Over the past 35+ years we have had the unique opportunity to review hundreds of loss prevention, shrinkage control and safety audits used by some of the finest companies in the retail industry. We have also assisted many of these retailers in revising their audit programs to be more efficient and effective. These audit programs have ranged from simple 1 page Yes/No formats in Word or Excel, to more thorough computerized audits completed on a cellphone or tablet with weighted scoring formulas. Most of these audits were completed by LP/AP, Safety, Internal Audit and Store Operations personnel.
Our review of these various audit programs has resulted in the identification of several pitfalls that plague many loss prevention, shrinkage control and safety audits. Listed below are a few of the more common pitfalls we have encountered.
Audit Creation
Unfortunately, many companies design their audit program prior to developing their custom LP, shrink or safety program. A good audit program is always built around and designed to measure location compliance to the company’s LP, shrink or safety program.
Audit Length and Scope
Many times, we review audits where the author definitely thought quantity was much more important than quality. Big mistake! We call this the “shotgun approach” – trying to audit too much too quickly. This typically results in a lack of audit focus and renders the audit ineffective.
Audit Focus
Do these points-of-audit sound familiar? “Are all associates wearing name tags?”, “Are associates dressed in appropriate attire?”, Are shopping carts cleared from parking lot?”. We frequently see these type of audit points on LP, shrink and safety audits. We are not saying these points-of-audit are not important, just that they do not belong on an LP, shrink or safety audit that is designed to measure program compliance and predict shrink or safety losses.
Audit Question Weight/Value
This is a frequent and major pitfall of many LP, shrink and safety audits we have reviewed over the years. In most any audit, select points-of-audit are more important than others. For example, in a loss prevention/shrink audit points-of-audit addressing customer service, backdoor security, EAS tagging, associate package checks, fitting room controls, and compliance to refund and void policies are much more important than the monthly LP topic posted on the bulletin board, stockroom door being closed, all associates signing the LP meeting form, or visitor sign-in/out log completed in full. Each point-of-audit should carry a weight that is related to its overall importance.
Audit Scoring
We have found that audit programs which are not scored, usually do not carry as much importance as those that are scored. Five (5) ‘NOs’, depending on the audit questions importance could result in a passing or failing score. Some executives may see 5 non-compliance issues as good, while others will see it as unacceptable. However, if those 5 NOs resulted in a 92% score or a 74% score then the executives will likely view the results more similarly.
Audit Location Selection
In some companies we have found they treat all stores the same when it comes to audits (every store audited once a year or twice a year). Shrinkage results, sales volume, management turnover, profitability, etc. play no role in the frequency in which a store is to be audited. A high volume, high shrink store is audited the same number of times a low volume, low shrink store gets audited. Shrinkage Control/LP audits should focus on those locations where the biggest return on investment can be realized.
Audit Notice
When it comes to scheduling audits there always seems to be a bit of a battle within companies regarding announced vs unannounced audits. We are strong believers that unannounced audits provide the most realistic picture of normal daily operations; better measure true compliance to program requirements; and greatly assist in keeping audit’s focus (LP, shrink control or safety) a priority issue within the company.
Audit Timing
I’ll never forget when visiting a client store and asking the Store Manager about shrink audits completed in their store (ie. who completes them, how often, etc.) and the manager stated, “Our shrink audit is completed the second week of February every year, and usually on a Tuesday.” I commented that shrink audits must be announced or scheduled in advance. The manager said that was not the case, it was just most convenient for his auditor to do his store the second week in February. For audits to have their greatest impact, ensure the audit rotation schedule is changed on an annual basis.
Audit Follow-up
Unfortunately, we have found on many occasions, usually due to a workload issue, failing audits are not re-audited on a consistent basis. Lack of follow-up to failing audits or non-compliance to key points-of-audits can render even the best of audit programs ineffective. To audit and identify deficiencies, but then fail to train personnel and re-audit to ensure deficiencies have been corrected defeats the very purpose of auditing.
These are a few of the major audit program pitfalls we have encountered over the years. If your audit falls into one or more of the above pitfalls, now would be a great time to make some needed changed. $
