Weaknesses and Potential Problem(s)
Recommendation(s) to Correct
1. Orders from new customers do not require
any form of validation, resulting in several
large shipments being sent and never paid for.
2. Customer credit histories are not checked
before approving orders, resulting in excessive
uncollectible accounts.
3. Outgoing shipments are placed near the
loading dock door without any physical
security. The loading dock is also used to
receive incoming deliveries. This increases the
risk of theft, which may account for the
unexplained shortages in inventory.
4. Physical counts of inventory are not made
at least annually. This probably accounts for
the inaccuracies in the perpetual inventory
records and may also prevent timely detection
of theft.
5. Shipments are not reconciled to sales
orders, resulting in sending customers the
wrong items.
6. The perpetual inventory records are only
updated weekly. This contributes to the
unanticipated shortages that result in delays in
filling customer orders.
Weaknesses
Require digital signatures on all online orders
from new customers.
Require a written customer purchase order as
confirmation of telephone and fax orders.
Customers’ credit should be checked and no
sales should be made to those that do not
meet credit standards.
Separate the shipping and receiving docks.
Physically restrict access to the loading dock
area where customer orders are placed.
Physical counts of inventory should be made
at least once a year.
Inventory records discrepancies should be
corrected and investigated.
The system should be configured to match
shipping information to sales orders and alert
the shipping employees of any discrepancies.
The warehouse staff should enter information
about shortages as soon as they are
discovered.