Loss Prevention & Control

& its Impact on Management of Inventory Shrinkage

Presented by: Surajit Datta

Manager-Internal Audit - aswaaq LLC

Brand for all UAE Brand

Who We Are What We Do

Fresh Return to

community Convenient Real Estate

Standardized Products & Services

aswaaq Brand Home delivery Monprix

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HAACP

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card

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Food Safety Best Employer Brand Identity Brand Identity DQA award Superbrands Bill payment

Supermarket

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SME Support

ISO 9001-14001-18001

ICD subsidiaries Benefits of Participation in DQA

Opportunity to learn and share good practices;

Contributes to organizational learning and teamwork;

Independent and objective assessment by external assessors serves as

a holistic evaluation of the organization and lead to process

improvement;

Feedback serves as a basis for designing and managing a Performance

Measurement system, Risk Management strategy and initiating

improvements in various areas;

Continuous improvement through RADAR approach.

3

ICD subsidiaries Loss Prevention & Control

4

Inventory shrinkage is a common problem in

retail and aswaaq is no exception.

Inventory shrinkage costs retailers anything

between 1.50 - 4%* or even more of their

total annual sales. And in terms of a

percentage of net profit, they are close to

20%.

By adapting and implementing LPC, risks are

identified, managed and assessed within a

robust Risk Management framework.

PR

EV

EN

TIO

N O

F L

OS

S t

o..

*Source: Retail Theft Barometer

Loss Prevention Framework

5

Monitoring &

Reporting

2

LPC Structure

4

Accountabilities

3

Awareness & Training

1

Strategy & Road map

Loss Prevention & Control Framework

Step-1a: LPC Strategy

Zero budgeting on shrinkage

Defining Accountability

Setting KPIs for informed decisions

Standard Reports, Dashboards, etc. for constant Monitoring

Re-engineering processes & procedures

Linking shrinkage & wastage results with employee

Performance Management System

Increasing frequency of physical inventory for categories

with high incidences of shrinkage.

7

Step-1b: LPC Short-term Plan

Step-2: LPC Structure & Resources

Appointment of LPC team

Re-engineering of core business processes

Design of training manual and training modules

Sr. Manager - Finance

LPC Officer

Head of Leasing & Mall Management

Security Monitors

(4)

Process Review

Gap Analysis

Process Re-engineering

Designing

Training

Manual

9

Weekly Newsletters for knowledge

and awareness

LPC awareness and training

programmes

Poster Campaign

Step-3: Awareness & Training

Shrink? Shrink?

Shrink?

Shrink? Shrink?

Cre

atin

g R

esp

on

sib

ilities

Step-4: Controls & Responsibilities

Pro

ced

ura

l co

ntr

ols

Step-5: Monitoring & Reporting

Monitoring Reporting

Internal:

Periodical data analysis by LPC

officer;

Internal audits of stores;

Semi-annual stock takes;

External:

Annual Statutory financial

audits;

Annual Government audits

Municipality inspections.

Reports by LPC officer;

Internal auditor’s reports to

Management and Audit

Committee;

Stock take reports;

Particulars 2011 2012 2013

Shrinkage as % of Sales 6.03% 0.81% 0.45%

Wastage as % of Sales 1.12% 0.88% 0.58%

Improvement - Shrinkage 87% 44%

Improvement - Wastage 21% 34%

0.0

5

0.0

7

0.0

6

0.0

3

0.1

5

0.1

5

0.0

9

0.6

0

0.1

0

0.1

5

0.1

1

0.1

1

0.1

5

0.2

8

0.2

0

1.0

9

-52

%

-50

%

-44

%

-67

%

1%

-49

%

-56

%

-45

% Store-1 Store-2 Store-3 Store-4 Store-5 Store-6 Store-7 Total

Shrinage & Wastage-YTDJun'14 Shrinage & Wastage-YTDJun'13 % Change

45

33 31 30

0

10

20

30

40

50

2010 2011 2012 2013

Stock Turnover (Days) - 2010 to 2013

12

Results Achieved

AED in million

13

Cost-Benefit Analysis

LPC Team – LPC Officer,

Security Monitors, etc.

Shrinkage & Wastage

reduction

Improved Margin

Improved Ordering

Reduced Stock Turnover

Reduced Out-of-stock

“DQA programme is not about winners and losers.

It’s success lies in reinforcing employee

engagement, teamwork and a sense of ownership”