Typical warehouse audit findings and their causes

Every warehouse is different, yet in audits the same kinds of findings come up again and again. The list below is not statistics but a set of general practical observations common in warehouse reviews: your site may not have all of them, and some may apply to you in particular. The aim is to read it and learn what to check at your own site. Above all, the finding itself matters less than the cause behind it.

Typical causes of gaps between records and stock

A shortage or surplus often turns out not to be theft but an ordinary record-keeping error:

• Unit of measure. The system shows pieces, the shelf holds boxes. If a box contains 12 pieces, one wrong entry gives a difference of 11 or 12.
• Two codes. One product is set up under two names and two cards: minus on one, plus on the other. The total is right, the breakdown wrong.
• Wrong location. The goods exist but sit on another rack. The count says "none", and later they are found by chance.
• Receiving error. The supplier brought 100 pieces, 96 were counted and 100 were entered.
• A late document. The goods are shipped but the paperwork is done the next day or a week later.

Process and document findings

The second group consists of gaps in the process itself:

• A write-off is approved with a single signature and there is no commission.
• Returned goods are not received or lie in a corner with no document.
• Documents are entered with back dates and the balance is "adjusted" when the month closes.
• Permissions are excessive: a storekeeper can change a price, a balance or a supplier record.
• A count difference is not explained but "closed" with a stock adjustment document.

Physical and management findings

Among physical findings the most visible are: goods past or near expiry, with the FEFO principle (first expired, first out) not followed; damaged goods still carried in stock; open packaging and unlabelled shelves; outsiders walking freely into the warehouse.

On the management side the findings include: no procedure at all, or one that is written but known to nobody; a new employee who "learned by watching" and had no briefing; a liability agreement that is missing or outdated; and no internal control, meaning nobody but the owner checks the warehouse.

From symptom to cause

Writing the finding down is not enough. The auditor asks "why" several times and reaches the root cause. A hypothetical example: the audit finds a shortage of 12 million so'm. That is not yet a cause but a symptom.

1. Why the shortage? Because the balance of one product is mixed up between pieces and boxes.
2. Why mixed up? Because two units of measure were set up under one code.
3. Why set up? Because when the card was added nobody checked it.
4. Why did nobody check? Because every storekeeper has the right to create cards.

The root cause is access rights. So the fix is not to close the shortage but to restrict who may create cards and clean up the existing ones. If you close only the shortage, it will return next month.

Another hypothetical example: at a pharmacy warehouse the auditor found 40 packs past expiry. The cause was not "carelessness": new deliveries were placed in front of the old batch, and the system did not track expiry by batch. The fix: a rule to place new batches behind old ones, filling in batch and expiry fields in the system, and pulling an expiry list once a month.

Using the list at your own site

Pick five findings from the list and check them at your site in half a day:

1. Does the system hold two copies of the same product?
2. Is the unit of measure the same in the warehouse and in the system?
3. How many documents in the last three months were entered with back dates?
4. How many signatures does a write-off carry?
5. Is expired or damaged stock still carried in the balance?

A quick check like this does not replace a full audit, but in many cases it points to the nearest problem. Write down the answers and repeat the check in three months to see what changed.

Conclusion

Most typical findings are not major abuse but a sum of small gaps in the process: unit of measure, access rights, a late document. That is why they can be both found and fixed. OmborAudit documents each finding together with its cause and hands over recommendations with priority, owner and deadline.