Solution Briefs
Understanding, experience and technology for success

 

Auditing in the Retail Industry

Addressing unique challenges in the retail industry

Retailing is one of the largest industries in the United States and accounts for approximately 10 percent of our gross national product. The American retailing business has seen immense growth in recent years with chains and franchisees being recognized as national brands today. To stay ahead of the competition, retailers are involved in an aggressive price war, putting enormous responsibility on optimized infrastructure and operating efficiencies to keep the cash registers running. Also, to comply with regulations and to keep their business operations optimized, they need to have efficient auditing process in place - making transparent auditing a necessity from both legal and operational standpoint.

Understanding the challenges unique to the retail industry, MetricStream brings a comprehensive auditing solution for retail operations that streamlines the auditing processes and provides true business value from the audit function. The solution brings out unmanaged but potential risks and discrepancies supporting sustained compliance with policies and standards for improving the bottom line. Its web-based access enables multiple audits to be conducted simultaneously across multiple geographies.

Challenges with Existing Audit Systems

In the year 2004 only, 27 participating retailers lost more than $4.7 billion to shrink.

Most retail chains have home grown applications for auditing where the entire process is carried out manually using paper or spreadsheets based procedures. While operational efficiency has come to be acknowledged as the cornerstone for strong bottom-line, retailers fail to gain visibility into their operations due to inaccurate, time consuming and labor intensive auditing process. A point in case is the increasing inventory shrinkage as a percentage of retail sales – this in spite of the increased efforts by retailers to combat the problem. Some of the major challenges being faced with existing auditing systems are:
  • Inefficient audit planning, scheduling, execution and reviews
  • Inflexible and delayed reports carrying outdated and incomplete data
  • No real-time visibility into audit plans, status and outcomes
  • Long cycle time from initiation of the audit to release of actionable data
  • Errors and inconsistencies due to manual data entry
  • Unreliable, manual alerts for audits and discrepancies
  • Data-loss in voluminous Excel files and paper-based records
  • Poor visibility of the audit process and results
  • No reduction in shrinkage due to delayed or ignored corrective actions
  • Non-standardized audit practices across franchisee and chain stores
Case Study - One of the World’s Largest Integrated Oil and Gas Companies

This large integrated oil concern with a workforce of nearly 100,000 employees, has business activities and customers in more than 100 countries across six continents. There are over 2000 gas stations in the United States alone. Minimizing “shrink” at these sites is crucial to maximizing profitability and retail audits play a key role in this process. Field auditors, audit coordinators and contract auditors are involved in audits of these gas station convenience stores. The audits are conducted to ensure accuracy of accounting and inventory across all the convenience stores.

Before MetricStream solution was implemented, audits were being scheduled and carried out manually by an audit coordinator and the staff auditors once every nine months. Results were being captured in an MS Excel workbook which was then being posted to their corporate office.

MetricStream solution has automated the retail auditing process with streamlined workflows for reviews and approvals accelerating the audits and has improved productivity with online communication and collaboration. The system provides real-time access to actionable information for enterprise-wide visibility into the audit process and metrics on executive role-based dashboards for information. Reviewers from the corporate office as well as external auditors from overseas instantly get real-time access and visibility into the audit information while previously it took weeks as document were shipped through postal mail.

The solution has lowered the total cost of auditing and provides increased the productivity of field audit resources, enabling the company to increase the frequency of audits. The system is being used to conduct over 2,500 audits per year at over 1,200 locations.

 

Solution Features
  • Risk Assessment
  • Offline Briefcase
  • Alerts and Notifications
  • Attachments
  • Security and Access Controls
  • Configurability
  • CAPA Management
  • Reports Wizard
  • Solution Highlights
  • Quick Implementation
  • Seamless Integration
  • User-friendly
  • Built-in Reporting
  • Robust Security
  • Benefits of the MetricStream Solution
    Recent regulations and growing losses due to shrinkage and other operational inefficiencies have placed dependable audit program as a key component in a business’ success. The MetricStream solution enhances existing audit process by providing capabilities that cater to the present day retail challenges such as real time monitoring and access to actionable data, increased frequency and accuracy of audits making it a best in class solution. Few highlights are:
    • Automatic: Data is entered in web-page audit forms minimizing the scope of error. These audit forms are automatically synced up with the centralized audit database to maintain a repository of findings and results.
    • Connectivity: Data captured off-line can be automatically uploaded into the audit system when the auditors connect to the network.
    • Reports and Metrics: Analytical reports and metrics like Audit Summary Report, Audit Detail Report and Audit Scorecard are available to the managers with the provision of genrating reports in MS Word.
    • Cost Effective: More accurate and frequent audits are conducted with same resources.
    • Security: All the data transmission, storage and login process is encrypted limiting the user access to authorized resources.
    • Alerts: Detects errors and deviations, and alerts mangers in case of excessive loss including shrink%. It has integrated corrective action and incident tracking system with automatic alerts.
    • Data Repository: Audit database records all historical analytics, trend-analysis, and root cause analysis on inventory losses, safety and quality incidents.
    • Real-time Access: Access to actionable information in real time helps reduce losses and implement corrective and preventive actions.
    • Standardized Process: The solution can be used at multiple sites simultaneously, standardizing the audit process across various branches of the chain.