Types of Audits
After discussions with a number of consultants about their audit services, SCDigest has developed the following framework for the types of DC audit services available, as shown in the table below.
Types of DC Audits |
Duration |
Cost Range |
Scope and Benefits |
1 – 2 Day |
Freebie |
In general, is primarily used as a sales vehicle by the consultant and, as a result, the value can be all over the map. Because of the set-up, there are disconnects in expectations between the company and the consultant in terms of the insight provided. It may be better to have short a “assessment” with the consultant/vendors focused on specific issues instead. Mostly used by local consultants (though that could be the local consultant of a larger firm) who can perform the assessment without incurring travel expenses. |
1 – 2 Day |
$3-$5K
+ travel expense |
Can provide value if scope is narrow and performed by consultants that have demonstrated expertise. Can be both general assessments, as well as assessments focused on a single issue. Output will include a written report, but will tend to be more directional than solution oriented. Usually there is a bit of a “game” between consultants trying to deliver value for the small fee, but without giving away too much of their expertise. |
1 – 2 Week |
$5-$8K
+ travel expense |
Often used when there is a specific, but challenging, issue in a distribution center that needs to be addressed. Allows for a review of operations including high-level performance measures based upon limited data and in-depth discussion/understanding of exceptions and challenges. This can establish the basis for prioritizing projects and efforts to achieve improvement goals. |
3 – 6 Week |
$12-$25K
+ travel expense |
Generally is focused around larger network and supply chain issues, rather than opportunities at a specific facility. As such, almost always sponsored by a senior supply chain/logistics executive. The focus is generally on identifying, defining, evaluating, and prioritizing initiatives and opportunities across the network. The result should be a series of priorities that help establish strategies, sequence projects, and develop investment plans. |
Of course, there are several types of vendors/consultants that offer these audits, including traditional distribution-oriented consultants, materials handling companies/systems integrators, and warehouse software companies.
Do Assessments Offer Real Value?
It’s unclear how many companies respond to the “unsolicited” offers for free or low-cost solutions, but many certainly do engage long term consulting or system providers for occasional check-ups.
For example, Don Wagner of Exceed Consulting says that his company regularly does assessments for existing clients who either are feeling operational performance pressures, or just sense that it is time to look at whether layout or process changes are needed in a DC.
 Wagner believes the assessments/audits that offer the best value for the client are those that look at how a major initiative (new DC, new Warehouse Management system, new automation system, etc.) is playing out over time. He divides these into two types:
Annual Audit of Original Study Analysis: This effort re-examines the original data points to determine how the business is tracking, compared to what was expected. This type of audit can provide great feedback on whether assumptions still hold true and if forecasted equipment/facility needs are still on-track.
Post Project Audit: Generally performed 6-12 months after a new system goes live, these audits are designed to look for common areas of problems or improvement actions that a company should consider. Common areas include: “brain drain” from the original project team, changes that may have been made that may be impacting performance, functionality (such as in a WMS/WCS) that isn’t being used and could help improve performance, improved system/equipment applications, and other areas.
Tompkins adds that it’s important to understand the basic orientation of whatever company you have do an audit.
“The value of an assessment is generally directly related to the cost you pay for it and who conducts it,” he told SCDigest. “A good analogy might be, if you have your car assessed by a tire dealer, they will likely tell you to buy new tires; if a filter salesman does the assessment, you will be told you need new filters. It is much the same in supply chain. If you have your distribution operations assessed by a conveyor company, you will likely be told that you need more conveyors as part of the solution. If done by a software company, you will discover you have a need for more software. This is not to say that they are only focused on what they offer and not what you need, but that their solution/tool bag contains mainly what they sell.”
Next week, we’ll explore the additional keys to success in making audits work for you.
What is your opinion of distribution center audits? Do you use them? Under what circumstances? Do you ever take advantage of the “free” audit offers? With any good results? Let us know your thoughts at the Feedback button below.
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It’s unclear how many companies respond to the “unsolicited” offers for free or low-cost solutions, but many certainly do engage long term consulting or system providers for occasional check-ups.
