Navy Exchange Improves Sales Audit Processes With Epicor

A common challenge for retailers as they expand is integrating disparate legacy systems. To help ensure data accuracy and business efficiency, merchants must take a more automated approach to their auditing processes. 

To sustain its consistent growth, Navy Exchange needed a stronger system to support future expansion plans. Offering U.S. naval personnel and their families a range of merchandise and services, including auto care, fuel and groceries, the retailer operates 230 stores, as well as 44 hotel locations and an e-Commerce site.

With annual revenues exceeding $2.8 billion and 300,000 transactions being completed per day, Navy Exchange is using the Epicor Retail Sales Audit to improve the integrity and accuracy flowing between the head office and individual locations. Since implementing Retail Sales Audit, Navy Exchange has doubled sales while sales audit payroll decreased tenfold.


Prior to implementing the Retail Sales Audit application, Navy Exchange had each store operate independently, with up to four employees performing manual cash counts and auditing transaction data. This information was then sent to the head office for laborious review and validation.

However, this process was inefficient because it had “no consistency or economies of scale in processing and reporting transactional data,” said Joe Lange, Director of Financial Accounting and Associate Controller for Navy Exchange, in an interview with Retail TouchPoints. Disparate and manual processes, in fact, caused many challenges for the retailer. “Most of all, coordinating and moving paperwork into a central location to be audited and then storing it to have future access to the data for research and audits.”

Improving Data Accuracy And Customer Service

Retail Sales Audit is designed to bridge the gap between the enterprise and sales channels. The centralized transaction processor consolidates, validates and secures data from all sales channels into one location and to one standard — then maps consistently to Navy Exchange’s enterprise applications. When errors are detected, they can be corrected in a more efficient and timely fashion, helping to mitigate costs and risks.

Because employees no longer have to manually calculate cash overages and shortages, and then manually transfer paperwork from stores to mother stores and district offices, Navy Exchange has seen a significant decrease in employee turnover. “All of our associates have asked at one time or another why we didn’t do it earlier,” Lange said. “There are many associates who completed sales audits the old fashion way, and they have been thrilled with the results.”

Lange also noted that he has seen less frustration among employees trying to retrieve past transactions, “and much better customer service” among users who access and leverage information.

Another benefit Navy Exchange realized early on was the ability to reduce staff and related costs. The retailer has reduced cash office staffs by one third, “effectively eliminating all the sales audit positions at the stores,” Lange said. “Thanks in large part to Sales Audit, our reduced labor requirement has saved more than $2 million annually since rolling out the Epicor system enterprise wide.”

Talent now is located in one location, with 15 auditors — three of which are supervisory auditors — and one manager. Daily duties include: sales and tender auditing, completing bank deposit, debit and credit and gift card reconciliations and assisting cash office associates worldwide by remotely entering their PCs.

Realizing New Growth Opportunities

Streamlined data processes available within the Sales Audit solution has helped improve internal systems and overall decision-making for Navy Exchange.

All merchandising, data warehouse, loss prevention and internal audit systems now can be updated by 6 a.m. the following business day, Lange reported. Typically, this process would take two weeks to complete.

As a result, Navy Exchange is equipped to track and respond to business events. For example, Sales Audit helped the retailer discover several overages and shortages that were caused by employees committing fraud, submitting false coupons or disguising shortages by manually offsetting the numbers against sales.

Due its success thus far, Navy Exchange has been able to expand Retail Sales Audit to other areas of the business. The solution was initially leveraged for general merchandise and grocery, and is being used on the e-Commerce side of the business.

“We have designed the data flow to somewhat mimic data coming from our brick-and-mortar stores with extra statistical data elements,” Lange said. However, the retailer now plans to integrate transaction logs for its retail fuel, food service and vending businesses. Data from the hotel side of the business, which comprises nearly 10% of revenue, also will be transitioned into the system.

“For a while, we were intimidated to bring additional businesses under the Navy Exchange umbrella simply because our systems were disparate and we had too many moving parts that really opened us to risk and inaccuracy,” Lange said. “But Sales Audit is a very versatile solution. With Epicor, we now have a way to easily reconcile and process transactions without the need for extra labor – and, in addition, have added benefits such as third-party gifts cards which are a unique complex process that was made simple working through the Epicor team.”

Navy Exchange began implementing Epicor Sales Audit at the end of 2002, and completed the process in 2004 across all locations worldwide. The solution was implemented at the same time as a cash office application and additional POS module “to capture receipts, disbursements and other transactions that were not routine sales transactions or tied to the main EPOS system,” according to Lange.

The cash office solution was created and integrated into the Sales Audit solution to “capture discrepancies between the register expected amounts to the actual amounts included into the deposit,” Lange added. “We also had export files built from Sales Audit to a reconciliation application, which reconciles all of our tenders, including, cash, checks, gift cards, proprietary credit card programs and national credit cards, based on imported depository (BAI) processor files.”

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