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Why a Logistics Audit is Valuable

Why a logistics audit is valuable

A dedicated logistics audit comprises an external and unbiased analysis of an enterprise’s operational efficiency, the capacity utilisation of its various warehouses, stock transportation flows and the completeness of its inventory control, as well as many other points.

In the following sections, we will take a closer look at this detailed and critical process and explain why it is always a smart move to conduct comprehensive logistics audits periodically. From helping companies to assess the present state of their facilities and examining how efficient their stock control measures are, to ensuring that their transportation routes remain fully optimised this valuable service has much to offer.

What does a comprehensive logistics audit include?

A logistics audit is defined as a complete analysis of an organisation’s logistics operations throughput. These reports (which are carried out by firms with specialist expertise in freight and logistics audits) assess the efficiency of stock transport flows, warehouse tasks and other aspects. The audits aim to identify any inefficiencies or errors within the enterprise. They also propose potential resolutions that increase the effectiveness of logistics within the operation.

Logistics audits and how the work

A logistics audit analyses the current situation and strategic planning in place within an enterprise’s supply chain by employing multiple supply chain key performance indicators (KPIs). To carry out a complete analysis a logistics audit must always consider the following points:

• Examination of onsite warehouse processes – for instance, operational effectiveness based on KPIs like the warehouse occupancy, or the number of dispatches or receipts per hour.

• Activity file analysis – for example, purchase and entry orders or other documents designed to assess turnover assignments, stock quantities or product slotting criteria.

• Evaluation of warehouse layout – for instance, logistics planning, cross-docking areas, storage and storage system efficiency and warehouse layout design.

• Employee throughput – examining operator performance and distribution and staff assigned to picking paths.

• Shipping route and loading dock activity – covering accessibility of a warehouse’s docking areas, efficient shipping routes and syncing effectively with carriers.

What are the different stages of a logistics audit?

Every logistics audit undertaken is tasked with making sure that the storage of both finished products and the raw materials they require for manufacturing and finished products is performed effectively. It must also ensure that the dispatch and receipt of goods are being completed successfully.

To reach these goals a dedicated logistics audit must always comprise three key stages. These include analysis of the situation, data analysis followed by proposals for ways to make improvements.

Stage one – Analysis of the present situation

The external auditor collects all relevant information during this initial stage. They must complete a thorough examination of the company’s current logistics operation. This typically involves the layout of one or multiple warehouses in use, the system employed and the movements of both stock and staff members.

Stage two – Data analysis and reporting

After all of the operational data is collected, the external auditor must examine the information to correctly calibrate the company’s throughput at every stage of the logistics process. This enables them to detect and identify the enterprise’s strengths along with any weaknesses that can be improved.

Stage three – Proposal for improvements

The final phase of the external audit involves a comprehensive report that proposes advised solutions that the company should implement if it seeks to increase its effectiveness in all key logistics processes, from space management of available storage to transportation and shipping routes.

While these are the key stages, every logistics audit is impacted by multiple factors unique to the operation it examines. For example, how many different warehouses the company operates, the kinds of SKUs it stores, and even the load volumes experienced and managed at a facility.

What are the benefits of external analysts conducting logistic audits?

Externalising these invaluable analyses is a vital part of logistics audits. The reason for this is that audits never involve a single department being examined at an organisation. For example, auditing the logistics department will involve other areas of the company, including purchasing, sales, IT and management. To mitigate interdepartmental clashes and data discrepancies and to make certain the audit is accurate, the best policy is always to leave examinations to an experienced third-party firm.

What are the advantages of logistics audits?

A logistics audit carries out a step-by-step study of each stage that an individual product goes through during its supply chain journey. This examination includes the process both within and beyond the logistics operation’s facility. A comprehensive logistics audit provides enterprises with three main assets. It delivers a diagnosis of the processes the company has in place, offers logistics planning consistency, and helps it detect any errors and inefficiencies present.

Present process diagnosis

A complete logistics audit analyses all operations that are currently taking place onsite within the warehouse utilising KPIs. This provides the logistics manager of the facility with a clear and dependable picture of what is occurring onsite in the facilities like warehouses and loading docks, along with what is happening in the shipping routes goods receipt areas.

Consistent logistics planning

Expert logistics audits can determine if the present actions and decisions being made that govern logistics align with the company’s adopted strategy.

Detecting errors

As a result of the exhaustive diagnosis process that an operation undergoes when a logistics audit is carried out, errors and inefficiencies can be easily identified and reported.

Comprehensive audits help companies detect, identify and correct logistics planning errors and allow them to implement informed solutions that optimise available warehouse resources. To do this successfully, the logistics audit draws on a diverse supply of data collected from all operations undertaken within the facility while using information gathered from end customers and suppliers. This process enables the company to evaluate the present logistics landscape and assess future requirements. With this insight, it can then make appropriate and effective plans.

A dedicated logistics audit may identify unoptimized space for storage within a specific section of a warehouse. However, analysis is not simply limited to spotting inefficiencies within an operation, these reports can also suggest solutions. For instance, on a site where a high volume of the same SKUs is present, selective pallet racks should be switched with drive-in-type pallet racking to take advantage of available storage space at the facility.

Logistics audits also help firms to prevent potentially risky situations. For example, high-turnover items going out of stock, production line bottlenecks impacting supply, as well as cost overruns occurring because of unsuitable systems for product storage.

A logistics audit ultimately present a company’s logistics manager with an in-depth view of the present logistics service, including its strengths and weaknesses. It also proposes ways to improve and optimise operations to improve efficiency.

World-leading experts in logistics audits

Logistics audits are key for any company seeking to boost its effectiveness. These comprehensive examinations offer fresh insights and detailed data on logistics operations, allowing managers to enhance their operations, maximise the resources at their disposal, and make gains in efficiency and productivity.

A world leader in freight invoicing and payments, CTGF manages savings for both international logistics, and transport clients. Contact our expert team today to explore our innovative business intelligence tools and freight audit services to find out how we can support your firm.