Logistic audit

From CEOpedia | Management online

Logistic audit is conducted usually on a voluntary basis. Can be carried out at the request of the management of the company. The basic objectives of an audit commissioned by the company management is primarily to check compliance of existing information on the results of logistics operations with reality. Secondary aims are: conformity assessment of the implementation process of regulations, ordinances and procedures to identify ways of improving the activities carried out in the area of ​​logistics, evaluating the objectives and the evaluation used controls business.

Logistics audit is characterized by considerable freedom both in terms of design, as well as the implementation and control of the implementation.

In the case of entrusting research to specialists from the outside, they should ensure adequate quality and the range of information collected from units involved in logistics activities in the audited company. Experience of employees of the audited entity is important asset in logistic audit. External auditors may also be employees of companies cooperating with the audited entity when it is necessary by the scope of audit.

Assuming that the logistics activities relates to flows of goods, information and funds through various phases (sourcing, manufacturing and distribution), each of the issues should be subject to a separate analysis to provide more complete information on the whole. It is necessary also to ensure systematic implementation of the audit.

Elements of the final report of the audit should be: current situation in the area of logistics as whole or in selected range of activities, and recommendation for the company to develop its logistic activities. The final report should also include information about the conditions that must be met for the implementation of recommendations. Such conditions may involve organizational changes, the selection of appropriate infrastructures, training of personnel, the anticipated costs associated with the introduction of changes, information about actions that should be taken to improve the flow of goods and information.

Examples of Logistic audit

  • Transportation Audit: This type of audit aims to ensure that the company is making the best use of its transportation resources. It is focused on reviewing the efficiency of the transportation system, such as the costs associated with shipping, delivery times, and the quality of service offered.
  • Inventory Audit: This type of audit examines the accuracy of the company’s inventory records. It also looks at the processes and procedures used to manage the inventory, such as cycle counting and receiving/stocking.
  • Warehouse Audit: This type of audit is focused on evaluating the warehouse operations to ensure that everything is running smoothly and safely. It will look at the layout of the warehouse, the processes used for receiving, picking, and shipping, and the safety procedures that are in place.
  • Procurement Audit: This type of audit focuses on reviewing the company’s procurement process. It is designed to ensure that the company is making the best use of its purchasing resources and that the terms and conditions of the contracts are being met.

Advantages of Logistic audit

A logistic audit provides a number of valuable advantages, including:

  • Improved efficiency and cost savings: Logistic audits can often identify areas of inefficiency and waste, helping to identify opportunities for cost savings.
  • Enhanced customer service: Logistic audits can help to ensure customer expectations are being met by assessing whether processes and services meet customer needs.
  • Improved operational compliance: Logistic audits can help to ensure operational compliance with applicable laws, regulations, and industry standards.
  • Improved communication: Logistic audits can help to ensure that information is properly shared and communicated between departments and customers.
  • Increased safety: Logistic audits can help to identify potential safety risks and take corrective action.

Limitations of Logistic audit

  • Logistic audits have certain limitations which should be kept in mind while conducting them. These limitations include:
  • Time constraints: Logistic audits are often time-consuming and costly activities. Thus, they can be restricted by a lack of resources, including personnel, funding, and access to information.
  • Lack of comprehensive coverage: Logistic audits cannot cover all aspects of the business. As such, they may not provide a comprehensive view of the operations and performance of the entire supply chain.
  • Lack of specialized knowledge: Conducting an audit requires specialized knowledge and understanding of the industry, which may be difficult to obtain.
  • Misinterpretation of data: Logistic audits may be subject to interpretation, which can lead to misinterpretation of data and inaccurate assumptions.
  • Subjectivity: Logistic audits can be subjective, and therefore may not be reliable or accurate.

Other approaches related to Logistic audit

  • A logistic audit can also be carried out as an internal corporate audit or a part of an external certification audit. Internal corporate audits are usually done at regular intervals in order to review the logistics performance of the business. The external certification audit is done when a company is seeking certification from a third-party organization.
  • Another approach to logistic audit is to conduct a risk assessment. This is done to identify the areas of logistics that are most vulnerable to fraud, errors, or other risks.
  • Logistic audits can also be carried out as part of a process improvement program. This type of audit is focused on identifying areas of the business that can be improved in order to increase efficiency, reduce costs, and improve customer service.

In summary, logistic audit is conducted for various purposes, such as to check compliance of existing information on the results of logistics operations with reality, to assess the implementation process of regulations, ordinances and procedures, to identify ways of improving logistics activities, to evaluate objectives and controls used in business, to review the logistics performance of the business, to identify vulnerabilities of logistics, and to identify areas of process improvement.


Logistic audit — recommended articles
HACCP system — Internal audit — Procurement logistics — Vendor analysis — Operational control — Storage documentation — Quality plan — Operational decision — Negative confirmation

References

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