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Distribution, Transport & Logistics

Control Objectives for Distribution, Transport and Logistics

(a) To ensure that an adequate, appropriate, efficient and cost effective


distribution and transport infrastructure is provided to meet the needs of
customers;
(b) To ensure that goods are distributed and delivered in the most efficient
manner;
(c) To ensure that stock is located in the optimum position to fulfill the
anticipated demands and to avoid localised shortages;
(d) To ensure that only correctly constituted and valid consignments are
actioned and accurately reflected in the accounts;
(e) To ensure that the appropriate goods in the relevant quantities are
delivered on time;
(f) To ensure that goods are adequately protected from loss and damage
during intermediate storage and transit;
(g) To ensure that contracts with external distributors and haulage
contractors are suitable and authorised;
(h) To ensure that external distribution and transport contractors are paid at
the agreed rate for work actually done;
(i) To ensure that the performance and cost effectiveness of external
contractors is monitored as a means of ensuring that they offer the appropriate
quality and VFM;
(j) To ensure that exports and all overseas consignments are correctly
handled, documented and comply with the relevant regulations;
(k) To ensure that an adequate number of appropriate delivery vehicles are
provided and operated cost-effectively;
(l) To ensure that the most efficient and cost effective means of delivery is
utilised;
(m) To ensure that the delivery demands are adequately and accurately
determined and planned for;
(n) To ensure that delivery journeys/runs are sufficiently and economically
planned so as to avoid delays and excess mileages, etc.;
(o) To ensure that transport facilities are operated legally and in accordance
with the prevailing regulations for drivers and vehicles;
(p) To ensure that correct type and quantity of goods are safely loaded and
that the relevant materials handling devices are provided;
(q) To ensure that deliveries are agreed and signed for, and that any
discrepancies are identified, documented, investigated and resolved; and
(r) To ensure that adequate and appropriate insurance cover is provided for
goods whilst in store and transit.

Risk & Control Issues for Distribution, Transport and Logistics

1 Key Issues

1.1 How can management ensure that the distribution facilities in place
are adequate, efficient and able to cater for current and future demands?
1.2 Is there adequate and timely liaison and information flow between
the sales, production, stock control, distribution and transport functions in
order to ensure that customer demands are fulfilled?
1.3 How can management be assured that the most appropriate, efficient
and cost effective distribution and transport options are utilised?
1.4 How can management be certain that only correctly constituted and
valid consignments are actioned, and that they are accurately reflected in
the relevant accounting systems?
1.5 Are all external distribution and transport contract arrangements
appropriate, authorised and regularly monitored for quality, performance
and value for money?
1.6 How can management be sure that external contractor's charges are
valid and authorised, and what mechanisms prevent the payment of invalid
or erroneous charges?
1.7 Are adequate precautions taken to protect goods in intermediate
storage and transit from damage and loss?
1.8 How can management be certain that all deliveries are undertaken in
the required timescale and agreed and signed for?
1.9 Are all delivery discrepancies identified, documented, investigated
and resolved (and how is this evidenced)
1.10 How can management be assured that the delivery vehicle fleet is
appropriate, adequate and is operated efficiently and legally?

2 Detailed Issues

2.1 Are accurate and appropriate delivery schedules prepared as the basis for
loading, distribution and delivery (and how would errors be prevented)?
2.2 Are distribution and transport facilities provided on a stable and planned
basis in line with the anticipated demands?
2.3 How does management maintain an awareness of the alternative
distribution and transport options as a means to ensure that the optimum solution
is applied?
2.4 Are distribution depots and intermediate storage facilities located in
accordance with the organisation's trading patterns and customer base?
2.5 Would management be able to detect any under used, surplus or
redundant storage facilities?
2.6 How can management be assured that the flow of goods from production
through sales to the customer is accurately anticipated and planned for, so that the
customers requirements are efficiently fulfilled?
2.7 Are all stocks and movements of goods adequately tracked and trailed in
order to determine their whereabouts?
2.8 Are distribution stocks accurately organised and identified so that orders
can be efficiently prepared for despatch and all items accounted for?
2.9 Are all stock movements supported by authorised documentation and
what processes ensure that all movements are correctly reflected in the
accounting system for the appropriate accounting period?
2.10 What processes ensure that the correct type and quantity of goods are
prepared for despatch?
2.11 What mechanisms prevent shortages of goods or unreasonable order
backlogs at the distribution centres?
2.12 What processes prevent the despatch of incorrect or false consignments?
2.13 What processes ensure that goods are stored and delivered in saleable and
good condition?
2.14 How is the financial stability, suitability and reliability of external
distribution and transport contractors evaluated and confirmed?
2.15 How would management be aware of poor external contractor
performance?
2.16 What prevents the acceptance of false, invalid or unauthorised distribution
and transport charges from external contractors?
2.17 Are individual consignments assessed for the optimum delivery method,
and how can management be sure that delivery costs are contained?
2.18 Would late, delayed or missing deliveries be detected and appropriate
action taken?
2.19 Are all goods damaged in transit accurately identified, investigated and
action taken to promptly despatch suitable replacements?
2.20 Are all export and overseas consignments correctly documented in
accordance with customs and export regulations?
2.21 Are export and overseas consignments despatched by the most efficient
and economic means?
2.22 Are the additional costs of overseas deliveries recovered?
2.23 How can management be assured that the delivery vehicle fleet is suitable
and efficiently utilised?
2.24 Are transport fleet operating costs monitored and reacted to?
2.25 What mechanisms prevent either uneconomic or poorly planned delivery
journeys?
2.26 How can management be assured that the vehicle fleet is operated in
accordance with the prevailing laws and regulations (i.e. including conforming
with required driving periods, distances and rest periods)?
2.27 Are all transport drivers suitably qualified, experienced and licensed?
2.28 Are vehicles loaded logically and efficiently in accordance with the
scheduled delivery run?
2.29 Are goods loaded safely on delivery vehicles and have the appropriate
loading devices been supplied to safely unload at the destination without
damaging the goods?
2.30 Are drivers held to account for all the goods loaded on their vehicles and
delivered to customers?
2.31 Are vehicles and goods in transit covered by adequate, suitable and
current insurance provision?
2.32 Are goods held in distribution and intermediate stores covered by
appropriate and current insurance?
2.33 How is the accuracy of data input from other systems (i.e. sales orders)
confirmed?
2.34 How is the accuracy of data output to other systems (i.e. stock control)
confirmed?