How to Audit Warehouse Inventory

How does your warehouse operate? From inventory arrivals and departures to staff who need to stay safe and protected on the job, a warehouse or logistics manager has many moving parts to track. A warehouse audit lets you identify areas to improve, helps you see what you’re doing right, and alerts you to any inventory or safety concerns. While an audit itself can take time and effort to pull off, in the end, a regularly scheduled warehouse inventory audit will pay off in the form of increased efficiency and safety and reduced shrinkage. 

Creating a warehouse inventory audit checklist will give you an idea of what you need to do to keep your warehouse running as smoothly as possible.

Define Audit Objectives

Before you start auditing inventory issues, you need to know where any problem areas are. Think of the “why” behind the audit. What do you hope to get out of it? Consider these potential reasons to conduct an audit.

• Missing inventory: If your warehouse receives a shipment, you should be able to account for each item. If you aren’t regularly keeping track of what’s in stock or don’t have a method to control inventory, it’s easy for things to get lost or stolen. An audit can help identify where shrinkage is taking place and can pinpoint what’s causing the problem.
• Frequent stockouts: A customer has ordered a specific item, only to later get a notification that it’s out of stock. Shortages are frustrating for all parties involved. They mean lost business for the retailer and added stress for the customer, who might need a particular item ASAP. Conducting a warehouse audit can help you see which products sell quickest. With that information, you can adjust your ordering, so those items are always in stock.
• Delayed shipping times: How long does it take your team to pack items and get orders on the road? Depending on the warehouse’s layout, shipping delays can occur if it takes people a long time to gather items. An audit can help you evaluate what changes you can make to the layout to improve efficiency. The process can also alert you to operational changes to make to speed up the process.
• Worker injuries: Worker safety should be a priority for any warehouse. An audit can help you identify the cause of injuries and ways to prevent them. You might also need to inspect your equipment and reevaluate safety protocols to ensure that your warehouse is up to OSHA standards and guidelines.
• Outdated equipment: A warehouse audit can also help you identify old or inefficient equipment. You can determine which pieces of equipment you need in the warehouse and which ones interfere with processes or cost more than they produce.

Conduct Warehouse Counts

If your inventory management software states that you have 10 of a specific product on hand in the warehouse, that total must be accurate. During an audit, you might need to have people physically count each item in the warehouse to confirm that the actual stock levels match your inventory software. 

One way to streamline the manual counting process is to use barcodes and a barcode scanner. The person responsible for counting scans each barcode as they go, tallying up the number of items automatically. Using a scanner helps reduce the chance of miscounts or the need for an employee to start over again.

Observe Warehouse Operations

Observation should also be part of a warehouse inventory checklist. The logistics director or warehouse manager may want to regularly walk around the warehouse floor to see how employees carry out processes. Ideally, the observations will be unannounced, so employees are more likely to follow safety standards and guidelines and to perform their assigned tasks efficiently at all times. 

Assess Inventory Data

Another essential step during a warehouse audit is to compare the physical inventory counts to the data you have about inventory. If you notice a significant discrepancy between an item’s count and the number the software claims your warehouse has on hand, you can use your software to trace the item’s history. For example, if your software says you have 10 of a specific product on your warehouse shelves, but the count only turned up five of that item, you can look at the information stored in the software to see who did what with the product.

In some cases, the discrepancy could be due to an honest mistake. Perhaps a worker double-scanned products when adding them to the system, or someone forgot to log a product transfer from one location to the next. It could also be that half of the items are in the wrong place and got overlooked during the count. In other instances, a discrepancy could be due to employee fraud or theft. Reviewing the data helps you determine the issue’s cause and lets you decide what steps to take next.

Find a Trusted Partner to Assist With Inventory Management

Many hands make light work, but they can also make it challenging to determine who handled or took responsibility for specific products. Finale Inventory’s stock history reports feature helps you see who on your team interacted with which products. The stock history reports keep track of each user and have a timestamp that shows when a person changed inventory levels, such as transferring stock from one location to another or checking in a new product shipment. Using these reports, you can quickly identify the right person to talk to if an audit uncovers any discrepancies with your inventory counts.

Try a Demo of Finale Inventory

Whether you manage one or several warehouses, knowing the best ways to audit warehouse inventory can help you streamline operations, save money and protect your employees. Finale Inventory’s cloud-based inventory control system allows you to track inventory and audit reports as needed. A barcode scanner makes quick work of receiving and counting products. To learn more about our inventory control system and to see it in action yourself, schedule a demo today.