8 Warehouse Audit Best Practices + Warehouse Audit Checklist
September 20, 2019
If you own and operate your own warehouse, it can be a huge undertaking. From inventory management to material handling, there are countless moving pieces to monitor.
While no one looks forward to doing a warehousing audit, it’s an essential task for running a successful supply chain and business. Regardless of how small or large the warehouse is, it’s a time-consuming process and must be done properly so you can improve efficiency and save money in the long run.
In this post, you’ll learn the several benefits of conducting a proper warehouse audit, and how to eliminate the need to do it on your own by partnering with a 3PL.
What is a warehouse audit?
A warehouse audit is a broad term that can apply to auditing any part of a warehouse. The types of audits include:
- Inventory audits
- Policies and procedures audits
- OSHA audits
- Shipping and logistics audits
- Accounting audits
- And more
Warehouse audits don’t follow a typical schedule. You definitely don’t need to do them daily or weekly, but they can be done as frequently as monthly or quarterly depending on the size of the warehouse and the current resources you have available.
Warehouse audit checklist
Because there are so many ways to audit your warehouse, we have a handy checklist of how to properly run a warehouse audit along with some best practices.
1. Define needs of the audit
Every warehouse audit needs to determine what is actually being audited. For example, a public company may focus on inventory valuation for disclosing financial data, while a private company may focus more on the efficiency of warehouse operations.
If you’re running an ecommerce business, your audits will likely focus on making sure the warehouse is running as efficiently as possible — especially if your business is still new, and you’re learning what the best approaches to warehouse management are.
2. Count physical inventory
Make sure you have your inventory system in place for accurate inventory counts that match the quantities in your inventory solutions software. With proper inventory tracking and inventory forms, you’ll be able to track discrepancies and investigate where the issues are coming from.
3. Keep an eye on operations
Observe order fulfillment, warehouse inventory processes, warehouse employees, warehouse quality control, and also other equipment like forklifts to ensure safety compliance and maximum efficiency. OSHA procedures are no joke and must be taken seriously. You do not want to be hit with OSHA fines or lawsuits from injured employees. Health and safety warehouse processes should come first.
4. Talk to workers
The employees involved in the day-to-day operations of the warehouse most likely know where the inefficiencies are more than anyone else. Use this as an opportunity to speak to them, learn what can be improved, which policies aren’t being followed and other useful data about the warehouse. Talk to workers across all areas of the warehouse to get useful feedback about each area.
5. Analyze inventory data
Your warehouse is likely using software to manage operations such as a warehouse management system. Use this as an opportunity to analyze inventory records to check for fraud, waste, validate transactions, and measure customer satisfaction.
6. Evaluate audit results
Once you have the audit data collected, you can identify processes or policies requiring modification within your warehouse space. With the data collected warehouse managers will be able to suggest improvements to increase productivity and efficiency. Work with the analysts on your team to analyze the data and prepare your findings and suggestions for key stakeholders.
7. Design changes and implement
Any changes that should be implemented should be written down and discussed with the team. You can take a two-phased approach with this. Phase one can be the analysis phase where your team finds major issues that need to be fixed. Phase two can be the implementation phase where you begin to fix the issues with input from key stakeholders.
8. Repeat when needed
Warehouse audits should be done regularly to keep your operations up and running! Depending on the size of your warehouse, audits should occur every few weeks or on a quarterly schedule. Continuous improvement is key and it’s a never-ending process.
4 benefits of performing a warehouse audit
While they are time-consuming and sometimes challenging in nature, conducting a warehouse audit offers many advantages for an ecommerce business for both inbound and outbound logistics processes.
1. Run a more sustainable warehouse
Audits help you learn where the current gaps are and where to improve. Without efficiency and productivity, the warehouse cannot sustain itself and will cost you even more money.
2. Gather reliable data
Data is king. Performing an audit more frequently will reduce inventory discrepancies and provide data needed for strategic decision-making. If you’re doing it manually, you will need to carefully record it. If you’re using a tool or warehouse management system, it will just be a matter of grabbing the most up-to-date numbers.
3. Reduce costs
As you conduct the audit, you will find or learn about inefficiencies in the warehouse that are costing you time and money. It can range from moving a few things around to replacing ineffective machines. Once the audit is over, take note of which inefficiencies were logged so you can track how much money you saved by fixing them.
4. Fix or prevent broken equipment
Continuous improvement should always be the goal. During the course of your audit, you’ll likely identify equipment that is not working as intended. While some employees might say it’s working “good enough,” equipment failures will cost you more in the long run. During the warehouse audit, take notes of the equipment that need to be fixed or needs preventative maintenance. Once the audit is done, place work orders so the equipment receives its maintenance or is replaced.
Let the professionals handle warehouse audits
Running a warehouse audit is a lot of work. If you don’t have the time or resources to handle audits, there are professionals who can handle it for you. If you already have your hands full with managing and overseeing operations and growing your ecommerce business, you may want to outsource fulfillment to a 3PL, like ShipBob.
Well organized spaces
ShipBob’s fulfillment centers across the United States are incredibly organized state-of-the-art facilities. Our fulfillment centers are enhanced with ShipBob’s own warehouse management software (WMS) to pick, pack, and ship orders more efficiently. We regularly conduct warehouse audits and continue to reevaluate our spaces as we grow, so we can continuously provide our merchants the best possible experience and increased efficiencies over time.
Everything is documented with ShipBob. Using our proprietary inventory management software, you’ll have full visibility into what’s going on with your inventory. All inventory data is tracked in real time, and our technology even syncs with your ecommerce platform. You can view every step as your inventory moves from received at our warehouse, from stowing to shipping.
Inventory management software
It’s important to check that physical inventory numbers match up with levels listed in your inventory software. ShipBob’s technology provides better inventory control by streamlining the process, so you can discover potential issues quicker or before they arise. You can also automate stock levels and reorder points so you never run out of inventory.
Let ShipBob handle your inventory
At ShipBob, we empower merchants to manage their inventory with the right tools and guidance across multiple ecommerce stores and fulfillment centers. Your orders and inventory are synced in real time between your ShipBob dashboard and ecommerce stores.
You will know when to proactively replenish inventory with reorder notifications, bundle your products for promotions, make inventory transfer requests, and much more. We also help you offer 2 day-shipping for customers.
A 3PL like ShipBob helps direct-to-consumer (DTC) ecommerce brands manage their inventory and ship orders quickly and affordably. To see if you’re a good fit and to get a pricing quote, click the button below.
Now that you better understand warehouse audits, it’s time to audit your warehouse. This process can take anywhere between a couple of hours to a couple of days depending on the complexity of the audit. If you don’t have the time or resources to do it yourself, let the experts at ShipBob handle your inventory for you in our network of fulfillment centers and pack and ship your orders.