Improving Efficiency Through Warehouse Audits

An efficient supply chain is key to maximizing business success, whether a small or large company. When businesses manage their supply chain effectively, they are increasingly likely to boost customer satisfaction, reduce operating costs, and increase sales and profitability.1

By conducting a warehouse audit, a company can likely add efficiency to its supply chain. Regularly assessing your warehouse operations can reveal inefficiencies, help establish sustainable standards, and prevent issues from developing into full-fledged problems.2 Read on to learn how to conduct a warehouse audit, so you can catch problems in their initial stages and optimize for future improvements.3

“By conducting a warehouse audit, a company can likely add efficiency to its supply chain.”

Configuring a Warehouse Evaluation Process

A warehouse audit can be conducted by an internal or external auditor, or by the department itself. Most importantly, the individuals handling the examination must be objective when analyzing past performance and possible improvements.4

When conducting a warehouse assessment, start by collecting both quantitative and qualitative data from key stakeholders in the warehouse, as well as other departments, such as customer service and IT. Be sure to not silo other departments, as they all provide valuable insight and can benefit from understanding the audit results.

After gathering the data, a thorough analysis of data is required to evaluate whether there are any existing inefficiencies or risks. From there, the audit team will produce a warehouse audit report that provides recommendations, risk assessments, and next steps.5

The Warehouse Audit Checklist

It’s important to note that warehouse audits can vary in depth from business to business depending on the extent of operations and the available resources. While it’s beneficial to establish a process that models the aforementioned one, a business with less resources or one that is new to auditing, can benefit by assessing some of the basic items included in this checklist:6

  1. 1

    Warehouse Layout

    Determine whether storage space is used effectively and that space used for non-storage activities is kept to a minimum.

  2. 2

    Equipment

    Ensure that all equipment is in good operating condition and that routine inspections take place. Additionally, evaluate whether equipment is being used to its maximum potential and is not interfering with other operations.

  3. 3

    Safety

    Make sure there are safety and accident prevention policies in place, and that employees and supervisors have a clear understanding of prevention methods.

  4. 4

    Housekeeping

    Check that general maintenance is performed, so that all areas, both internally and externally, are kept tidy and sanitary.

  5. 5

    Performance Measurement

    Evaluate the overall efficiency of warehouse operations. Then provide recommendations and actionable next steps.

Additional Considerations

Another benefit of conducting a warehouse audit is the ability to use the data gathered to create benchmarks to measure against. One of the most critical benchmarks is cycle time, i.e. the time it takes to process an order from start to finish. A warehouse audit should ideally reveal inefficiencies, errors and waste, all of which can reduce cycle time.7

In Summary

A warehouse audit provides your business with a quantitative and qualitative understanding of the productivity and service levels of warehouse operations. By conducting warehouse assessments, you can identify business progress levels across a wide range of benchmarks, and ultimately help your business to grow and succeed.8

Conducting A Shipping Invoice Audit

Shipping expenses can make or break your business

Over time, basic rate increases and surcharges can add up. That’s why it’s so important to audit your shipping invoices. They are a valuable resource that can help reveal your true shipping costs which can include unexpected fees that can drive costs higher.

When it comes to shipping costs, knowledge is power

Key invoice areas to evaluate:

Surcharges.

As mentioned above, unmonitored surcharges can account for a large percentage of your shipping costs. When you know what you’re paying for, you have options. You can shop around and choose alternate carriers that may not charge extra for comparable services.

“…understanding your shipping expenses in the short term can pay off significantly in the long run.”

Common ancillary surcharges include:

  • Residential delivery
  • Delivery area surcharges (DAS), Extended DAS
  • Fuel (ground and air)
  • Large packages
  • Saturday delivery
  • Return fees (print and electronic return labels, pickup attempts)
  • Package pickup and intercept
  • Confirmation of delivery

Address correction charges.

Many businesses don’t realize that they can be charged extra for a typo in the street name; a missing apartment number; or even a wrong digit in the ZIP Code™.

Dimensional (DIM) Weight occurrences.

When the DIM weight is larger than the actual weight, you may be paying extra for non-existent weight. It pays to compare how shipping carriers apply DIM weight, so you don’t pay more than you need to.

Investing the time to understand your shipping expenses in the short term can pay off significantly in the long run.