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Case Study – FMCG & Retail
The client is a large consumer products company with nationwide manufacturing, warehousing and retail distribution operations, supported by hundreds of distributors and retail partners. Rapid growth, high product velocity and a multi-layered channel ecosystem had created multiple touchpoints where revenue leakage and conduct risks could occur without immediate visibility.
Despite periodic internal audits and local corrective actions, the organization lacked a unified view of insider risk in sales, distribution and trade schemes, and leadership wanted an independent assessment without naming the brand publicly.
The engagement began with three interlinked problem areas:
Inventory shrinkage
- Unexplained stock losses at warehouses and distributor points, often attributed to “normal” damage or pilferage without strong root-cause analysis.
- Limited ability to differentiate between process gaps, collusion and external theft in reported shrinkage numbers.
Distributor/retail fraud
- Complaints and whispers around manipulation of trade schemes, diversion of stock to grey markets and falsification of returns or claims.
- Incentive structures that rewarded volume at any cost, creating pressure and opportunity for unethical practices among internal teams and channel partners.
Compliance exposures
- Inconsistent adherence to code of conduct, POSH and whistleblowing practices across regions and third-party workforces.
- Concerns that a major incident or media exposé in any one region could trigger brand damage and scrutiny of licences and contracts.
Leadership wanted greater assurance that insider risks in the FMCG and retail engine were being actively managed, not just acknowledged.
HRMP designed a multi-phase ERA intervention tailored to the FMCG and retail context.
ERA assessment
- Mapped end-to-end processes across demand generation, order booking, dispatch, warehousing, returns, promotions and claims to identify risk hotspots.
- Analysed historical data on shrinkage, trade scheme usage, complaints, distributor terminations and audit observations to surface patterns.
- Conducted interviews and confidential feedback sessions with sales teams, warehouse staff, distributor employees and internal auditors to understand culture, pressure points and loopholes.
Controls redesign
- Recommended redesign of delegation of authority, segregation of duties and approval thresholds in areas such as discounts, returns, stock adjustments and scheme claims.
- Simplified and standardised inventory and scheme-related processes across regions, reducing local discretion where it created unnecessary risk.
- Introduced targeted checks and monitoring for high-risk combinations of roles, access and incentives, supported by clearer exception logging.
Whistleblowing rollout
- Rolled out the Disclose Without Fear (DWF) Portal as a central, anonymous channel for employees and select channel partners to report fraud, misconduct and policy violations.
- Communicated non-retaliation commitments and clear guidance on what to report, including examples specific to inventory and trade schemes.
- Set up routing so relevant concerns reached Compliance, Internal Audit and HR, with tracking of status and closure timelines.
Training and culture reinforcement
- Designed and delivered focused training modules for sales, warehouse and distributor-facing teams on ethical conduct, scheme integrity and reporting responsibilities.
- Conducted manager-level sessions on reading early warning signs, handling concerns and reinforcing “how” results are delivered.
- Provided toolkits for regional leadership to keep ethics and ERA themes alive in regular reviews and townhalls.
Within the first defined review period after implementation, the client observed tangible improvements.
Savings from fraud and leakages
- Significant reduction in abnormal shrinkage levels at identified hotspots, translating into measurable savings in cost of goods lost.
- Detectable cases of scheme abuse and collusion surfaced via the DWF Portal and targeted reviews, leading to corrective actions and avoided future losses.
Shrinkage reduction and process discipline
- Improved accuracy and consistency in stock records, returns processing and adjustments, with fewer unexplained variances across key warehouses and distributor locations.
- Stronger adherence to redesigned controls, as evidenced by reduced exceptions and fewer adverse internal audit comments.
Licence protection and compliance comfort
- Enhanced confidence that licences and regulatory relationships were better protected due to more robust vigilance around conduct and schemes.
- Clearer documentation of how misconduct allegations were investigated and closed, improving readiness for any external scrutiny.
Improved audit outcomes
- Subsequent internal audits recorded fewer high-severity observations related to inventory, schemes and distributor conduct in the impacted regions.
- Audit Committees received more structured reporting on fraud risks and mitigation actions, strengthening overall assurance.
Partnering with HRMP helped us connect the dots between shrinkage numbers, scheme misuse and culture on the ground. For the first time, our Audit Committee could see a clear, data-backed story on insider risk in our distribution engine—and the actions we were taking to control it.
Business Head & CISO
Global IT Consulting Firm
