Improve Audit Effectiveness and Reduce Costs With Parameter-Based Auditing

Warehouse process improvement projects are always a balancing act, and designing a QC/Audit program is no different: you have to weigh the costs of performing audits versus the benefits of eliminating errors. But what if you could improve the effectiveness of QC, without increasing the time and effort you devote to audits? That’s exactly what a number of distributors have done through parameter-based auditing.

Many facilities cannot justify auditing every single order, so most perform some form of spot-checking, often by randomly checking a percentage of orders. Truly random audits will only catch a proportion of your errors; if you inspect a random sample of 10 percent of your orders, you are only likely to catch 10 percent of the errors.

Random audit results have the additional value of providing insight into where errors are occurring. This information is useful in two ways. First, it helps managers identify recurring picking errors and address the root causes. Second, by knowing which products, which users, or which types of orders are most likely to contain errors, managers can better prioritize which orders are checked.

Parameter-Based Auditing Using Lucas QC/Audit Module

Many Lucas customers have implemented parameter-based audit across multiple criteria (using our QC/Audit module, a part of our management dashboard):

1. Inexperienced Workers. Since trainees or employees working in a new area or job are more likely to make mistakes than more experienced staff, its useful to audit a higher-percentage of their orders.
2. Order. If certain types of orders are more likely to have mistakes than others (multi-item orders versus single-item orders, for example), you can flag the more error-prone orders for 100 percent audit.
3. Product. You can set a high percentage of audit for any order containing products that are prone to mis-picks. In addition, if there are certain items for which an error is especially costly it may be worth putting more resources on auditing those items.
4. Customer. Shipping errors to some customers may be more costly or damaging (in terms of customer satisfaction) than shipping to others. For example, we have several foodservice customers that set a higher audit percentage on the orders that are shipped the furthest distance, since the costs for correcting errors are higher. Similarly, other DCs may want to inspect a higher percentage of orders for new customers.

This gives you a general idea of the options available when it comes to audit parameters; for a more specific example, check out this blog post about how Eby-Brown uses Lucas for QC/Audit: Audit Criteria – Balancing Accuracy and Productivity. Chris Timmons, EVP of Operations at Eby-Brown summarizes their results:

“We’ve been able to reduce our QC costs as well, because now we don’t necessarily have to QC everything. And we’re talking hundreds of thousands of individual items. And we can QC the stuff that’s important or that we think might be at risk, or we think might be in jeopardy of not being picked accurately. So, it’s been a big, big saver for us.”