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How to Run a Warehouse Audit

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The perception that many have of the simplicity of warehouse operations merits consideration. How simple is it? We receive goods, put them away, pick them upon order, ship, and then maintain the overall operation. On it’s face it appears simple. Yet, let a novice manager in training step into the shoes of an existing warehouse manager and they may soon find themselves overwhelmed. 

Reality sets in when a long term customer has an issue and catches the new manager on a bad day. So the customer, after a series of unpleasant exchanges, takes their business elsewhere. It only takes one or two of these scenarios to occur in succession for the consequences to become severe enough for drastic action.

This is where warehouse audits come into play. In a prevent versus reactive mindset, the warning signs of trouble for our new manager would have been caught in advance. Corrective actions would be taken, and the customer would still be on board today. 

Questions that a Warehouse Manager Should Ask

Are we using an effective Warehouse Management System? If there is inaccuracy with your data, the result will be “garbage in, garbage out”. 

Are cycle counts and root cause analysis prioritized? Are the accuracy findings posted in a highly visible location? 

What are your inventory turnover levels? Is it turning over on average 6 to 8 times in a year?

Does your warehouse utilyze automation? Have you incorporated a Warehouse Control System with your Warehouse Management System?

Is there a cross-trained team designated to help solve problems when they arise? 

Warehouse Audit Essentials

There has to be some form of data collection for an audit to be worthwhile. It is in the data collection that measurements occur, and thus benchmarks are established followed by accuracy findings.

While the specifics of the auditing process can vary, the focus here will be in the underlying principles of why the audits are critical

Catch it in Time

The primary reason you should audit your warehouse on a regular basis is to catch a problem in its infancy. Consider the analogy of a human being. Some humans fall ill quickly, and recover quickly. Then we have the slow onset of a disease, one that may be present for some time and growing. The individual does not feel just right, yet ignores the warning signs. Once the condition is unbearable, they end up in the emergency room only to learn that it is too late, their condition is terminal.

The same goes for our warehouses. If left unchecked, a small discrepancy can, over time, develop into a catastrophe for the company. If this discrepancy is caught quickly, corrective actions can be taken and the recovery is quick.

Customer Relationships

The customers that a warehouse manager deals with on a daily basis varies depending upon the nature of the business. They can range from vendors to retail store managers. The key to any relationship is communication. Ensure that you have an open door policy for all of your customers. Request consistent feedback from them so that you can adjust to their needs when appropriate.

Cost and Process Control

The standard benchmarks for cost analysis can come from various sources depending upon the size of the company and nature of business. Perhaps there are other warehouses in the company of equivalent size. Or, industry standards may be available from other companies. For our statistical analysis friends, historical analysis will show trends over periods of time. 

Equally important is process control. It is through an audit of process control that your warehouse can develop “best practices” for each department and the warehouse as a whole. For example, if certain pickers are not following the proper paths for order selection, a process control audit will reveal this. 

Quality

 A quality audit will reveal, for example, whether orders which are supposed to be quarantined are handled properly. Are the quality standards that are emphasized company wide being followed at your warehouse?

Interpersonal Relationships at Work

Having worked for a company that was infiltrated by a union drive, it bears consideration to ask what you have done to ensure that your workforce is committed to each other. Is there harmony across departments and through the hierarchy? Again, the key to any relationship is communication. Let everyone in the building know that they can be heard, positive and negative feedback should be encouraged.

Inventory Control to Inventory Management

Is the available space used to its maximum benefit? Successful managers make the transition from inventory control to inventory management. They begin to view inventory as money, rather than product. They look for ways to improve the company’s profit. Is there inventory in the warehouse that can be eliminated without any customer complaints? Going from a control to management mindset will bring about opportunities for growth.

Best Practice Audit Approach 

The three critical areas to warehouse operations are quality, service, and productivity. Upon the completion of a warehouse audit, the focus should be on these three areas. With benchmarks in place for each, and consistent tracking practices utilized, your warehouse operations will thrive.

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Topics: Warehouse Management Lean Manufacturing Warehouse