Preparing for Third-Party Auditors

This guide outlines the processes and expectation surrounding on-site visits from third-party auditors during physical inventories for Flexe Shippers. 

IN THIS TOPIC

• Overview
• Common Auditor Requests
  • 1. Procedural Information
  • 2. Supporting Documentation 
  • 3. Transactional Data
• Best Practices
• Audit Types
  • 1. Floor to Sheet Audits
  • 2. Sheet to Floor Audits

Overview

Third party auditors may be present during physical inventories to perform checks, typically through sampling rather than observing the entire count. The Shipper will notify the Primary Logistics Analyst if auditors are required for the year-end count. This guide outlines common auditor requests and audit types to help you prepare. 

Common Auditor Requests

While not exhaustive, this list covers common information and documentation auditors may request. Be prepared to address these requests on the day of the count, as applicable to the project:

1. Procedural Information

Provide a relevant internal or Flexe-provided SOP outlining the following:

• Counting procedure
• Personnel responsible for counting
• Blind, double-blind, or open count methodology
• Count management
• Variance handling procedures
• Tolerance threshold triggering recounts
• Process for updating variances in the WMS
• Process for handling of aged, damaged, and obsolete materials

2. Supporting Documentation 

• Warehouse map illustrating layout and location of the customer's materials
• Pre-count inventory snapshot detailing SKUs, locations, and expected quantities (for auditor sampling). 
• Post-count inventory snapshot (provided before auditor departure) showing SKUs, locations, and actual quantities after adjustments. 

3. Transactional Data

Before the count:

• List of 5-10 most recent inbounds (including container numbers, order numbers, receiving documents, and WMS screenshots).
• List of 5-10 most recent outbounds (including order numbers and WMS screenshots). 

After the count:

• List of 5-10 inbounds received after the count (including container numbers, order numbers, receiving documents, and WMS screenshots).
• List of 5-10 most recent outbounds after the count (including order numbers and WMS screenshots). 

Best Practices

Below are some recommendations for a smooth and successful third-party auditor visit:

• Confirm Auditor's Schedule: Determine if the auditor will be on-site at the start or end of the count to accommodate their observation needs (cycle counting or post-count auditing).
• Clarify Snapshot Usage: If the auditor will review post-count data, confirm whether they require the pre-count or post-count inventory snapshot.
• Maintain Normal Operations of Cycle Counting: If the auditor is observing cycle counts, continue as scheduled during the auditor's presence. Ensure a complete post-count inventory snapshot is available when the auditor departs.
• Delegate Auditor Inquiries: Provide cycle counters with instructions to redirect auditor questions to warehouse management or the Flexe representative.

Audit Types

1. Floor to Sheet Audits

• The auditor blindly counts a predetermined number of randomly selected locations and compares their findings to the system data. Discrepancies may trigger additional location checks and requests for WMS screenshots to verify inventory accuracy.

2. Sheet to Floor Audits

• The auditor randomly selects locations from the pre-count inventory snapshot and compares the physical count with the snapshot data. Discrepancies may lead to further location checks and requests for WMS screenshots to confirm data integrity.