The history of the development of such a category as audit is considered by many authors differently. The corresponding definition in translation from Latin is interpreted as “hearing” and is used in practice to determine verification. So, audit is understood to mean an audit carried out by an independent expert aimed at a specific activity or phenomenon. That is why they distinguish between technical, operational, environmental, and logistic audits, which are discussed in this article. What is meant by the presented category? How is it different from others? What types of logistic audit exist? You can find answers to these and other equally important questions in the process of reading our article.
The concept and organization of logistics audit
Today, along with the concepts of financial, accounting, technical and other types of audit, an important position is taken by a logistics audit. First of all, its action is aimed at reducing logistics costs and increasing the efficiency of the enterprise as a whole.
Logistic audit should be understood as a comprehensive audit of the effectiveness of the logistics subsystems. The role of logistic audit in choosing a logistic strategy is to identify “problem areas”. So, in the process of the procedure, a tree of relations between them is formed, which are of a causal nature. In addition, a large-scale economic calculation is made with respect to sales, space utilization and inventory management. The organization of the logistics audit and the stages of the conduct relate directly to the following types of inspections:
- Audit of procurement, that is, logistics.
- Planning audit according to the scheme “sales - production - purchases”.
- Audit of logistics costs for warehousing, packaging, storage and movement of marketable products.
- Audit distribution of marketable products in accordance with the supply chain.
Logistics Audit Results
In addition to the organizational issue, the theoretical basis of the logistics audit system also includes the result of the procedure in the form of a report containing the following information:
- Assessment of the actual condition in relation to the logistics system of the enterprise.
- A list of technical, informational, organizational and technological recommendations for improving all logistics subsystems.
- An assessment of the need for certain changes.
- Preliminary (potential) return on investment.
The results that are announced after a procedure such as an audit of logistics systems, usually speak of the appropriateness of certain projects related to the following points:
- Development of a strategy in terms of the logistic component of the structure.
- Reengineering (design) of a system or a subsystem of logistics. A striking example of the latter is the design of a warehouse complex.
- Formation of a system related to the regulation of logistic business processes.
Logistic audit and its main principle
A key principle of logistic audit is the evolving movement from general to particular. In other words, the procedure begins with checking the goals of the global structure and ends with the reasons for missed opportunities, low productivity, and low efficiency.After working out general issues, the logistics audit of the enterprise involves a detailed study of the logistic functional areas in the company.
So, in accordance with the above principle, the current strategies of the enterprise are studied, which can fully influence the organization in terms of the movement of flows of material nature. For this, in any case, an analysis of the corporate mission, as well as the production, marketing and procurement strategies of the company is necessary. The audit of logistics systems with its final step includes the formation of a database. So, it can be used to evaluate the activities of these systems in the enterprise.
To implement the procedure considered in the article, a team is created that includes representatives of the logistics service and other functional departments of the company (accounting and finance, sales and marketing, procurement and production, information service, and so on). It is important to add that, for example, a logistics audit of the enterprise’s transport system is carried out in the presence of third-party experts. In addition, students of specialized higher educational institutions are often attracted to implement the procedure. This move is undoubtedly advisable, because for beginners, one way or another, we need a practical basis for achieving the goals set in a professional plan.
Stages of compilation of branches of the logistics audit
Modern scientists distinguish several stages of logistic audit, among which are preliminary, main and, accordingly, final. To begin with, it would be advisable to consider the preliminary stage of the logistics audit.
So, during the first two to three days, specialists study the functional areas of production, supply, sale and marketing of marketable products. Then, throughout the week, logistic experts process the results of the research, as well as prepare a list of logistic functions, which, one way or another, are subject to thorough verification. The final stage of the logistics audit at this stage contains the wording of questions for questionnaires and interviews, as well as the compilation of a list of indicators in accordance with which the evaluation of logistics functions will be carried out.
The main stage of the logistics audit
To begin with, it should be noted that the main stage of such a large-scale procedure is classified into internal and external audits. This chapter discusses the audit of logistics costs using the example of an industrial enterprise and its main stage. The starting point of an internal audit is considered an interview with the head of the enterprise. After that, a logistics audit is carried out in accordance with the following areas:
- The first direction involves a survey of employees of functional departments of the company on issues that, one way or another, are related to logistics (sales, warehouses, transport).
- The second direction involves working with a sample of enterprise documentation.
- The third area is the collection of information in accordance with supply contracts for the statistical analysis of sales and purchases of marketable products.
In the process of the internal logistics audit, a system of indicators is applied, which are classified into the following groups:
- The first group contains indicators of servicing external and internal consumers, as well as an assessment of the quality characteristics of the service, which should include the ability to fundamentally change the features of orders in accordance with customer requests, the time of execution of orders, as well as stability with respect to this time.
- The second group includes indicators that are directly related to the cost of funds for the implementation of logistics operations and procedures.In the process of cost analysis evaluate the ratio of "costs - benefits." This implies the benefits that customers receive from the adoption and further implementation of certain decisions in the company.
- The third group has several indicators of the use of their own fleet of vehicles (rolling stock) or storage facilities, among which the coefficient of application of the carrying capacity of the vehicle, the coefficient of application of the storage volume and so on.
External audit
As it turned out, the main stage of the procedure considered in the article contains such types of logistic audit as internal and external. In this chapter, it is advisable to familiarize yourself with the latter. It is important to note that it makes sense to set the starting point for an external audit only when the internal audit procedure is guaranteed to be completed. So, at this stage, the study of the expectations and requirements of the clientele is carried out in order to determine the optimal performance of the enterprise; consideration of techniques used by competitors; assessment of the level of customer service material flow and so on.
It should be noted that an external logistic audit is carried out in the form of mailing specially prepared questionnaires or selective interviews directly with representatives of the companies served, as well as buyers from various places in the geographical plan or with a different volume of purchases. It is important to supplement that standard questionnaires without fail adapt completely for each checked structure. In addition, as a rule, interviewed are not only the leaders of the company or its individual divisions, but also specific employees in accordance with their field of activity.
Thus, according to the results of the external audit, it is possible to formulate specific recommendations for the structure and indicate those changes that need to be implemented in the current logistics system at the time of verification.
The final stage
After the main stage of the logistics audit has been completed, it is necessary to prepare the following analytical reports:
- The first report, developed in accordance with the analysis of the stock list, contains information on the assortment of raw materials and marketable products, stocks by groups, categories or positions, estimates of the turnover of items according to the stock list.
- The second report contains an analysis of cash flows in the company and also beyond. For example, a detailed description of the movement of cash flow through the warehouse in general and the volume of cash flows in accordance with each logistics operation separately. It is important to note that on the segments of the line between the storage areas, it is also important to indicate the amount of cash flow. The results obtained are used to determine the number of movers and vehicles for internal storage.
- The third report is devoted to equipping the enterprise with resources. Thus, relevant information includes the classification and characteristics of material handling equipment. The main purpose of the description is nothing more than an assessment of the material and technical base relevant to the enterprise.
Summary of Information
As it turned out, the logistics audit is carried out in order to identify shortcomings in the logistics system of the structure. After identifying “bottlenecks (areas with increased risk), one way or another, logistics experts develop recommendations to correct the identified problems. Of course, these recommendations are subsequently used to improve the level of service for existing customers, find new ones, as well as to improve cash flow management.
Logistics Audit Example
In this chapter, it would be advisable to consider the logistics audit procedure using a specific example.Warehouse audit is nothing more than a search for methods to improve the activity of the warehouse within the framework of an express study of warehouse processes and resources. The above event can be carried out both one-time and on an ongoing basis. As noted above, the logistics audit is mainly aimed at identifying shortcomings in the organization of the warehouse, as well as in its work. In addition, in this case, it is appropriate to create certain proposals to eliminate the deficiencies found. A particular task of the procedure considered in the article is often the justification that the warehouse must be automated.
Often, a logistics audit is considered a mandatory step preceding the implementation of a WMS system. So, the research results and relevant recommendations of logistics experts allow us to find the most optimal options in terms of storage of commercial products, as well as optimize the implementation of warehouse operations, number of employees, loading, and so on. In other words, a logistic audit, in one way or another, contributes to the realization of what needs to be done at the warehouse in order to bring it into absolute order before automation.
Logistic audit in practice
Logistic audit of a warehouse includes the following operations:
- Analysis regarding infrastructure.
- Analysis of the technical process.
- Analysis of relevant documents.
- Analysis of computer and information systems.
- Development of proposals and recommendations for improving the situation.
- Calculation in terms of a feasibility study for the implementation of a WMS system.
In the process of conducting a logistic audit of a warehouse, the following tools are used:
- Interviewing company employees.
- Supervision of the workflow in the warehouse.
- Analysis of relevant documentation, including work instructions, routings, layouts, and so on.
The results of the logistics audit in the warehouse are the following items:
- List of actual problems for the enterprise.
- Recommendations for solving existing problems.
- Justification of the need for the introduction of an automated system.