Logistics audit procedure

 As logistics systems differ from company to company, Logistics Field Audit develops individual programs of the audit. LFA can be concentrated on any type of distribution and warehouse management, workforce management, resources and transportation management, control over supply chain, logistics function management, logistics scorecarding and analytics, or may study whole operations system within supply chain.

 The typical logistics audit procedure:

1. Preliminary observation of company’s operations

Logisticians – auditors spend few days in a company studying operational functioning and interviewing responsible personnel in the frames of prior signed Confidentiality Agreement. The preliminary research and interviews, combined with the profound knowledge of the auditors, help to make a proposal for providing Logistics Field Audit, and prepare a draft agreement.

2. Positioning supply chain strategies to corporate objectives

2.1. The LFA Expert's goal is to tie logistics strategies and initiatives to specific corporate objectives, then define the operational metrics that need to be improved to achieve both supply chain goals and support these high-level objectives.
2.2. Relating of the Companies logistics requirements to the preferences of the company’s customers
2.3. Positioning of supply chain management within the company’s structure, review of relationships between interrelated departments
2.4. Quantification of key logistics sources across operational areas (distribution centers, transportation management, productivity management, global supply chain visibility and logistics integration)
2.5. Where necessary, developing proposals for involving logistics-auditors within the company’s supply chain management process

3. Negotiation on the LFA Service Agreement and involvement of logistics-auditors within the supply chain management process

4. Logistics Field Audit process

4.1. Managing operations (any combination of warehouse and distribution management, labor and resource management, transportation, supply chain visibility, logistics command and control, or the entire Supply Chain execution function.)
4.2. Key metrics on current operations and performance are collected or derived during data collection.
4.3. Development of relevant information systems (KPI’s), its implementation and methodology for data collection.
4.4. Structuring relationships between interrelated departments.
4.5. An analysis of current operations and potential process improvements.
4.6. Detailed analysis of the key sources of hidden logistics value that can be unlocked through process and technology change .
4.7. A comparison of current practices against potential levels of performance and results across a broad spectrum of key logistics system attributes.

5. LFA reporting

5.1. LFA analysis and conclusions.
5.2. Maintain result-focused technology deployment.
5.3. Planning of significant improvements of supply chain management.

6. Implementation

7. Post-implementation audit

Logistics Field Audit methodology is an effective management tool, widely used by the leading companies in the world. It ensures significant cut of time period between gaining objective assessment of company’s logistic system functioning, developing of recommendations, introducing innovations. It is all achieved via involvement of auditors into the supply chain management process.