8 Steps To Better Operational Audits

Written by Yash Patil, Digital Marketing Strategist, Astreem Consulting

Audits are key to improving operational performance in any multi-store operation. Both internal and external audits help to ensure compliance and consistency in successful business management. However, audits are only useful when designed correctly, easily implemented and provide insights to help managers make decisions.

Audit programs are designed to improve operational standards, improve customer service and audit compliance. Ensuring consistent quality and service delivery is critical to businesses on the brink of expansion and international growth. Being able to ensure consistency and quality is the key to sustainable growth. This article provides you with an easy 7 step guide to developing better audit programs that are easy to manage and implement.

Related: The Role Of Audits In A Growing Business

Step 1: Start With The ‘Why’

As with any goal, starting with the ‘Why’ is the necessary first step. Defining the objectives of the overall audit program, the key compliance areas to be covered and the Key Performance Indicator (KPI) criteria will help operations managers design a better audit plan.

For example:

  1. Do you want to track compliance with brand standards?
  2. Do you want to track the customer service in different stores?
  3. Do you want to check on the hygiene standards of your outlets?
  4. Do you want to check the completion of operational processes?
  5. Are your outlets following merchandising guidelines?

Whatever your audit needs may be, the objectives of the audit need to be clearly defined to reap the benefits of an operations audit. 

Step 2: Identify The Areas Of Audit

Once the goals are set you need to identify all the KPI factors that need to be audited and group them into the key compliance areas to be covered. If you want to audit brand compliance across all stores, you need to identify all areas that may affect how the brand is perceived.

For example:

  1. In-Store Corporate Identity.
  2. Staff Appearance.
  3. Customer Experience.
  4. Handling Customer Complaints.

Step 3: Identify Who Conducts The Audit

Generally, we have people in 3 roles that are involved in conducting audits.

Field Team Auditor: Company Store Managers or Area Managers

Dedicated Internal Quality Assurance Auditor: Company personnel whose only job is to conduct audits

External Auditor: 3rd Party Auditor engaged to conduct audit

Using an internal Field Team is the most cost-effective way to conduct audits. However, the disadvantage of using an Internal Field Team is that there are certain conflicts of interest in the scoring of the audits. Having a dedicated Quality Assurance Team to conduct audits may provide for more unbiased scoring of the audits; however as this option requires a separate team dedicated to implementing and maintaining audits, it is a resource-heavy solution that works better for larger companies.

Using a 3rd Party Auditor may be a good solution to help reduce both conflicts of interests that may arise from using internal field teams and avoid the high costs incurred in maintaining a dedicated quality assurance team. Since external auditors are not tied to the operating metrics of the audited stores, the audit scores are much less likely to carry bias and provide a more accurate assessment of ground situations. These 3rd Party Auditors are paid by the audits they conduct.

Step 4: Designing The Audit Questions

The designing of audit questions depends on several factors.

Who is conducting the audit: If the field team member is conducting the audit, you want to keep the audit simple and short.

Type of questions asked: The audit questions should also be from the view of recording a fact (objective) rather than asking for opinion (subjective). Statements with a Yes/no answer or those with a graded range are the most commonly used audit question formats.

Frequency of the audit: Designing the audit is closely related to the frequency of the audit. If you are going to visit the store every day, then the audit can be short and you can vary the sections covered. But if the frequency is once a quarter, designing a more comprehensive audit to cover the various aspects of an operational audit would be preferable.

Step 5: Conducting The Audit

Before rolling out your audit program, you need to decide which tools will be used to conduct the audit. Excel spreadsheets or physical hard copies are commonly used for audits; the problem occurs in collation and interpretation of the data. Copious man-hours are often invested to clean, analyze and archive the collected data. Another issue occurs when you need to collate reports from past period records to make performance comparisons across periods – this is also time-intensive for personnel, especially non-dedicated auditors with other responsibilities. 

Step 6: Report Generation

The critical output of an audit is the data collated and how it is interpreted. Collecting data without collating it is a waste of a lot of effort. Once the audits are complete, auditors need to collate the data onto spreadsheets for further analysis. Copious amounts of man-hours are often invested to harvest and process the data into a logical report. Another issue is the manual effort required whenever historical comparison data is required to spot trends or to make predictive analyses. Good use of technology can help your team reduce a lot of time spent on data collation, data management as well as reporting.

Step 7: Analyzing The Results

The whole point of the audit system is to provide insights into the performance across various key compliance areas of your business. Analyzing the results and incorporating the insights as feedback into operations decisions is key to the performance improvement of your brand. 

For example, if specific outlets are consistently showing poor audit scores in the Customer Service Audit, then specific action at the store level must be taken. The way staff are trained to handle customers must be addressed. A retraining session may be scheduled for the staff, followed up by a post-training audit to check that Customer Service performance has improved as indicated by better audit results. 

Step 8: Improving the Audit Program

The last important step is to make sure that the audit program stays relevant to the management goals of your brand and business. Regular reviews are essential to improving the quality and maintaining the relevance of the audit program.

Does My Business Need An Operation Management System?

A well-designed audit program is about providing insights, feedback and enforcing accountability throughout the organization. It is one of the best ways of improving and sustaining the performance of your brand.

If this sounds like something you may need or want for your business, take this test to find out now: Does My Business Need An Operation Management System?

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