While frequent monitoring and tracking of your daily operations is key to success, a less frequent, but more in depth audit of your warehouse is essential to analyze current operations, discover potential areas of weakness, and find new opportunities on a grander scale.
A warehouse audit is important for optimization and ensuring that your warehouse is able to work towards its goals
Areas we suggest auditing include metrics and KPIs, inventory, procedures, financials, and waste
Businesses can utilize technology for streamlined auditing
- 3PLs can manage the process for you (and how 4PLs can manage your 3PLs)
What is Warehouse Auditing?
When undertaking an audit of your warehouse, what you are really doing is story-telling. You are investigating whether the verbal story you tell yourself and your clients is aligned with the numerical story that is told within the various metrics gathered throughout your facility.
When we talk about measuring and analyzing metrics, it is important that you know what metrics. There are literally hundreds of potential metrics that could be measured within the average warehouse facility, however, creating a balance between a select few is what will help you create your cohesive story.
Different metrics will usually have an underlying rationale behind them, whether it’s lowering cost, improving accuracy, or emphasizing speed of fulfillment. If your warehouse’s verbal story is that you maximize perfect orders, but you mainly focus on metrics that revolve around order fulfillment time, your attention becomes divided between two different outcomes; ensuring the order is fulfilled correctly, and ensuring that it is done quickly. It is finding the balance between all these factors that will allow your operation to find success, whatever that may mean to you specifically.
Where to Audit
There are a number of different areas within a warehouse that are important to analyze when undertaking an audit, such as:
Metrics and KPIs
As we have mentioned above, understanding what success means to you is of the utmost importance. When auditing, you are measuring your current performance, where it needs to be, what is stopping you from getting there, and how to overcome those issues. Further below we will see various metrics and KPIs that you will want to consider, and understand how they fit into your operation’s story.
You’ll want to begin your inventory audit by comparing your actual levels of inventory with the levels shown within your files. All too often: the quantity of inventory shown within a system is greater or less than what is actually on the racks.
Some metrics to track for inventory can include:
Auditing your procedures allows you to illuminate procedures that may not be as optimized as they could be, either because of certain aspects of the procedure itself, or because there may be a need to ensure staff are trained correctly.
The main procedures to analyze when auditing can include:
- Picking and packing
Keep in mind that your operation will have specific requirements that may alter the way you need to look at how these, or other, procedures are carried out.
Ensuring warehouse safety relies entirely on the reporting of injuries, big or small, when and how they happen. Looking into things like the number of injuries in a given time frame, as well as the time since the last injury reported will identify any equipment, areas, or procedures in your operation that are leading to injury. This allows you to act towards eliminating these risks, whether that be changes to procedures or more training for your team.
Other important considerations when auditing safety and compliance with protocol can include:
Cleanliness of work areas
Proper use of machinery and equipment
Accessibility of first aid kits
- Team members wearing proper gear
As previously mentioned, the auditing process is about balance and alignment, and this includes your accounting team. Any and all documentation regarding invoices and payments should align with what is actually happening in your facility. Not only should everything in your financials align properly, it should also be readily available and cohesive. We will discuss how software like a WMS can help with this further below.
Some important financial KPIs to monitor can include:
Accuracy of forecasting
Inventory to sales ratio
In order to get orders fulfilled on time, efficiently, and with minimal risk to your team, you must ensure you have the proper tools and equipment. This can include scanners, forklifts and pallet jacks, racking, freezer/refrigeration systems, and any and all safety equipment necessary for your team. Ensuring these and other items are in working order keeps inventory moving smoothly through your facility.
Some important considerations for equipment/tool auditing can include:
Proper storage and handling of equipment
Proper and regular maintenance of machinery and equipment
Functioning, and up-to-code, electrical equipment
Waste in your warehouse can lead to an increase in errors, costs, and wasted time. However, there are ways to decrease waste, and even make it work for you. When it comes to your specific operation, look at exactly what is being wasted and how.
Considerations to waste management within your facility can include:
Sources of waste
Current costs associated with waste management
Opportunities to reduce, reuse, or recycle
WMS and Digital Twins
A warehouse audit is a timely process. It can be made much more streamlined and efficient by utilizing different tools and technologies, such as a dedicated Warehouse Management System (WMS) and a digital twin.
A WMS keeps detailed and accurate reports of any and all the areas mentioned above in one easy-to-navigate dashboard, easily accessible by any authorized party. This creates a much more seamless and transparent process for monitoring and tracking different aspects of your operation, even making it possible to audit your warehouse more frequently and efficiently. By pairing your WMS with sensors and other equipment, you can gather real-time data, store it in your system, and analyze it at your convenience.
Going one step further, pairing a WMS with a digital twin of your warehouse allows you to visualize and simulate with ease. You can easily identify and visualize areas of inefficiency within your operation, and then effortlessly run simulations of various implementations in a digital space, before making any time-consuming and costly decisions in the real world.
3PLs and 4PLs
Partnering with a 3PL to handle fulfillment can ease some of the burden that comes with auditing a warehouse. However, it is important when finding partners to ensure a mutual understanding of your operation’s story, past, present, and future.
When it comes to network management, a 4PL partnership takes things even further, using advanced technology to monitor and track KPIs across your network of 3PLs, ensuring an audit runs smoothly no matter physical distances between your fulfillment centers.
At Routeique, we understand the specific needs and goals of your business. Our suite of software and technology easily collects data across your various channels and presents it in an easy-to-use dashboard, giving you full visibility of your entire network. Routeique gives you x-ray vision into your supply chain, allowing for unprecedented insight, foresight, and oversight, making the auditing process seamless and effortless.
Auditing your warehouse can be a daunting undertaking, with so many moving variables and metrics to monitor and analyze. Creating balance and alignment between your business’ verbal story and the numerical story found within your facility is crucial for warehouse optimization.
Utilizing a variety of tools and technologies can ease the pain of auditing, and partnering with a tech-enabled 3PL or 4PL can improve the process even further.
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