INTERNAL AUDIT CHECKLIST

REMARKS
NC (M) - Major Non Conformace
SL # REQUIREMENTS AUDITOR GUIDANCE EVIDENCE
NC (m) - Minor Non Conformace
OFI - Oppurtunity for Improvement
1 Compile the Correct Metrics
If you do not have the correct metrics, your warehouse receiving process
will be off, and it will be impossible to design and implement an effective
system. Metrics to gather include:
1. Total time it takes to move materials through the system to usability
2. Error reports
3. Dock utilization
4. Supplier shipping problems
2 Pre – Receiving
Before the receiving process begins, you will need to establish and
enforce receiving requirements for your suppliers and shippers. Your goal
for them should be to present the cargo as quickly and efficiently as
possible. Consider every aspect of work from their part that you would
like to see during the receiving process, and jot all of this down to bring
up to them.
Packaging requirements should include:
1. Label position
2. Label Information
3. Palletized or loose cargo
4. Number of packages per pallet
5. Items per carton
6. Acceptable package size & weight
3 Labour & Booking

In order to successfully improve the warehouse receiving process, the

correct amount of man hours will need to be allocated. Take a look at the
number of shipments coming into the warehouse and match your
workload accordingly. The majority of the time, labour is the highest
warehouse operational cost, so never neglect to carefully evaluate this
and schedule labour shifts accordingly.
4 Shipment Identification

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As soon as a delivery truck arrives to the unloading dock, your inventory

clerk should be prepared for the shipment and ready to speak with the
driver about the shipment being received. Any concerns, questions, or
discrepancies about the shipment should be voiced before the inventory
clerk signs her name on the delivery shipping notice as she accepts the
shipment from the driver. It is vital that your inventory clerk goes through
proper training and has a good handle on this process so that signatures
are not prematurely made for incorrect shipments.
5 Product Count
Once the inventory clerk signs the shipping notice, warehouse personnel
should unload and count the product received to make sure the correct
amount of the shipment has been sent to your warehouse.Every crate
should be opened and an exact product count will need to be taken.
Invoice slips should be included in each crate so as to keep a tally of
product and note the purchasing department if there are discrepancies.
6 Product Inspection
The inventory clerk will need to check all products being received for
possible damage caused during shipping. If damaged items are found,
they should be placed safely to one side so that the delivery driver can
pick them up again and replacements should be brought back to the
warehouse to replace the damaged product. Again, it is extremely
important that each item is looked over thoroughly so that the proper
number of replacement products needed can be reported.
7 Receiving Documentation

All products should have inventory numbers assigned to them prior to

stocking the items on shelves. It is the inventory clerks job to input
product information into the warehouse data system, sync the data with
all other departments requiring the information, and then share this data
with the inventory clerk who will file all written documentation for auditing
purposes.
8 Label Correctly
Labelling is different today than it was 10 years ago, and it is constantly
changing still. The surge in computer use within the warehouse industry
has altered bar-coding, ID scanning, pallet management, and more. With
these improvements, it is more important than ever to make sure labelling
is accurate.If the label looks complex or different from the last label
received, inquire about how to read them. If you have new personnel on
board, make sure proper training is in place to ensure they are brought up
to speed with current labelling processes.
9 Error-Ready Replenishment Process

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A replenishment process ensures the re-order of items to your warehouse

in 2, 4, or 6 week intervals. In order to have an efficient and productive
warehouse receiving process, a replenishment process should leave
room for error. This ensures that if defective items are received, or
miscounts are made, your customers will not suffer as a result.
10 Be Thorough with the Inspection
Creating an inspection process which can handle incoming as well as
outgoing items is vital to a successful receiving process. During this
inspection, any and all issues with vendors, shippers, and other handlers
can be detected and voiced. Proper inspection will require time and
manpower, so be sure to have all of the tools and people necessary to
check for inventory data issues or any other problems you could catch
during this inspection.
11 Collect the Correct Data and Analytics

Before your put away process even begins, you are going to want to
collect the correct data in order to make this go as smoothly as possible.
Consider your goals, you want to find the most optimal storage location
for product. With this in mind, consider noting cargo size, weight, height,
receiving and shipping frequency, the cargo type, sales volume, current
storage availability, and any other data you feel would be useful.
12 Create a Timeline to Stick to

As items are received, they should be put away as quickly as possible.

This will help clear space for more incoming items, and make fulfilling
orders simpler and hassle-free. In order to make this process as quick as
possible, create a timeline with well-coordinated directions for every
employee. Remember, a slow put away process could mean delayed
order fulfillment, held up shipping, or congestion on the warehouse floor.
13 Modernize Your WMS

A dated warehouse management system (WMS) can slow down your

warehouse and make it more difficult to create an efficient and seamless
put away process. A quick way to optimize this is to invest in a modern
warehouse management system that can seamlessly communicate with
your ERP (or other homegrown software) and expedite receiving
capabilities. This will not only speed up the put away process, but make
product ready for pick up.

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Pickers will go out on your warehouse floor expecting to find items in their
designated areas. If your put away employees are not placing product in
the correct spaces on their first try, customers might receive an incorrect
order or their shipment will be delayed.In order to minimize this from
happening, follow your warehouse management software instructions to
store the item in a specific slot. Your warehouse employee will need to
scan the barcode or RF tag on the item as well as the slot to improve
accuracy.
14 Minimize Damaged Items in Put Away Process
Items can become damaged during the put away process for a number of
reasons, including being handled and moved around too roughly. They
can also be hit by moving vehicles such as forklifts if left in the incorrect
area, or stepped on by people walking by. In order to prevent this, create
an efficient put away process, and hold each member of staff accountable
for their part of the process. A proper warehouse management system
will help to provide a straightforward and successful process with minimal
room for error.
15 Track All Item Locations Correctly
If you are not tracking or making notes of where every unique product is
being put away, you will have to rely on workers’ knowledge and memory.
While this might work for very small operations, the larger your
warehouse stock becomes, the more difficult this will be. Find a system
that will display real-time reporting, so that you never have to go
searching for product or rely on another employee’s knowledge of where
it might be.
16 Count Items Before They Are Put Away

When new product arrives at the receiving dock, you should appoint a
specific member of your team to count it and verify all product has been
received. Where many warehouses go wrong is ending the counting
process here. Product should be counted a second time as the worker
places it on the shelf. Knowing where items are is important, but having
an idea of the current quantity is essential.
17 Reduce Traveling Time

You have probably heard this before, but it cannot be reiterated enough.
Creating a map in order to reduce travelling time from the receiving area
to the final location where the product will be stored is an essential piece
when optimizing the put away process. Go over this route with all
employees, and make sure they are following it every time new goods are
received.
18 Use Direct Put Away When Possible

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Direct Put Away is a great practice to use in order to increase speed and
efficiently. In this method, cargo is directly moved from the receiving area
to its final destination without going through a staging phase. Chosen
staging locations are not required, so this particular approach requires
less handling and less space within the warehouse to be completed.

*Note – in order to complete this practice, your WMS will need to have
the capabilities to assign final locations from Advance Shipment Notice as
soon as the cargo is delivered at the receiving dock.
19 Keep Warehouse Clean and Organized
While this point may go without saying, you would be surprised how many
warehouses are not particularly clean or organized. This truly makes all
the difference in running an efficient put away process, and should not be
taken lightly.
A cluttered or disorganized warehouse will have an immediate impact on
the amount of time it takes to put product away, and locate it later on.
Even if you are using the most modern warehouse technology and have a
streamlined process, you need to keep your warehouse clean and
organized to guarantee efficiency.
Optimizing the put away process and increasing warehouse efficiency
can be done with these simple and easy-to-incorporate tips. Take the
time to consider the practices your warehouse could improve on, such as
investing in a more current WMS technology, reducing travel time,
collecting necessary data before the put away process, and creating a
streamlined plan that can be executed efficiently by your team.
20 Create Objectives
You are moving into your warehouse to minimize your own costs and
maximize efficiency and profit – but what other objectives do you have?
Outline every positive that could come from this move, and implement a
strategy to meet these goals.
21 Consider the Transition Period
You will want to perform an assessment of your current operation and
create a short-, medium-, and long-term plan of action for your
warehouse readiness to handle the online channel challenges. Ensure
your plans will effectively support the transition with no issues for your
customer.
22 Determine the Space Needed

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You will want to consider the amount of square footage required for your
warehouse before you begin shopping around for a new space. Be exact
with this, as it will determine how well you utilize the total square footage
of the building (not just the floor space). Factor in all areas, including
space for shipping, sorting, receiving, packing, employee and
management offices, and product locations.
23 Plan it Out
Planning out your warehouse should be the next step. Factor in all
possible obstructions in your planning, such as poles that your employees
would have to walk around every day.
Look at the area where product will be arriving and going out daily. Make
sure you have separate areas for inbound and outbound products, so that
the two are never mixed up. You can add painted arrows to your
warehouse floor to ensure that this is never an issue.

Consider where products will be stored in relation to packing stations.

Create designated storage spaces for your most popular products near
the packing stations, so workers do not spend additional time walking up
and down your warehouse aisles. Similarly, if two products are frequently
ordered together, do not store them at opposite ends of the warehouse.

24 Warehouse Attributes
Be sure that the warehouse you choose has a loading dock. Since the
majority of product will be coming off of a truck, they will be unloaded via
a pallet. If your warehouse does not have a loading dock to assist
workers with this, they will have to lower product from the truck during
every shipment, which is a two person job.
You will also want to be sure that the floor of the warehouse is a smooth,
concrete material. If the floor is pitted anywhere, rolling carts with get
stuck, and their wheels will be more susceptible to breaking.
25 Equipment Needed
Before you begin the transition to your new warehouse, you will want to
consider the equipment and racking system you will need. This varies
depending on your product and needs, but may include:
Forklift
Conveyors
Sorters
Carton erectors
Radio-frequency terminals
Product handling
Palletization and stretch wrapping

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R-pack technology and heat tunnels

System terminals
Remember that the equipment you purchase will require maintenance to
continue running smoothly. Whether that means general cleaning or
replacing old or broken parts, the maintenance costs of a warehouse add
up and should be factored into your overall budget.
26 Production Zones and Assembly Areas
Once you have considered and planned out primary units like equipment,
stock shelving, and assembly stations, the next step is to address how
workers, materials, and goods move in and around your key elements.
On top of this, it is vital to consider the space needed for production work
to not only efficiently – but safely – occur on a daily basis. Safe workflow
applies to all types of operation, but is especially important in
manufacturing where materials and equipment will be moving around one
another. It’s vital to create suitable production zones and workflow areas
for any warehouse layout plan.
27 Storage Areas
Taking time to consider the storage area in your warehouse layout is vital,
particularly for assembly operations. Storage is important for
manufacturing, too, but usually secondary to equipment needs.
Before determining the storage space your warehouse requires, first
consider what you are storing. Examples include:
Small assembly items housed in bins on light-duty shelving
Pallets with machinery parts
Boxed goods for pick, pack, and ship
Overstock items
Large raw materials for manufacturing
Whatever your warehouse is storing will dictate the type of storage you
need for your warehouse layout. It also dictates the space you need
around storage areas, like aisle widths needed for transporting goods to
and from storage.
Setting up your warehouse correctly before beginning operations will
improve efficiency and save on time and money that you will have to fork
over later if you miscalculate space or materials required. Take as much
time as you need in order to reduce packing and picking errors, help
prevent workplace injuries, and reduce stress for the entire team.
28 Training Staff

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Not only does having a properly trained team increase safety in a

potentially hazardous work atmosphere, but it improves efficiency and
makes your job as management much easier. Train your staff members
early so that the operations of the warehouse run smoothly and in the
correct way. While most employees are able to stock shelves, not every
employee will be able to follow correct protocol. Correct behavior as soon
as it occurs so as not to allow improper handling to become the norm on
the floor.
29 Safety
Warehouses often combine heavy machinery with large product, slippery
floors, and fast import and export times. With all of this in mind, safety of
the staff needs to be your first priority. A thorough safety training should
be in place, and each new member of staff should be tested on their
knowledge of safety protocol after attending training.
30 Security
Warehouses are often used to store a lot of expensive products and thus
are a popular target for thieves. A well-equipped warehouse should have
tight round the clock security to minimize theft. Consider installing
surveillance cameras to cover all areas of your warehouse, both inside
and out. Safety of products need to be a priority.
31 Parking and Space Surrounding the Building
Wherever you set up your warehouse, it’s vital to have a good amount of
space surrounding the building for parking. This is necessary to facilitate
the efficient loading and unloading of product.

Storage Space
32
This point needs to be carefully considered. In order for you to run a
successful warehouse, it’s essential that you have enough space inside
the building to keep all of your goods in proper order without clutter. Not
only will this improve organization, but will promote the effective
movement of goods.
33 Mechanical Appliances
In order to have a smoothly running warehouse, the right machinery is
required. This not only minimizes handling costs but helps in dealing with
large or bulky loads.
34  Design

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If your warehouse stores extremely large and heavy items, your racking
system will need to be designed to handle that. If you store cold food,
your refrigeration system will need to be prioritized so product is not
susceptible to going bad. Whatever the product is that your warehouse
stores, make sure the warehouse is designed with this in mind.
35  Emergency Protocol
Your warehouse will need to prepare for the possibility of an accident or
other emergency and be ready at all times. Whether this is a fire, flood,
mechanical accident, or any other disaster that may occur, take time to
create a plan that will be effective and safe.
36 Organization

Organization is key if you want incoming product going to the appropriate

locations, and your pickers to later be able to find that product in a timely
manner. Establish a system that organizes your materials in a defined
order that makes the most sense for your process.

Do not organize simply to organize – think logically about the location the
various products will be placed in. The fastest moving items should be
front and center, products which are normally ordered together should be
placed in the same aisle, and so on.
37 Receiving Process

Materials should always be verified and inspected immediately after

arriving at your warehouse. Staff should be trained to note any shortages
or damaged product at the time it’s received. Making sure the product is
moved to the correct storage space right away is also crucial in the
receiving process. When materials are left in the receiving area, they may
show in your system as available, but pickers will not be able to find them
on your shelves.
38 Picking Process
The time spent picking orders can make or break an efficient warehouse.
If organized correctly, you can develop a pick list to save on time and
resources.
If you normally ship a small number of orders with large quantities of
products, arrange the lists so the picker can work from one material
location to the next and avoid the constant back-and-forth process. If you
ship many small orders, create pick lists in groups and then divide the
materials by customer order when it reaches the verification stage.
39 Quality Control

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As soon as a product arrives at the shipping station, it must be verified

before being packed and processed. Packers do not have the time to
double-check each item, so it’s vital to identify problems right away so
that the products can be returned to the appropriate location immediately.
Never allow a large section of incorrect products to pile up – this will only
create a cluttered space and could create shortages on the next orders
being processed.
40 The Right Software
There are countless software choices to choose from with regards to
material handling and warehouse management. Programs are normally
used for inventory control, labor, equipment maintenance, shipping, and
more. Do your research, and choose a program that provides the right
solutions for your company’s needs.
41 Prompt Delivery and Customer Service
It’s important both for the efficiency of your warehouse and for customer
satisfaction that you use a shipment-tracking program. You will want to
know where your products are at all times, and your customers will as
well. Being able to provide them with real time stats will only improve the
customer service you offer.
While warehouses may differ in the products they store and the
processes they use, every warehouse can benefit from using these tips in
order to improve efficiency, safety, and customer satisfaction. Remember
to continue improving your processes through trial and error, and
reevaluate and reorganize as often as needed.

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