How a Logistics Audit Can Identify Bottlenecks and Improvements for Organizations

An audit is an evaluation of an organization, a specific process or a system. The crucial aspect of an audit is that it is based on an unbiased examination which will provide an objective point of view. In an organization, an audit can be carried out directly either by the concerned department or by an internal audit group or by an external specialized company.

Whether performed in-house or outsourced, there are numerous benefits for companies conducting audits such as establishing sustainable quality standards and providing constant access to reliable information. Audits will support strategic and managerial decision making and help identify areas for improvement and eliminate inefficiencies.

A professionally carried out audit and subsequent implementations will improve efficiency, drive sustainability and help the corporate image of an organization in the eyes of internal or external customers and shareholders.

For the purpose of this article, we will focus on a specific field among the wide scope of audits, which is the Freight Logistics Audit. The goal of a Logistics Audit is to objectively examine a company's existing logistics and transportation operations and flows, assess the efficiency of the systems and processes in place and to provide the organization with recommendations and guidelines on its Supply Chain and freight management.

A Logistics audit will invariably start with gathering quantitative and qualitative data from key stakeholders and with analyzing and interpreting this information. The main departments collaborating in data collection and interviews will typically be Logistics and Transportation as well as Warehousing, Purchasing, Production, Trade Compliance, Customer service and IT departments. All these departments are involved directly or indirectly in the supply chain and can provide a valuable insight on the situation as well as benefit from the outcomes of the audit.

The gathered and analyzed information will be transferred to as-is process, documentary and physical flows maps to provide a clear understanding and help evaluate the entire process in order to identify any inefficiencies, bottlenecks, and waste(1). The audit team will then provide suggestions for improvements and modifications summarized on "to-be" maps and adequately prioritized. Specific recommendations, action items and risk assessments will accompany these suggestions and solutions to help with their implementation. The gathered data will be used to back-up findings, quantify logistics costs and potential savings through data analysis and benchmarking.

A freight logistics audit will generally cover both inbound and outbound transportation as well as other logistics related activities such as stock management, warehousing or trade compliance. Typical findings will generally relate to the (without being limited to) logistics sourcing strategy, customs compliance performance, HTS management, freight optimization and consolidation, order and stock management, ERP and logistics systems interaction, process streamlining and unification, premium transportation limitation and regulation, logistics provider portfolio strategy and contract management.

Logistics & Transportation Industry is under pressure to meet greater customer expectations, improving return on assets, minimizing costs, optimizing capacity and promoting operational excellence. The industry is at the forefront to adopt new technologies to facilitate time specific delivery and electronic tracking. In this rapidly changing environment, it is imperative to ensure that investments help to rationalize costs and provide the intelligence to optimize inter-modal flows.

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