Distribution/MFG Operational Audit
Distribution/MFG Operational Audit
An operational audit is a consulting service that reviews the warehouse operation and identify process improvements, gaps in software solutions, and gaps in automation in the facility to be able to recommend improvements. A warehouse audit identifies non-value added time being spent by operators on the floor, inefficiencies in both productivity and accuracy within software solutions, and opportunities for automation improvement where picking is out of racking or shelving but there’s a form of automation that could dramatically improve operation.
A warehouse operational audit is a form of systems analysis, it effectively follows the process flows from receiving through put away, replenishment, inventory control, order management, picking, packing, verification, outbound, and shipping. It’s similar to a kaizen event in a distribution or manufacturing environment.
Achieve Goals and Objectives
Add Experts to Your Team
Identify Critical Warehouse Processes
Advanced WMS, WES and WCS Suite
Benefits of an Operational Audit
reflect market trends or when a strategic shift to gain greater efficiencies or market advantage is sought. There may be a review of new capabilities in Intek and Minerva software that might drive the upgrade. Many customers seek audits every two to three years. Or things may have changed substantially enough to where the business is evaluating different forms of automation and want to know the benefit.
A business will benefit by seeing key points for areas of improvement. One highlighted area is operational accuracy, system or processes items that don’t contribute to operational accuracy or actually have negative impact. The goal is to identify anything that is impacting the warehouse storage footprint, wasted space, and opportunities for any form of automation with controls with a WES or WCS.
A warehouse operational audit identifies financial elements of the issues and there’s a secondary step to define the return on investment associated with improvement implementation. The first step is to identify the current costs and possible future state. Sometimes this is all a manufacturer or distributor requires to develop their own ROI is based on what is identified.
Often, they need expert assistance in developing the ROI. Intek and Minerva don’t dictate what the ROI will be but just break it down, show what can be solved, and provide all the underlying data to determine the ROI. Costs and rates such as labor rate, storage carrying costs, return item costs, lost customer costs, mis-ships, etc. are often important cost drivers.
There are other costs, intrinsic advantages, and soft costs. For instance, if you look at inventory accuracy, inventory on hand and carrying cost and their impact, and estimate improvements from current state to 99.5% or better, a financial estimate be generated.
If the fill rate or order accuracy is below average and a customer is losing market share or losing customers because of these things, these can be very expensive costs. Oftentimes it’s a C level person, CEO, CFO, that’s going to say, “You know what? We have to fix this or we can’t grow our business.” The ROI becomes more subjective but even greater with the inclusion of business growth enablement.
Conducting a warehouse operational audit allows one to see if the business is best in class. Best in class businesses benefit from increased market share and have less customer loss compared to their competition.