What a warehouse audit is and what it examines

Many managers think of a warehouse audit as counting everything again. Counting is only one part of the job. An audit asks different questions: is the stock that came in backed by documents, was it protected in storage, who authorised each issue and on what basis, and does the figure in 1C or Excel match what is actually on the shelf? It is a wider and deeper exercise than a one- or two-day count.

Audit versus stock count: what is the difference

A stock count answers "how much do we have?": goods are counted and the result is compared with the balance in the accounting system. An audit goes further and asks "why did this happen?" and "will it happen again?".

Here is an example. A count comes up 40 pieces short on a cable. The count records a shortage and stops there. The audit finds out whether those 40 pieces were miscounted at receiving, entered in the wrong unit of measure (reels instead of metres) or dispatched without paperwork. Different causes need different fixes. So a warehouse audit is not a one-off number; it is a conclusion about how reliable your processes and controls are.

What the auditor looks at

The review follows the goods from start to finish:

• Receiving: is the delivery checked against the supplier's delivery note, are quantity and quality verified, is a discrepancy report drawn up when something is off?
• Storage: are locations defined, is high-value stock kept in a separate zone, are items nearing expiry set apart?
• Picking and dispatch: does every shipment follow an order or invoice, and does a second person check it?
• Returns and write-offs: who handles damaged, expired or lost goods, and with which document?
• Accounting system: user permissions, manual stock adjustments, deleted documents and documents entered with a back date.

At every stage the auditor asks two things: does a rule exist, and is it followed in practice? A rule that exists on paper but that nobody follows is a finding too.

How the review runs

1. Agree the objective and scope: the whole warehouse or one zone, and for which period.
2. Study the processes: instructions, documents, conversations with staff and observation on site.
3. Test a sample: take a sample of documents and compare it with the goods and the system data.
4. Analyse discrepancies: find the cause of each deviation.
5. Report: findings are ranked by significance and each one gets a recommendation.

An example: the "vanishing" cement

Suppose a building-materials warehouse shows a shortage of 3–4 million so'm every month and everyone puts it down to "losses". The auditor first takes the receiving documents and compares the weight on the supplier's delivery note with an actual weighing. Then come the issue documents: was the same quantity released to one customer several times, were returns posted on time? It may turn out that much of the shortage is not theft at all but the gap between the stated and real weight of the bags, plus returns booked late. The remedies then differ too: scales, the receiving routine and posting deadlines.

What an audit is not looking for

The most common mistake is to treat an audit as a hunt for the culprit. Staff then start hiding information and the review loses its point. An audit judges the process, not the person: where a rule is missing, where it is broken, which control does not work. If suspicion falls on a specific individual, it is set out in the report carefully and only together with the evidence.

What you get at the end

A good audit does not end with the words "there is a shortage". The manager receives a list of findings with their causes and concrete recommendations: who changes what, and by when. For example, if the main cause of shortages is that nobody double-checks the storekeeper at receiving, the recommendation is not "the storekeeper should be more careful" but "assign two people to receiving and require both signatures on the delivery note". That can be done, and whether it was done can be seen at the next review.

Conclusion

An audit is like a medical check-up for a warehouse: it shows not one shortage but the condition of the whole system. OmborAudit, as an independent party, can help carry out such a review under a contract and a confidentiality agreement.