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Operational Audit is a systematic review of effectiveness, efficiency and economy of operation. Operational audit is a future-oriented, systematic, and independent evaluation of organizational activities.

Objectives

1. Appraise the effectiveness and efficiency of a division, activity, or operation of the entity in meeting organizational goals.
2. Understand the responsibilities and risks faced by an organization.
3. Identify, with management participation, opportunities for improving control.
4. Provide senior management of the organization with a detailed understanding of the result

Advantages

In addition to making the business more efficient and profitable in the long run.

An operational audit almost always provides a company with some new, fresh perspectives.

It makes executives aware of problems that might not have been found otherwise and lets them evaluate risks for the future.

Managers also can use results to motivate employees, as the company always has something to work toward to improve desired results.

Areas to Evaluate

1. Warehouse Layout
2. Product/Inventory/Orders processing
3. Receiving
4. Storing
5. Material Handling Equipment
6. Housekeeping
7. Safety
8. Inventory Control Systems at the end of the process.

Steps

1. Preliminary preparation
2. Field Survey
3. Audit Program Development
4. Audit Execution
5. Reporting and Follow-up

Further improvements can be gained by organizing the warehouse so that product is easily found and retrieved. Review warehouse layout and product storage, and make improvements to the overall layout and product storage strategy.