The Retailer Spring Edition 2021

THE RE TA I L ER

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MAXIMIZE VALUE, INCREASE PROFIT WITH SELF- FUNDING RETAIL CONTRACT COMPLIANCE AUDITS

James Albrecht Vice President Audit Operations PRGX

Vijay Parekh Director - Strategic Accounts PRGX

M aximise Value, Increase Profit with Self-Funding Retail GNFR Contract Compliance Audits

Select a programme manager

A self-funding GNFR contract compliance audit programme enables retailers to overcome these challenges and recoup a percentage of profit loss. At the same time, such a programme can identify systemic issues to mitigate future loss and enhance supplier relationships. The following describes four ways retailers can secure maximumvalue from a self-funding GNFR contract compliance programme. Start from the top Use top-down programme alignment to define internal objectives for the programme and communicate this with senior management throughout the organisation. This includes clearly defining programme objectives followed by communicating themat every level to expand support beyond procurement. It’s crucial to build strong governance, reporting and escalation processes into the programme so all parties are fully informed before settlement actions are taken. Educate stakeholders that while auditors expect to find errors, their focus is to develop a plan for realising future savings. Having alignment with senior leadership, organ - isation-wide, is the most effective management model, which helps realize the full potential of a contract compliance audit.

The programme is much more likely to be suc - cessful when it’s overseen by a programme manager who has sufficient bandwidth to con - duct the audit effectively. If internal bandwidth is lacking, consider selecting an embedded professional programme manager from an audit partner to handle day-to-day project management. From day one, the audit team should be in close contact with the programme lead and report any roadblocks early. If an auditor identifies a systemic issue like ambiguous contract lan - guage, communicating that broadly can help ensure the adoption of corrective actions as the programme grows. Embrace transparency by setting clear audit guidelines and expectations with suppliers to promote cooperation and faster claims pro - cessing. At the same time, be sensitive to the concerns of key suppliers by reassuring them of the programme objectives. It’s important that suppliers do not view the audit as being done out of mistrust. In fact, make sure they understand a GNFR Set clear expectations with suppliers

Performing supplier contract “health checks” can help retailers increase revenue, improve pro - cesses and enhanceGNFR supplier relationships Major retailers operate in a complex, constantly changing environment, with thousands of sup - pliers and millions of transactions – and an ever-changing web of logistical challenges involved with suppliers who keep everything moving. As such, it’s difficult to constantly monitor whether each goods not for resale (GNFR) supplier contract is being executed properly, especially when employees are already jug - gling dozens of balls at once. And, because tremendous amounts of time and effort go into negotiating supplier contracts, regular check-ins and verifications to ensure contracts are carried out as intended may not happen. Analysing these contracts can be a strong gov - ernance tool – particularlywhen retailers lack the budget or bandwidth to independently and consistently analyse each supplier’s contract.