The term "logistics" encompasses management of the flow of items from the origin point to the final destination. When transportation companies want to analyze information related to inbound and outbound transportation, and other activities like trade compliance, warehousing, or stock management, they will perform a logistics audit. This procedure pulls together multiple elements of the supply chain process to help an organization Learn more about what is and is not working. This is possible by objectively assessing the entire process to impossible any waste or inefficient aspects.
When a shipping organization does not feel that it is capable of conducting a logistics audit internally, they will instead bring in logistics shipping companies to handle this process. Bringing in an outsider to evaluate the company leads to a fresh perspective, as the analysis is completed without bias or conflicting interests. Here are the steps that the logistics shipping companies might use to perform the audit.
1. Observation of Organizational Procedures
The best way for a logistics audit team to get a clear, unbiased look at how the organization functions is by observing individual functions within the organization. The company may also interview organizational leaders to fill in knowledge gaps and to get a better idea of things like decision making hierarchy. The resulting background information is then used to draft the proposal.
2. Match Supply Chain Chain Strategy to Corporate Objectives
Knowledge of corporate objectives acquired during the previous step is then used to configure a supply chain strategy. Additionally, logistics shipping companies will be able to create metrics to measure the effectiveness of this supply chain strategy. These metrics will be related to core components like production management, transportation management, distribution centers, and global supply chain visibility. If necessary the strategy might even call for the involvement of logistics auditors within the process.
3. Negotiate the Service Agreement
Once logistics shipping companies have decided on the best strategy to use, they will begin to negotiate the terms of the agreement, and define the financial costs and necessary resources.
4. Logistics Audit
Finally it will be time for the actual logistics audit to be performed. Current operations and process involvements will be assessed further to locate inefficiencies by comparing current practices to ideal performance and results. Additionally, each department will assist in collecting key metrics or deriving them during data collection.
5. Report Logistics Audit Results
Once logistics shipping companies have collected data during the audit, they will analyze these results and then report the results to the shipping company. From these results, they will draw conclusions about how processes can be sped up and make recommendations to the hiring company.
6. Hiring Company Implements Suggestions
Once the hiring company receives recommendations from logistics shipping companies, they will decide which of the suggestions to implement and then make these changes.
7. Post-Suggest Logistics Audit
The company will analyze the results of the implemented suggestions to determine if improvements in efficiency were made. If not, it will be time to start the process over again.
The process might vary depending on which company is hired, but overall the process will entail logistics analysis, making changes, and then repeating these two steps until the company is satisfied with the results.