**Bentonville**: Walmart is overhauling its post-audit processes by partnering with UK-based Audit Partners Limited for fiscal year 2025. The change aims to enhance transparency but raises concerns about increased claims and the burden on smaller suppliers navigating new systems.
Walmart, the multinational retail corporation based in Bentonville, Arkansas, is making significant adjustments to its post-audit processes as it seeks to enhance transparency in its dealings with suppliers. This shift comes in light of the company’s extensive operations, which generated $441.8 billion in sales during the fiscal year 2024, involving myriad suppliers, millions of products, numerous stores, and a rapidly growing online presence.
To improve upon its existing system, Walmart has chosen to engage a single third-party auditing firm for the fiscal year 2025, which began on February 1. Following a bidding process initiated in late 2024, Walmart selected the United Kingdom-based Audit Partners Limited (APL), which maintains audit operations in Nepal and India. APL has also been tasked with conducting post-audit duties at Walmart’s subsidiary, Sam’s Club.
Previously, Walmart employed multiple third-party auditors, including Apex Analytics, Cotiviti, PRGX, and Auditec, to manage its post-audit claims, which examined discrepancies in various categories such as pricing, allowances for defective products, and shipping mistakes. According to industry insights, larger businesses like Walmart tend to generate a higher volume of post-audit claims due to their vast inventory and supplier base. Even smaller suppliers, despite offering a limited number of products, can encounter claims that may reduce their payments unless successfully disputed.
Boyd Evert, CEO of HRG, a firm that aids suppliers working with major retailers including Walmart, expressed cautious optimism regarding Walmart’s intent to streamline and increase transparency within the post-audit framework. He stated, “Walmart’s goal to have greater transparency with post-audit is a noble step in the right direction, but it remains to be seen how efficient the protocol will be with a sole auditor who relies heavily on automation and auditing workers in other countries.”
Walmart’s transition to a new system includes relocating claim notifications and supporting documentation to a web portal named “High Radius.” Evert highlighted that this change may burden smaller suppliers who lack dedicated post-audit teams, compelling them to log into an additional portal to check for claims and pending deductions regularly. He warned that busy smaller suppliers could easily overlook claims until the associated deductions are already made.
Concerns about the potential for increased claims due to automation were also raised. Evert noted that experiences in South America with automated post-audit systems showed that machine learning and artificial intelligence could lead to a proliferation of smaller claims, sometimes grouped under single claims across multiple locations. He indicated that the nature of automated claims often hinges on the specific wording in supplier contracts, failing to consider any informal communications that might impact claims assessment.
Additionally, Walmart intends to revise how it calculates the defective allowance for suppliers through its Claims and Returns Systems (CARS). The new approach will set benchmarks based on actual returns from the previous year. For instance, if a supplier’s returns are initially benchmarked at 5% and subsequently rise to 6%, Walmart will not retroactively charge for the additional 1%. Conversely, improved return rates will reset the allowance accordingly, maintaining an ongoing adjustment process.
As Walmart moves towards these changes, Evert acknowledged the challenges these transitions may present. He stated, “Suppliers have asked for this, and Walmart is delivering. It will be a positive in time but painful for some getting there.”
While Walmart has not publicly commented on this new protocol, Evert expressed that the retailer’s efforts are merely reflecting industry practices already embraced by other competitors. He concluded by underscoring that time will reveal the effectiveness of the proposed changes and the reliance on a single auditor.
The Supply Side section of Talk Business & Politics continues to monitor developments affecting companies, organizations, and individuals engaged in providing products and services within the retail sector.
Source: Noah Wire Services
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