LOGISTICS AUDIT

1. LOGISTICS AUDIT

2. Logistics Audit
• A Logistics audit is an unbiased assessment
by an independent party of all aspects of a
client's supply chain system, including
supplier and customer relations, planning
procedures, document flow, logistics
infrastructure, quality control and
correspondence of logistics costs to local
market conditions.

3. • In-depth experience and knowledge of best
practices help auditors to identify problem
areas, potential areas for improvement, and
opportunities for the application of advanced
technologies. A logistics audit analysis is
provided in a manner consistent with the way
CFOs and other corporate executives make
investment decisions.

4. Logistics audit unlocks hidden
logistics value
• Logistics audit uncovers hidden sources of
logistics value and develops a plan for an
optimal logistics function by improving
operational efficiency through better logistics
system management including integration and
close coordination of the supply chain
components.

6. • In reality the hidden costs in logistics of many
companies, approach millions of dollars,
which, when unlocked, can bring profit, the
rise of the stock capital and the growth of the
market share. Those companies, less in size,
may have similar or even greater possibilities
in relative (per cent) indicators.

7. • Regular logistics audit results in the
unlocking of the costs reduction possibility
and simultaneously logistic system efficiency.

8. Logistics Audit Procedure
• As logistics systems differ from company to
company, Logistics Field Audit develops
individual programs of the audit. LFA can be
concentrated on any type of distribution and
warehouse management, workforce
management, resources and transportation
management, control over supply chain,
logistics function management, logistics
scorecarding and analytics, or may study
whole operations system within supply chain

9. The typical logistics audit procedure:
1. Preliminary observation of company’s operations
2. Positioning supply chain strategies to corporate
objectives
3. Negotiation on the LFA Service Agreement and
involvement of logistics-auditors within the
supply chain management process
4. Logistics Field Audit process
5. LFA reporting
6. Implementation
7. Post-implementation audit

10. Preliminary observation of company’s
operations
• Logisticians – auditors spend few days in a
company studying operational functioning and
interviewing responsible personnel in the
frames of prior signed Confidentiality
Agreement. The preliminary research and
interviews, combined with the profound
knowledge of the auditors, help to make a
proposal for providing Logistics Field Audit,
and prepare a draft agreement.

11. Positioning supply chain strategies to
corporate objectives
2.1 The LFA Expert's goal is to tie logistics strategies
and initiatives to specific corporate objectives,
then define the operational metrics that need to
be improved to achieve both supply chain goals
and support these high-level objectives.
2.2. Relating of the Companies logistics
requirements to the preferences of the
company’s customers

12. 2.3. Positioning of supply chain management within
the company’s structure, review of relationships
between interrelated departments
2.4. Quantification of key logistics sources across
operational areas (distribution centers,
transportation management, productivity
management, global supply chain visibility and
logistics integration)
2.5. Where necessary, developing proposals for
involving logistics-auditors within the company’s
supply chain management process

13. Logistics Field Audit process
4.1. Managing operations (any combination of
warehouse and distribution management, labor
and resource management, transportation,
supply chain visibility, logistics command and
control, or the entire Supply Chain execution
function.)
4.2. Key metrics on current operations and
performance are collected or derived during data
collection.
4.3. Development of relevant information
systems (KPI’s), its implementation and
methodology for data collection.

14. • 4.4. Structuring relationships between
interrelated departments.
4.5. An analysis of current operations and
potential process improvements.
4.6. Detailed analysis of the key sources of hidden
logistics value that can be unlocked through
process and technology change .
4.7. A comparison of current practices against
potential levels of performance and results across
a broad spectrum of key logistics system
attributes.

15. LFA reporting
5.1. LFA analysis and conclusions.
5.2. Maintain result-focused technology
deployment.
5.3. Planning of significant improvements of
supply chain management.

16. • Logistics Field Audit methodology is an
effective management tool, widely used by
the leading companies in the world. It
ensures significant cut of time period
between gaining objective assessment of
company’s logistic system functioning,
developing of recommendations, introducing
innovations. It is all achieved via involvement
of auditors into the supply chain
management process.