LP101: Loss Prevention Audit Principles

The Audit Process Can Provide Us with a Multitude of Insights into Performance

inventory shrinkage, how to calculate shrinkage in retail, loss prevention audits

The loss prevention audit is a means of providing an objective and consistent evaluation of company standards, operating procedures and internal controls. Using both quantitative and qualitative metrics, they allow us to appraise and address a variety of performance efficiencies that shape and influence service, sales, shrink, appearance, supervision, administration, organization, security, safety, productivity and a host of other factors that will impact the overall management and profitability of the store or facility.

A loss prevention audit may take on a variety of shapes and sizes. The audit may help manage and maintain a safe and productive work environment. Others serve to limit our exposure to certain types of loss, while still other audits will serve additional supplementary functions that will further enhance the performance and profitability of the store. Essentially, the person conducting the loss prevention audit (the auditor) is being asked to determine whether or not a specific process, procedure, task, or other initiative is in compliance within specific predetermined guidelines, policies and/or regulations.

Analyzing the results of a loss prevention audit can provide us with a multitude of insights in to the overall operations of a store. Compliance—and non-compliance—does more than provide us with specific information regarding how a specific strategy is being executed. The audit process will also provide us with insights about the bigger picture:

  • The leadership in the store and the way that they supervise their teams.
  • Organizational skills and the overall way that store operations are managed.
  • Management’s ability to plan, prioritize and multi-task.
  • The character of store management and how they perceive the importance of certain aspects of their job.
  • The sense of ownership that store management carries in making and keeping their store successful.

Strong audit scores typically occur in successful stores. They can help to highlight the company’s best performers, support operational decisions and target members of management for potential promotability. Conversely, consistently poor performance can lead us to other conclusions.

Auditing is a process, and should not be viewed as a single event that occurs in the store on any given day. While it may provide us with a snapshot of how company policies, procedures, and/or protocols are working at any particular moment, results should also be reviewed and analyzed over time. Anyone and any store can show terrific results or lapses in efficiency at any given time—it’s how those results are received, how they are addressed moving forward and how they are managed over time that will provide us with true insights.

Building a successful career in loss prevention has always been predicated on the commitment to professional growth and development. As the business moves forward change comes quickly, and our skills and abilities must evolve to meet the needs and expectations of a new professional standard. Especially when we consider the pace of change, we find that success is largely based on the refinement of the fundamental principles that anchor our skills and our decision making.

LPF LogoBy capitalizing on opportunities to enhance our knowledge and education, we are making an investment in our own future. To learn more about developing your leadership skills and the certification process, visit losspreventionfoundation.org.

 

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