Internal Control Procedures for Warehouse Shipping - Receiving

Internal Control Procedures for Warehouse Shipping & Receiving. Internal Control Procedures for Warehouse Shipping & Receiving. Related Articles. 1 Best Practices in Warehouse Operations 2 Build a Successful Warehouse Team 3 Examples of Internal Controls for Inventory 4 The Standard Operating Procedure for Inventory Control. The biggest theft threats often come from inside a company. Employees are in the best position to steal, and your company's warehouse is a perfect target. If they're able to hide a shipment or falsify documentation, you may not even know that part of yesterday's shipment is in a worker's closet today. Internal controls keep the risk of internal theft and fraud to a minimum. Get Organized. You'll never know what goes missing if you don't keep track of what goes in and out. There are several things you should do to organize your inventory: Number all warehouse locations and identify what inventory items go in what section. That makes it easier to track items and notice if they're gone. Count and identify the inventory as soon as the warehouse receives it. That way you'll know exactly what's on hand, even if the shipper mislabeled something. Label the inventory. Have someone sign for anything that leaves the warehouse. This should be done whether it's a replacement part for your factory or something a customer ordered. Everything that comes in and out of the warehouse should be documented. Keeping the warehouse tightly organized will help. However, some errors are inevitable, so audit the warehouse contents and paperwork every so often. Manage Your Staff. Even with tight organization and good record keeping, an employee who knows the system might be able to outsmart your controls. You can make it more difficult by seeing that a single individual doesn't have complete control over buying, shipping and receiving. Divide up tasks like purchasing approval, shipment receiving, invoice approval and inventory counts among different employees. This makes it harder for any bad apples to falsify information or hide shipped goods. Physical Security. Don't neglect to take practical, physical steps against theft: Securely lock the warehouse. Build a fence around it. Store particularly valuable shipments in a secured area inside the warehouse. Restrict access to the warehouse and the goods in it to as few people as possible. If you fire an employee, you should immediately cut off his access to your warehouse or any computerized records. Take back identifying tokens and keys, change passwords and if necessary change the locks. The last thing you need is a resentful ex-employee settling some scores. Test Your Security. Lots of ideas that look good on paper don't pan out in the real world. Your company might suffer if the internal shipping/receiving controls don't work as planned. Test everything – record-keeping, physical security, inventory tracking – and ensure that they function the way they're supposed to function. If your controls have flaws, make the necessary changes to fix them. It will take time, but it's worth it.