ACL Success Story – Retail – Sonae Distribuição Brasil

2011-07-01

Sonae Distribuição Brasil

“As a result of the continuous monitoring of data using ACL, we have improved merchandise turnover rates, reduced our payment time to suppliers, and saved the company millions of dollars. These are critical issues for any retail business, and ACL Audit Analytics has made it possible for our company to gain a competitive advantage by solving them.”

José Dimas Gonçalves, CFO, Sonae Distribuição Brasil

As one of Brazil’s largest and most diverse supermarket chains, Sonae Distribuição Brasil (SDB) must closely monitor merchandise turnover times, supplier payment periods, and floating capital rates to maintain profitability. The SDB internal audit team developed an innovative ACL application that cut stalled inventory in half and saved the company more than £1.3 million. With ACL Audit Analytics, SDB can now obtain comprehensive data from all its stores in less than two hours and continuously monitor stalled inventory. Using ACL technology, the SDB audit team can consistently maximise revenues and support the organisation’s progress toward its strategic business vision.

Customer Profile

Sonae Distribuição Brasil is the third largest chain in the Brazilian supermarket sector as ranked by Brazilian supermarket association ABRAS, controlling 150 stores and overseeing 21,000 employees nationwide. SDB operates both wholesale and retail chains for goods including food, clothing, household appliances, and electronics. The company also runs restaurants, distribution centers, and cold storage facilities. Based in Porto Alegre, SDB generated over £820 million in revenues and invested over £22 million in the Brazilian economy during 2003.

Challenges

In the retail sector, profitability is directly linked to inventory turnover. Merchandise that becomes stalled – rather than sold, transferred, or purchased – can create significant losses, due to high inventory volumes and narrow profit margins.

The SDB internal audit team needed a way to measure and identify stalled merchandise to minimise obsolescence and boost revenues. The team had three specific areas of concern: merchandise turnover rates, average period for payment to suppliers, and the floating rate on the cost of money. Additionally, the company needed a solution that could monitor inventory across multiple stores and systems within the company’s large business holdings.

Solution

Led by Vladimir Mendes Queiroz, senior auditor at SDB, the audit team created an ACL application that quickly pinpoints stalled inventory in any of the company’s retail or wholesale operations. The application can be customised to identify merchandise by category, region, product, and a wide variety of additional variables.

Using this innovative ACL application, the company decreased stalled inventory by over £1.3 million in just four months – a 48 percent reduction. SDB implemented the application as a continuous monitoring tool, giving the internal audit team an unprecedented view of the business while producing significant cost savings every month.

Now SDB auditors can monitor stalled inventory, merchandise turnover, and floating rates with ease and efficiency. In less than two hours, auditors can generate detailed information about merchandise, business transactions, and inventory totals from all of the company’s stores. The reports allow management to adjust ordering and sales efforts, and to shift quickly with market demands.

Results

Sonae Distribuição Brasil applied ACL technology to one of its top organisational challenges with dramatic results. Using ACL, SDB has been able to:

• Decrease stalled inventory by over £1.3 million in just four months– a 48% reduction
• Free up valuable storage space through quicker product turnover, decreasing overall storage costs
• Analyse 100 percent of in-store inventory at all SDB retail and wholesale locations
• Examine all movement operations registries – including sales, transfers, and purchases – for any desired business period
• Generate detailed information about all stalled inventory in any SDB store in only 90 minutes