In today’s fast-paced business environment, accurate inventory reports are essential for both operational efficiency and regulatory compliance. When a third-party auditor steps in to verify your inventory, thorough preparation is key. This blog will guide you through the necessary steps to ensure your inventory reports meet the auditor’s stringent standards.
Understanding the Auditor’s Approach
Before you begin preparing your inventory for an audit, it’s vital to understand how the third-party auditor will be conducting their checks. This understanding will allow you to tailor your inventory counting approach effectively.
Tailoring Your Counting Approach
First and foremost, you need to comprehend the auditor’s reporting methodology. For instance, if an auditor is performing 20 checks, you must know whether these are 20 single counts or if they will be examining 20 SKU numbers across multiple locations. This distinction is crucial because the number of potential errors increases with the number of locations checked.
- Single Counts vs. Multiple Locations: If the auditor is conducting 20 checks in different locations, they might count a single SKU at each site. Missing two counts in this scenario might seem manageable.
- SKU Numbers Across Locations: Conversely, if the auditor looks at 20 SKU numbers housed in three different locations each, this translates to 60 individual counts. Here, the margin for error is much slimmer since each location’s count must be accurate.
Understanding this will help you adjust your counting methods, whether it involves increasing the scrutiny of each count or implementing additional verification steps.
Aiming for the Best Inventory
The primary goal during any inventory audit is to present the most accurate data possible. If your system lacks a robust Warehouse Management System (WMS), you might need to be more meticulous in your counts.
The Process of Count Verification
To ensure the highest accuracy, it’s beneficial to perform multiple counts and verifications.
- First Count: Conduct your initial inventory count.
- Second Blind Count: Perform a second count without reference to the first to eliminate bias.
- Verification Count: Compare the results of the first and second counts. If they match, proceed with these figures. If discrepancies arise, conduct a third count to determine the true count.
This method, involving blind counts and subsequent verification, minimizes the risk of human error and enhances the reliability of your inventory data.
Role of WMS System in Verification
A Warehouse Management System (WMS) can significantly streamline the verification process. If you have a WMS in place, it can auto-verify counts against the system’s records.
How WMS Assists in Verification
- Initial Count: The counter performs the first count and records the numbers.
- Auto Verification: The WMS compares this count with the existing system data. If the numbers match, the count is automatically verified as accurate.
- Manual Verification: If the count does not match the system, a verifier steps in to conduct a second, non-blind count to determine the accurate number.
The integration of a WMS not only speeds up the process but also reduces the likelihood of errors, ensuring that your inventory reports are precise.
Ensuring Accurate Inventory Reports
Meeting a third-party auditor’s request for accurate inventory reports involves several critical steps:
- Understanding the Auditor’s Methods: Tailor your counting approach based on whether the auditor is performing single counts or examining SKUs across multiple locations.
- Performing Multiple Counts: Utilize a process of blind counts followed by verification to ensure accuracy.
- Leveraging Technology: Implement a WMS to automate and verify counts, reducing human error.
By following these steps, you can present accurate and reliable inventory reports, meeting the stringent requirements of third-party audits.
In Summary
Preparing for a third-party inventory audit requires meticulous planning and execution. By understanding the auditor’s methods, performing thorough counts and verifications, and leveraging technology like a WMS, you can ensure your inventory reports are accurate and reliable.
If you have any questions, don’t hesitate to contact us. We’re here to help and guide you through every step of the process.
