How to Prepare for a Warehouse & Material Handling Audit (And Why You Need One)
In order to be successful in the order fulfillment and material handling industries, supply chain professionals, operations managers, and business owners all must typically exhibit a true focus with performance. Beyond simply understanding how their operations are currently performing, these individuals must also have a firm picture of what comes next.
You must constantly be asking yourself the question: How can I make my warehouse, distribution center, or operations more efficient, productive and profitable?
While there are many potential paths that you could take to improve your operation’s performance, the fact of the matter is that it can be difficult to prioritize multiple strategic initiatives. This can sometimes lead to decision paralysis: When all of your options for growth, increased efficiencies, and reduced costs look like great options, how do you choose where to start?
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Evaluating your operation through a warehouse and material handling audit is an excellent way to evaluate all of your options, identify your best routes for growth, and prioritize initiatives. Below, we discuss what these audits are, what benefits they bring to the operations that undertake them, and offer tips that you can use to prepare for one.
What is a Warehouse Audit?
A warehouse audit (also sometimes called a materials handling audit) is a process that an order fulfillment operation undertakes to audit its technology, systems, and processes in order to evaluate current performance and identify areas for improvement.
In addition to enlightening an operation with valuable performance insights, the audit can also be used to answer specific questions or address specific concerns. For example, an audit might be used to answer the question of whether it is time to service, modify or replace a certain piece of technology, whether an aging process should be reimagined, or whether there are options that might be leveraged to address a labor shortage.
The exact processes that will go into a warehouse audit can, of course, vary substantially depending on the specifics of the operation in question. That being said, an audit will typically involve a third-party systems integrator coming out to the facility in order to observe its systems and technologies in action. Over the course of a day (or a few days, depending upon the complexity of the operation), data will be collected. This data will then be analyzed in order to answer questions around:
- Mitigating risk
- Improving performance
- Optimizing the operation’s efficiency
- Reducing costs
Benefits of a Warehouse Audit
An audit can serve a number of purposes depending on the needs of the operation; in fact, it should be tailored specifically to the individual needs of the operation. If an audit ever appears to be one-size-fits-all, then it would serve a business owner well to seek out a partner who will provide a more custom approach.
Often, the reasons for a business pursuing a warehouse audit will fall into one of three buckets:
- Audit as preventative measure: In this case, the audit is being undertaken to evaluate the current facility and technologies in order to identify the areas of greatest risk. Which systems and equipment are at greatest risk of failure? By identifying these risks early, it is possible to take preventative measures (through maintenance, upgrades, and so on) to prevent and minimize unplanned downtime.
- Audit as opportunity identification: Beyond risk mitigation, a warehouse audit can also be helpful in identifying opportunities for improvement or for differentiation from the competition. While specific equipment might not be at risk of failure, for example, a system or workflow may not be operating in an optimized manner, hindering performance. Understanding that, and making the necessary adjustments, can lead to significant improvements.
- Audit as knowledge base: For operations which have not been disciplined in the identification and monitoring of KPIs, a warehouse audit can serve as an excellent means of gaining this baseline measure and benchmarking information which can then be leveraged during key decision-making activities.
How to Prepare for a Warehouse Audit
Because most warehouse audits typically involve resources such as a systems integrator visiting your facility, it’s best to be focussed. The better prepared you are for the auditing process, and the more information you have available before boots are on the ground, the more efficient the process will be.
Investing the resources in an audit is often a wise investment. These audits can prevent significant unplanned downtime, premature equipment failure plus wasted labor and are typically one of the smartest proactive investments an operation can make.
Below are some tips you can use to prepare for your audit so that you can get the most value and insight out of the process.
1. Understand your goals.
Before hiring a systems integrator or partner to conduct an audit for your operation, it is critical that you first understand what your goals for the audit are. What answers do you hope to get out of the process? What questions do you need answered? Thoroughly understanding your end goals before you begin the process will help you better communicate with your potential partners, and might even help you select an integrator who specializes in addressing challenges or concerns similar to your own.
2. Create a benchmark.
In order to truly understand whether or not the improvements or changes you ultimately implement have had any kind of meaningful impact on the performance of your operation, you need to have a benchmark of your existing performance. Once changes are implemented, you can then look at your benchmark and determine if the changes had a positive, negative, or no impact—information you can use to either roll back failures, replicate successes, and make further adjustments.
Some, but not all, integrators will work to create a benchmark for your operation before work begins in earnest, particularly if you do not yet have data to reference.
3. Manage expectations.
An effective audit is a focused audit. That’s why it is important that you gain buy-in from all of the key stakeholders within your organization early in the process so that you can be sure you and your partners are zeroing in on the right KPIs, metrics, etc. Failure to nail down the outputs you want from your audit can lead to scope creep, a lack of focus, and higher costs than you may have otherwise intended.
Choosing a RightFIT Partner
When selecting a systems integrator to conduct a warehouse or materials handling audit for your operation, it’s important that you seek someone who will act as a true partner in your success. Avoid anyone selling a one-size-fits-all solution, and seek someone who will custom tailor their audit and recommendations to the unique situation your operation is facing.
With more than 40 years of experience integrating order fulfillment systems for our clients, we’re proud to practice the “customer for life” mantra. We’ve designed, modified, and kept customer operations running since the 1980s—a tribute to our commitment to reliability and performance, regardless of the specific technologies or solutions leveraged. We call this our RightFIT Methodology, and it’s something that we’re proud of.
As such, we are sought out by the very best-in-breed manufacturing partners, who represent the full breadth of automated material handling technologies—from conveyors and sorters to pick modules, automated storage and retrieval (AS/RS), automated packaging, palletization, robotics, and everything in between.