Ideally, companies should perform a routine warehouse audit to ensure that daily processes are running smoothly, goods are all accounted for, picked, packed, loaded or unloaded properly, and that all systems are functioning at their optimal.

While auditing can get a bit in-depth, the process is usually fairly straightforward. Having said that, as technology grows and expands across industries, the way audits are performed is indeed quickly changing. For most companies, it would be wise to outsource this process to a third-party that specializes in warehouse auditing as they will likely have all of the tools and means necessary to get the audit completed quickly. 

Regardless of whether you outsource this assessment or you already have an in-house auditing team to handle it, there is some basic knowledge you want to equip yourself with before getting started.

Determine the Type of Warehouse Audit You Need

When performing an audit, there are four main needs that should be considered. Depending on what area of the warehouse you want a closer look at will determine the type of assessment that needs to be performed. If you are working with a third-party, they may use assessment types to determine their course of action and this will also directly impact what data they capture for you.

Commonly used assessment types include:

Business Needs Assessment

This type of assessment shows the objectives and future expectations of the business weighed against the current data the warehouse (or really any other of your business) relays. It essentially aims to pit one against the other in a comparison to determine how the warehouse overall contributes to the long-term and sustainability needs of the company. The goal with this is to find any gaps where the warehouse is failing to align with the business or the business is failing to properly equip the warehouse and so on.

Information Architecture Assessment

Logistical data is shared with members of the team to determine if the data architecture is workable in its current state or if there needs to be larger changes made. The goal of this assessment is to ensure that proper collection and handling of data is carried out correctly every time and that it is then sent across the proper channels to all parties who may need it.

Organizational Assessment

The organizational assessment examines leadership's roles in data management, an overview of the work environment itself, and how the flow of tasks is structured throughout the company. Organizational assessments also address if and how training is conducted to understand and manage various daily warehouse tasks, including warehouse data management.

Project Management and Planning Assessment

This assessment aims to provide the auditor with an understanding of the tasks, timing, and resources needs within the warehouse. Furthermore, it looks at communication and collaboration between departments as well as how problems are solved. Determining the level of planning (such as demand planning) and whether there are clear issue resolutions and procedures in place is the main function of project management and planning assessments.

Once you have determined the type of assessment to conduct, auditing teams should determine the area in which to focus their attention.

Determine the Areas on Which to Run Your Warehouse Audit

There are four areas in which you can choose to audit.

These four are labor, facilities, workflow and procedures, and systems.

As you can see, there are some similarities between the types and the areas. For example, if you wish to audit procedures then you would do well to choose the project management and planning assessment type and/or the organizational assessment.

Each type of audit addresses a specific issue or set of issues within the supply chain. It is important that when you are auditing your warehouse that you choose one route to take and complete that audit first. Conducting too many assessments simultaneously may result in manual errors made, a stronger likelihood of disorganized data, or even corrupted or bias information as auditors and members may wish to expedite the process and provide answers to surveys that cater to the wanted result rather than to the information in an effort to speed through it all.

Choose the type of audit you want to run, then select an area or set of likewise tasks to audit...

Labor

Audits of this type address productivity, cost of labor, turnover, training, and the local labor market. This area also usually examines potential causes to and offers solutions for ways to minimize the expense of labor.

Facilities

This type of auditing uses what is known as the “cube” method as it is literally assessing the size of the warehouse in relation to how the space is or will be used. 

Essentially, the goal of this is to determine whether or not the building is being used to its full capacity. The cube is the width, length, and height of the functioning warehouse space. If the warehouse is lacking the space needed or the space could be used more efficiently than it currently is, solutions may be offered regarding the utilization of space moving forward.

Workflow and Procedures

This focuses on the flow charts, slotting system, packing materials, and quality control within the warehouse. The audit should review both intake and output procedures, whether there are enough materials at stations, and how effective and flexible the picking process is.

Systems

Recent years have seen more and more monitoring and auditing of software platforms and critical equipment. But in the case of warehouse audits, this assessment is geared toward auditing the WMS (warehouse management system) is the purpose of this audit. The system audit addresses the inventory management system (IMS), Bar Coding, Replenishment, pick ticket selection, packing verification, tracking, and returns.

Final Thoughts

Anyone with a knowledgeable team on their side can perform a warehouse audit. For everyone else, there are plenty of dedicated third-party auditors to choose from.

Regardless of how you get it done, the important thing is that it becomes a routine. Moving forward in an ever tech-hungry landscape is competitive and industries are leveraging new advancements in the process almost daily. It is imperative that companies use the tools and knowledge necessary to collect the right data, measure, compare, and leverage the results.