Prepare for a Successful New Year with Procedural Review Audits

Procedural Review AuditsMany retailers are operating at full speed during the 30 to 60 days leading up to and including the holiday season. By January, the rush has ended, aisles are emptier, temporary employees are gone, and retailers are left with any remaining unsold inventory and pressure to prepare for the next season. During the slower, post-holiday quarter it is essential for retailers to focus inward. In the midst of depressed sales, theft and loss wreak havoc on the bottom line, as there is less revenue to buffer the vicious impact of shrink. The first of the year offers an opportunity to improve processes and apply resources to get stores in tip-top condition for the upcoming year.

Pinpointing Operational and Loss Prevention Challenges

Procedural review audits (PRAs) help loss prevention professionals assess the areas of greatest risk and loss, enabling them to prioritize where limited resources should be directed. Audits are commonly used in retail to evaluate compliance with regulations and ensure best practices are implemented across retail stores. A procedural review audit is similar, but when applied to loss prevention, can be structured specifically to identify areas of risk and point toward root causes. Therefore, they enable management to effectively measure consistency, while pinpointing operational and loss prevention challenges.

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Below are examples of the many areas where PRAs are effective:

Supply Chain: From the time a delivery truck opens its doors to the time inventory is placed on shelves, the opportunity for loss is significant. Problems can arise from administrative errors, theft, spoilage, waste and damage. PRAs are extremely useful for understanding whether or not all received items are properly evaluated, processed and stored to minimize both purposeful and inadvertent losses.

Compliance and Regulatory Issues: Failure to comply with regulatory standards can result in losses, fines, or even damage to the brand. Audits can be used to identify problems early and also pinpoint processes that, if addressed immediately, can eliminate the potential for losses and fines.

Pricing Integrity: Handling price changes consistently and effectively is a challenge for many retailers. Price reductions on the shelf must simultaneously occur in the POS system, ensuring that price scans are seamless, correct and pose no glitch to cashiers. PRAs are a great way to confirm that pricing discrepancies are not occurring.

Safety: Accidents can create staggering losses in terms of damage to inventory, or worse, harm to customers and employees. Ensuring safety across all operational facets of the store is a solid foundation for loss prevention. Safety audits may include anything from ensuring that the fire doors are not blocked and are functioning properly, to verifying that when a spill occurs, all employees know the protocol for timely and thorough clean up.

Operations: LP personnel may monitor operations to ensure that processes are being executed consistently and correctly across all locations. The consistency and frequency with which processes are carried out greatly impacts loss prevention. For example, it is important to ensure that a damaged or faulty product is returned immediately to the supplier to avoid financial loss.

Hot off the holiday trail, retailers usually have great insight into challenges they faced, processes that failed, and customer service challenges they experienced. In most cases, problems evident during the holiday season are present throughout the year, but are less obvious during slower times. Retailers should take notes, reflect on challenges and use this insight to craft PRAs that can help to monitor and correct these problems.

Andrew Wren serves as chief executive officer of Wren Solutions, a loss-prevention technology provider helping LP professionals reduce loss, increase profits and rise as heroes in their companies. Wren is responsible for corporate and product strategy, leveraging his more than two decades of security technology expertise. To learn more about Wren’s solutions, visit