Our client, a large retailer of outdoor equipment and apparel, had identified a $12 million unexplained inventory variance between its financial and operational systems. The client believed the variance involved the allocation of costs from the distribution company to its selling channel. However, the variance still could not be identified even after the client deployed an internal team to research it.
Protiviti’s Supply Chain and Loss Prevention professionals collaborated to perform a four-week assessment of our client’s procure-to-pay and inventory management processes. This involved analyzing data around various areas within the specific processes to prove or disprove potential root causes identified by our client’s key process owners. In addition, the engagement team conducted interviews with individuals from the field to complement the data analysis and further uncover potential process risk and operational breakdowns.
Protiviti’s analysis identified a $12 million inventory variance, due to the following causes:
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