Unearthing $20 Million in Savings: A Lesson in Operational Analysis

Transaction Audit and Advisory Case Study

Some of the most significant opportunities for improvement hide in the most unexpected places. This case study is from work I did for one of the largest retailers in America, a company serving countless customers nationwide. The task was straightforward but essential: evaluate their returns process for potential improvements, perform a transaction audit, and identify areas of risk.

On the surface, the retailer's returns system seemed to be working just fine. But in risk assessments and audit work, we know better than to take anything for granted. Using the power of SQL, our team meticulously tested millions of return transactions. The goal was to ensure that every aspect of the returns process was working seamlessly, from updating inventory records to the amount and type of return, all the way through sending products back to the vendor and the overall customer experience.

Our investigation didn't take long to yield a significant finding. Non-receipted returns, which were meant to refund customers the lowest retail price in the last 90 days, were, in reality, giving them back the current retail price. This seemingly minor discrepancy was costing the retailer over $20 million annually in unnecessary refunds. We quickly worked with the IT department to get this corrected.

The lesson here isn't just about mega-retailers; it's about every business, from mom-and-pop shops to large corporations. While most businesses are not leaking millions, they can still benefit from this kind of review.

These transaction audits don't just ensure financial compliance and/or savings; they also advance customer satisfaction. By making sure your processes work as intended, you build trust and keep customers coming back. Opportunities for improvement can hide where you least expect them. So, consider this case study, and ask yourself: Am I certain our customer facing transactions work according to our policies?