you have available.
A warehouse audit should answer the most prioritized questions “Does our procedures meet current operating requirements?” and “What can we improve on?”
The reason an audit can be beneficial is the fact that it be an unbiased examination and evaluation that objectively analyzes past performance and possible improvements. The warehouse audit can be performed by the department itself, an internal auditor, or an external auditor. It should result in a warehouse audit report that details strengths and weaknesses and suggests improvements.
Benefits of a Warehouse Audit
There are several advantages to performing a warehouse audit, whether it’s done by an inside agency or an outside organization. These include establishing consistent and long-term standards as well as having continual access to dependable information. A professional audit will assist you make strategic and managerial judgments as well as show where you can enhance and where you can cut costs. A competent warehouse audit should provide recommendations for increasing efficiency and sustainability in a professional audit report.
A warehouse audit will invariably begin with the gathering of data – both quantitative and qualitative – from key stakeholders. This data will then be analyzed and interpreted. The main department involved in data collection and interviews will be the warehouse, however, other departments may also be involved, including purchasing, customer service, production, and IT. Each of these departments can provide valuable insight into any issues and can also benefit from the outcome of the audit.
All gathered and analyzed information can be turned into an as-is process, with documents and flow maps to supply a clear understanding of the entire process. They can be used to help evaluate the process so that inefficiencies, waste, and bottlenecks can be identified. The audit team will then offer recommendations, risk assessments, and action items on a warehouse audit report. The data gathered during the warehouse audit is also analyzed and used as benchmarks to back up the findings as well as quantify costs and potential savings.
Warehouse Audit Checklist and Report
A properly completed warehouse audit report will give you a complete set of data analyses that can be used to measure continuous improvement. This includes order profiles, productivity profiles, inventory profiles, and other operating ratios. The audit covers each functional area, from receiving through shipping and including inventory control. Below is a warehouse audit checklist that demonstrates what the audit should include.
- Facility current and optimum capacity and throughput
- Logistical layout and material flow
- Safety, security, and housekeeping
- Systems functional capabilities and performance
- Customer service performance metrics
- Productivity analyses
- Storage and handling equipment
- Inventory accuracy
- Identification of opportunities for improvement
- Comprehensive warehouse audit report with recommendations
In a nutshell, a warehouse audit identifies good working practices and improvement or optimization opportunities inside the warehouse through data benchmarking and an objective assessment. It also supplies a roadmap to qualitative warehouse improvement, savings and cost avoidance, and improved efficiency.
Warehouse Audit Checklist
(1) Audit Defined
What is being audited must be determined during every warehouse audit. A public corporation, for example, may focus on inventory valuation while a private company may concentrate more on warehouse efficiency.
(2) Inventory Count
Ensure that you have an efficient inventory management system in place for accurate inventory counts that correspond to the quantities in your inventory software. You’ll be able to detect anomalies and figure out where the problems are coming from if you use correct inventory monitoring and inventory forms.
(3) Audit Operations
Ensure that order fulfillment, warehouse inventory procedures, warehouse employees, warehouse quality control, and other equipment like forklifts are in accordance with safety requirements while maintaining maximum performance. OSHA regulations are very serious, and they must be followed to the letter. You don’t want to face OSHA penalties or lawsuits from injured workers because of a careless mistake. The safety and health of warehouse employees should take precedence over everything else.
(4) Evaluating Inventory Data
Warehouse management software is a good example of software that may be used to handle operations in your warehouse. Take advantage of this situation to analyze inventory records for fraud, waste, data validation, and customer satisfaction monitoring.
(5) Open Communications
Employees who are involved in the warehouse’s day-to-day operations know how the workflow goes. Take advantage of this and speak to them about what can be improved, what may be missing, which policies aren’t being followed, and other useful information about the warehouse. To obtain valuable input on each area of the warehouse, talk to your employees from every area. There’s a lot you can learn here to make important business decisions now and down the road.
(6) Audit Results
Once you’ve captured audit data, you can identify processes or policies that need to be adjusted within your warehouse environment. Warehouse managers will be able to offer recommendations for increasing productivity and efficiency based on the data collected. Work with the analysts on your team to analyze the information and produce your findings and ideas for relevant stakeholders.
Let Thill Inc. Handle Your Inventory
We help merchants run their inventory efficiently by providing the right technology and guidance across several ecommerce stores and fulfillment centers at Thill, Inc. Your Thill dashboard and ecommerce sites are linked in real time, allowing you to manage your orders and inventory interchangeably.
You’ll be able to tell when it’s time to replenish inventory via reorder notifications, combine your items for sales, request inventory transfers, and much more.
Give us a call today at 920-967-9201 to learn more about how we can help – you can also fill out our online form here.