Auditing Receiving and Dispatch: Where Control Usually Breaks

The dock is where the warehouse's figures meet the real goods. In many cases it is the point where errors enter and losses leave: a carton not counted at unloading, a signature on a note before checking, a truck loaded with more than the document says, a movement posted two days late. An audit of receiving and dispatch examines exactly this point: what really happens there, whether the documents agree with what passes, and where control breaks.

At receiving

Watch the following when trucks arrive:

• Appointments: is the delivery scheduled, or does it arrive without notice? An unannounced arrival calls for extra care.
• Identity: are the driver's identity and the truck's plate checked, and the supplier's name matched?
• Counting before signing: does the receiver count the goods before signing the delivery note, or sign first and count later?
• Blind receiving: it is better for the receiver to count without seeing the quantities written on the note, and for the figures to be compared afterwards, so the count does not lean towards the expected number.
• Damage: is it written on the note before the driver leaves, and photographed?
• Weight and size: is the gross weight compared with the document when in doubt?
• Returns: treated like any receipt: counted, inspected and recorded, and not left on the dock.
• Recording: is the receipt recorded on the same day, with the time?
• Exceptions: is a delivery that differs from the document placed in a holding area and not mixed with stock?

At dispatch

Dispatch is the other side of the dock, and losses leave through it if control is slack:

• Goods leave only on a written order from an authorised person.
• What has been picked from the racking is compared with the pick list before loading.
• What is loaded onto the truck is counted in front of a second person, and the seal numbers are recorded.
• The driver's name and the truck's plate are recorded, and the driver signs the document.
• The truck is checked at the gate against the document.
• The dispatch is recorded on the same day.

Watch the weak periods: night shifts, lunch hours, Fridays and holidays, and what happens when the supervisor is absent. Controls that work by day in the manager's presence may stop when he or she is away.

Matching the documents

The basic idea of the audit here is the three-way match. At receiving, the invoice or purchase order is compared with the delivery note and the receiving record. At dispatch, the customer's order is compared with the pick list, the dispatch note and the gate log. Any place where the figures diverge deserves a stop. It is wise for the auditor to choose several transactions at random and follow them from start to finish, rather than rely on what the warehouse puts forward.

Simple controls that close the gaps

Most of these controls need neither software nor a large budget:

1. Separation of duties: the person who receives does not post the movement in the system, and the person who picks does not sign for the dispatch.
2. Numbered forms: with a register of the numbers used, so that no document disappears without showing.
3. A daily dock log: each truck, its time and its document.
4. A camera on the dock, with its recording kept for a known period.
5. A weekly sample match: ten documents followed to the shelf.
6. A clear gate policy: who enters and who leaves, and against which document.

A worked example (conditional figures)

The auditor picks 20 dispatches from last month and follows them. Seventeen agree with the documents. Three show a flaw: one was posted a day after the dispatch, another had two cartons more loaded than the document says, and a third carries no driver's signature. This is a small sample, so the report may not say that 15 percent of dispatches are wrong. It says precisely that in a sample of 20 three cases of three different kinds were found, and that these points deserve a wider check. For each kind it suggests a control from the list above.

In short

Control at the dock is not complicated, but it needs daily discipline: counting before signing, a three-way match, separation of duties and a log. WarehouseDepo audits receiving and dispatch on site: it watches operations as they happen, follows samples of documents and writes to you where control breaks and which controls close the gap.