Warehousing & Storage

Control Objectives for Warehousing and Storage

(a) To ensure that materials, goods and products are adequately and securely
stored in order to facilitate their prompt identification and despatch;
(b) To ensure that sufficient storage space is available and the layout of
storage facilities is suitable to meet the operational requirements of the
organisation;
(c) To ensure that goods are effectively stored in order to provide an efficient
service to customers and internal users;
(d) To ensure that the optimum warehouse locations are utilised to maximise
the efficiency of distribution to customers, etc.;
(e) To ensure that all goods are adequately protected from damage,
deterioration and loss, in order that they remain in optimum condition for use;
(f) To ensure that all stock movements are valid, authorised and properly
executed;
(g) To ensure that goods are stored safely;
(h) To ensure that staff are appropriately trained in the handling of goods in
order to avoid damage to the goods and injury to staff;
(i) To provide adequate and serviceable materials handling devices as an aid
to efficiency and cost effectiveness;
(j) To ensure that hazardous items are safely stored;
(k) To ensure that all relevant regulations and legislation are complied with;
(l) To ensure that stocks are used in rotation; and
(m) To ensure that adequate and relevant insurance cover is provided for both
the stocks and storage facilities.

Risk & Control Issues for Warehousing and Storage

1 Key Issues

1.1 How are management aware of the current and future storage
capacity requirements, and what is the evidence of effective planning to the
meet the identified demands?
1.2 How does management decide where to locate warehouses, and is
adequate account taken of the relevant logistical, transport and customer
service considerations?
1.3 Are the storage locations (i.e. bins or bays) adequately identified to
enable the prompt location of stock units?
1.4 Are storage facilities adequate to protect goods from damage or
deterioration?
1.5 How can management be assured that all stocks are adequately
protected from theft and pilferage?
1.6 What measures are in place to prevent unauthorised access to the
storage areas?
1.7 How can management be certain that all movements of stock are
valid, authorised and correctly executed?
1.8 Are goods (especially hazardous materials) stored safely and in
accordance with established regulations and good practice, and how can
management be assured that this is the case?
1.9 Are staff adequately trained in the various materials handling
techniques, and how can management confirm this?
1.10 Is the efficiency of the storage facility enhanced with the use of
appropriate handling devices (trolleys, pallets, forklift trucks, cranes, etc.)
and how can management be assured that all such devices are serviceable
and contributing the overall cost effectiveness of the operation?
1.11 How can management be sure that all the relevant regulations and
legislation are being complied with?
1.12 What mechanisms ensure that adequate, up-to-date and relevant
insurance cover is in place for both the stocks and the storage facilities?

2 Detailed Issues

2.1 Is space allocated in order to cope with peak loads rather than normal or
minimum requirements?
2.2 Have management provided some spare storage capacity as a contingency
to cater for expansion, etc. (and how was this accurately determined)?
2.3 Is space usage monitored and action taken to avoid wasted or excess
space?
2.4 Are raw materials, goods and finished goods appropriately segregated?
2.5 How does management avoid excess storage space and aim to contain the
costs of providing storage facilities?
2.6 Are fast moving items accurately identified and conveniently located for
efficient handling?
2.7 Are items adequately trailed to all the relevant storage locations?
2.8 Are stocks used in rotation (as appropriate) in order to avoid the build up
of older or outdated items?
2.9 Is there sufficient space between storage locations to enable effective and
safe access, the use of handling equipment, and the safe evacuation of the building
in case of emergency?
2.10 How can management be assured that production and sales requirements
are promptly and accurately advised to the warehouse?
2.11 Have specific responsibilities for the warehouse operation been allocated
(and does this include maintaining an awareness of current materials handling
trends and relevant regulations)?
2.12 How can management be assured that packaging, storage and handling
techniques are adequate to protect the goods from damage and deterioration?
2.13 Are damaged items promptly identified and appropriate action taken (and
how is this evidenced)?
2.14 Are the appropriate environmental conditions (i.e. air conditioning,
humidity, and temperature) provided and maintained at the required level?
2.15 Are storage areas well lit for safely and security purposes?
2.16 What physical and other security measures are in place to protect goods
and personnel, and are they regularly tested for effectiveness?
2.17 Are adequate and operational intruder alarms systems installed and
regularly tested?
2.18 Are adequate and operational fire prevention, protection, and containment
facilities provided, and are they regularly tested and maintained?
2.19 Would the fire containment systems (i.e.. sprinklers, foam inlets, etc.)
cause significant damage to stocks?
2.20 What measures prevent staff pilferage of stock items?
2.21 Are adequate staff provided to meet the operational demands of the
organisation, and how does management determine and maintain the staffing
requirements?
2.22 Are staff aware of the required and safe handling techniques and how is
this confirmed?
2.23 Have management provided adequate and suitable protective equipment
and clothing for staff, and how is its use confirmed?
2.24 How can management be sure that goods are stacked and stored safely?
2.25 Are sufficient and adequate facilities provided for moving heavy items,
and are staff aware of the correct use of such facilities?
2.26 Are delicate items adequately protected during storage and when being
moved?
2.27 How is the accuracy of data input from other systems (i.e. Stock control
or Sales order processing) confirmed?
2.28 How is data output to other systems (i.e. Distribution) confirmed?