Warehouse Audits – No More Just a Tick in the Box

Does running your business include managing fully equipped warehouses yourself or through clearing and forwarding agents? Managing them efficiently and effectively can be a huge task. Operating warehouses is an integral part of the distribution channel to get your goods to channel partners and customers. Current business environment demands for fast, dynamic, and flexible logistics solutions and hence more the need to have proper governance across the processes. Here is where warehouse audits play and important role.

To get assurance of the operations, warehouse audits need to be conducted regularly. The frequency depends on the products sold, warehouse size, operational complexity and other challenges which are specific to businesses.

 Warehouse audits help businesses to:

 a)     get a confirmation on the existence of inventories as represented in the books of account

 b)     get insights into the quality of operations at the warehouses   

 c)    get a confirmation on compliance to laws

 d)     to improve processes

 Traditionally, warehouse audits aimed to just count the inventory and match it with book stock using manual verification and comparison techniques. But now, the audits do much more than that.

 Our audits also focus on:

 a)     Analytics based reviews

 b)     Benchmarking between warehouses and scoring them on parameters and sharing best practices.

 c)      Root cause analysis and process improvement.

So, here is what we are going to discuss in detail in this blog: 

1. What is a warehouse or depot audit?
2. How often should you conduct warehouse or depot audits?
3. Why should you conduct warehouse or depot audits?
4. What is a warehouse audit checklist?
5. Why should you let us do your warehouse or depot audit?
6. How do we conduct a warehouse or depot audit?

 

Let’s understand what a warehouse or depot audit is.

    1.What is a warehouse or depot audit?

 Similar to other audits conducted in a business, a warehouse or depot audit is a step-wise inspection to keep an account of the material that the company has. It is important to conduct a warehouse or depot audit because it helps you gauge performance and efficiency.

 Sometimes, you may feel that a warehouse or depot audit is completely unnecessary but you should understand that spending some time conducting this audit may help you save a lot of time and money later. By conducting a warehouse audit, you can be sure that safety protocols are followed, and inventory is accurately accounted for. This will ensure your operations run smoothly.

 A warehouse audit is key to ensuring that the supply chain runs successfully. Let’s look at how often you should conduct a warehouse or depot audit.

    2.How often should you conduct warehouse or depot audits?

 Are you looking to improving the efficiency of your warehouse in the near future? If so, you shouldn’t be conducting a warehouse once in a year or once in a really long time. The warehouse audit should be conducted regularly.

 But this does not mean that you need to stop all warehouse functions to conduct the warehouse or depot audit. You can break the entire process into manageable portions so that you can get it done perfectly without disrupting the company’s operations or customer requirements.

 Perform warehouse audits quarterly or even month to month. Instead of really taking a look at each and everything in your whole distribution center at the same time, spot check high-volume stockpiling racks as often as possible for quality control. Take a stock count and cross-reference it with stock records as a component of your ordinary cycle before they transform into enormous scope issues.

 Now, let’s take a look at why you should conduct warehouse audits.

     3.Why should you conduct warehouse or depot audits?

 There are several important reasons as to why you should conduct a warehouse or depot audit regularly. Here are a few of them:

 i. Understand the problem quickly before it gets uncontrollable

 Given that you will have your stock or materials in the warehouse, there will be several issues that crop up over time. To avoid bigger concerns, it’s better to understand the small issues, note them, figure out solutions early to ensure that they do not occur again. Prevention is always better than cure. In the case of your warehouse, it is even more important to prevent problems than worry about them later. You do not want your customers to come to you with complaints and cancel agreements.

 ii. Cost and process control

 If you have a warehouse that contains a lot of material, especially material that may get damaged over time, it is better to have an account of it. This will help you avoid loss of money due to damage to your goods in the depot or warehouse. Moreover, you will be able to control the processes based on your warehouse audit report.

 Through an audit of process control, your warehouse can develop “best practices” for each department and the warehouse as a whole. For example, if certain staff are not following the proper processes for order selection, a process control audit will reveal this.

 iii. Maintain the quality

 A quality audit will uncover, for instance, whether orders which should be isolated are taken care of appropriately. Are the quality guidelines that are stressed widely across the company being adhered to in your warehouse or depot?

 iv. Control and manage inventory

 Is the accessible space used to its greatest advantage? Good managers make the progress from stock control to stock administration. They start to see stock as cash, instead of items. They search for ways of working to the organization's benefit. Is there stock in the stockroom that can be disposed of with no client grumblings? This helps in moving from just control to a broad mentality. This will help the company and business to develop over time.

 We know that you are looking to conduct a warehouse or dept audit soon. We will provide you with a checklist that you can maintain while you conduct the audits. You won’t miss a thing!

     4.What is a warehouse audit checklist?

 Before you conduct your warehouse or depot audit, here’ the checklist that you need to have. Follow the checklist and make sure to get the answers to all the questions. This will help you have a successful and useful warehouse audit. 

→ Know the purpose of the audit

 You should be clear about the reason behind the audit. Why are you conducting the warehouse audit? What is it that you want to focus on? Make sure you are clear about these objectives before conducting the audit. 

→ Know the physical inventory

 Make sure you have an account of your physical inventory. For this, your systems should be in place and you should know the amount of stock you have versus the stock you should have ideally had. 

→ Understand the operations

 You should know how operations run in your company and your warehouse. How are your employees adhering to the safety protocols or are they really following the guideline given to them? You should have answers to these questions when you are conducting an audit.

 For this, you may have to: 

→ Talk to your employees

 It is important to communicate with your employees. This will give you ground-level information on what’s happening in your company, the processes they follow, etc. They may also surprise you by pitching in certain brilliant ideas to improve the processes.

→ Evaluate audit results and implement required changes

 Once you have the audit results, you need to spend time understanding them. The report shouldn’t be shelved to take a look later because there may be problems that need to be addressed immediately.

 While this may seem simple, it is a tiresome process to follow every time you want to conduct a warehouse or depot audit. That’s why we can help you with it.

     5.Why should you let us do your warehouse or depot audit?

 We follow step-by-step processes when it comes to conducting an audit. It does not matter what audit we are conducting, we have a clearly defined procedure.

 Here’s why you should rely on us to conduct an effective warehouse or depot audit for you: 

1. We have a comprehensive checklist-based approach
2. We enable comparison through an evolved rating process
3. We fix benchmarks and KPIs for depot performance based on rating
4. We make reports and ratings available online through an interactive portal

    6.How do we conduct a warehouse or depot audit?

 As mentioned earlier, we have a step-by-step procedure to conduct a warehouse or depot audit. We divide into four parts: 

1. Physical verification
2. Transaction review
3. Compliance review
4. Other necessary checks

• Physical verification

 Physical verification includes: 

→ Physical verification of good stock, freebies, gifts, promos, Fixed Assets

→ Stock Interchanges – Batch and PKD

→ Stock maintenance

→ Cut-off procedures

 

• Transaction review

 Transaction review includes: 

→ Inbound/outbound transactions review

→ In-transit transaction accuracy

→ Unaccounted stocks review

→ Transaction completeness review

 

• Compliance review

 Compliance review includes: 

→ Statutory compliance

→ Cycle count review

→ Policy compliance review

→ Documentation completeness review

→ Pre and post-audit checklist

 

• Other checks

 This includes: 

→ General upkeep and maintenance

→ Safety, health and environment parameter review

→ Lease, insurance

→ Root cause review and improvement status

 Once we complete all these checks, we conclude the warehouse audit and submit the report to you. Also, we conduct audits across all places in India. Our teams will spend sufficient time understanding your needs and figuring out solutions to your problems.

 Want to conduct a warehouse or depot audit?

 We at Ajay Kumar Associates are prepared to help you find the right solutions to meet your warehouse organization and depot management needs. We provide services such as real-time inventory management, depot audit, returns processing, and more. Reach out to us and let’s get talking!