Conducting process audits in a warehouse or manufacturing setting will give you insights into process performance. These insights can be used to drive higher throughput, less cost, less rework, and give clear feedback for performance improvements. Audits can be used in virtually every area of the warehouse. A good audit program is an essential part of inventory control and quality assurance programs. It lets the Ops team monitor flexibly monitor quality.
Let's explore the insights that a good audit program and tool can offer.
What Is An Audit?
An "audit" in operations is where the warehouse operations team checks that a thing is in the state in which it is supposed to be. Checks can be affirmative or negative. Negative checks are exceptions and represent deviations from the expected or desired outcome.
For example, a warehouse team experiencing fill errors or incorrect packing could audit boxes coming off the pack lines. They could have someone stand at the line, remove and check packages randomly over a period of a couple hours.
The person would ensure that the contents of the package were correct, that the pack-slip and other documentation was correct, that the right dunnage and packaging were selected, and the goods were in good condition.
If the person encountered any errors (weight, contents, quality), he could record the error or errors and fix the package or hand it off to problem resolution, take pictures.
Similarly, a manufacturing team can record downtime, exceptions, or other quality issues in a process.
Audits are a critical part of inventory control programs.
Audits Produce Quality Data And Error Rates
The audit in the example would produce the following data:
- Number of boxes checked
- Number of boxes good
- Number of boxes defective
- Types of defects (damage, qty, other error)
- Who packed the defective boxes
- What line the boxes came off of
- When the boxes were packed (e.g. what shift)
- With the right tool, pictures of the problem(s)
The Ops team could then calculate or research:
- Error rate for the sample within a confidence interval (98% +/- 5% good)
- Implied error rate for the entire set of packed items
- Who had issues with packing and what the issues were
This would enable second-order insights:
- Contribution of packing workcenter to the facility quality and delivery metric deviations
- Pareto chart of causes of packing failures
- Employee management insights (such as which employees contribute most to errors) and training upgrades
- Corrective actions for the root cause of the defects
- Communications throughout the organization on the problem and impacts
Last, but very importantly, this data and these types of insights could be available very quickly--in near-real-time, depending on the system for capturing data.
Ad-Hoc Audits Enable Insights Not Available Elsewhere
The audit we described is an interesting process. It is applied at a specific point in another process. It requires a user to inspect an item and identify deviations. It requires the user to input that information for further use.
This type of functionality is very valuable for Operations teams.
Part of the value comes from being able to pinpoint issues quickly, with sampling over a short or a long time of day.
Part of the value is being very flexible in what is audited. A WMS may only have cycle counting, problem-solving, and pick-short reporting capability. That is, it only knows what it is told. Programming customizations can take a lot of time and effort.
But an Operations team armed with a spare FTE and recording tool can check:
- Inbound trailer condition
- Receiving staging areas
- Receiving problem solve
- Receiving processing
- Putaway or stow carts and areas
- Empty bin locations
- Putaways
- "Piles" of goods at collection points throughout the warehouse
- Cycle count quality checks
- Pick carts
- Pack areas
- Ship stage areas
- Every transition point between processes
- Equipment performance and exceptions (e.g. doing Forklift audits, manufacturing equipment downtime checks, and so on)
- Maintenance activities
You get the idea! Audit enable operations leaders to have clear visibility to what is causing problems in their sites. Even better, with good data management, the performance of the individuals and of the process can be measured over time.
What's Needed To Conduct Audits
Here's what you need to get process audits going in your operation.
- Something to check
- Someone to check it
- A list of the data points to record, and how to observe them
- A recording tool, such as printed record sheets, a WMS module, Excel, or purpose-built application
- A schedule or plan to do it.
This means that audit programs can include a range of activities. They can be very quick for spot-checks or they can be intentional long-term efforts to improve processes.
Paper-and pencil or Excel is fine for a temporary, single-shift need. But dedicated, more robust tools are needed for higher-volume, sustained process auditing. Otherwise, the operation runs a high risk of failure to sustain the audit and failure to capture and use the data.
Challenges of Conducting Process Audits
Challenges of conducting audits revolve around capture, collation, and communication of data.
The capture of data can be done with something as simple as pencil and paper and a tally of good and bad items. However, operations teams will want to deep-dive the defects or problems. This means that increasingly sophisticated tools may be considered, including those that can capture barcode IDs, pictures, and other identifying information. Sometimes it may be helpful to integrate the tool to the WMS for easy data table access.
The collation and analysis of data is another challenge. Data must be collected and analyzed before it can generate insights. This means that automation or staffing is required to put together reporting or key metrics from the audit data. It does little good to have someone complete an audit, and let the audit sheet sit at a workstation on the floor!
Data collection often contains human-caused errors. Human data input is known to have high error rates (2-10% or more) so a tool should be considered to eliminate data capture errors.
Last, the communication of data to decision-makers or operations teams can be difficult. Capturing audits on a spreadsheet or paper is great! But the data will then sit in that tool until someone looks it up and completes the reporting. This means that data can be lost on the floor, in individuals' files, or otherwise not make it back to the people who can use it.
The problem is made worse when there are multiple shifts that should be doing audits. The audit process should deliberately include all shifts and possible users who should be doing the audits. Otherwise there is high risk of the data being lost, inconsistently gathered, or otherwise unusable.
Audits Are Right For Many Operations
There are few operations where audits cannot offer insights into performance.
Consider whether you have the right visibility to your process performance. If there are gaps, consider putting an audit program together.
If you're interested in learning more about how to employ audits at your operation or in a purpose-built tool to ensure your audit data is useful, let us know!