The vital role of internal controls for consumer industry ERP implementation

Talking points  

• Today’s consumer industry is undergoing rapid transformation as organizations modernize their enterprise resource planning (ERP) platforms and migrate to the cloud.
• Controls are important for organizations to modernize their ERP systems, both before and after implementation, helping improve data integrity, regulatory compliance, and effective risk management throughout the transformation process. 
• Internal controls for ERP can address the challenges and risks that consumer companies face, such as accountability, data breaches, and reputational damage. 

Known for the transformative impact they can have on business processes, ERP systems are undergoing their own transformation. Across industries, companies are shifting from legacy, on-premise ERP systems to modern cloud-based ERP platforms, with projections indicating that the market could double in less than a decade—from $92.6 billion in 2025 to $229.79 billion by 2032, according to Fortune Business Insights.

One key factor driving this transition? Leading vendors are phasing out support for on-premise legacy technologies, prompting organizations to modernize and move to the cloud now.

As more consumer companies implement these next-generation systems, the importance of internal controls during an ERP implementation is coming into sharper focus. These integrated policies, procedures, and technical safeguards help organizations preserve the accuracy, integrity, and security of business processes and data, thereby mitigating operational, financial, and compliance risks.

Read on to explore the importance of internal controls for ERP system and finance transformation in the consumer industry and how they can help your organization thrive in this evolving environment.

What are the risks of inadequate controls for ERP for consumer companies?    

Without capable internal controls, consumer companies face heightened risks as they configure platforms and transition to cloud-based environments. These could include:

• Financial misstatements and fraud;
• Inventory inaccuracies and stockouts;
• Inefficient order fulfillment and customer dissatisfaction;
• Noncompliance with Sarbanes-Oxley Act (SOX) requirements and/or technical accounting policies;
• Penalties and fines; and
• Data breaches and reputational damage.

Proactively addressing ERP internal controls allows companies to safeguard operations, maintain consumer trust, and improve business resilience in a rapidly changing consumer landscape.

Your data—and your brand—in the cloud

As companies implement ERP systems, they often consider how to better leverage their operational data and financial data models by using a centralized point of collection and maintenance of data in data lakes. At the same time, the increasing usage of cloud-based ERPs is changing the location of that data. 

As data storage shifts from company data centers to external technology vendors, direct control over systems and data typically decreases. As such, consumer organizations should consider how accountability also shifts, both legally and reputationally. Organizations rely on their vendors’ controls, making vendor attestation reports key to managing risk and efficiency.

At the same time, foresight during design and building of data models can provide CEOs and CFOs with new ways to analyze their data. For example, leaders might be able to perform in-depth revenue analysis for varying drivers (e.g., by consumer category or even individual consumer). 

Effective controls can address consumer industry pain points

Each corner of the consumer industry faces its own risks if internal controls aren’t carefully considered and implemented. Imagine a rental car company recording the same car twice; an airline losing track of an essential, serialized rotable part; or component materials missing from the shop floor production line. Risk, revenue, and reputation are all on the line. Effective internal controls for ERP can address these challenges and provide value to consumer companies.

When used alongside other ERP internal controls, strategically applied artificial intelligence (AI) and other technology can streamline organizational processes and enhance data integrity. By enabling smarter anomaly detection, predictive analytics, and intelligent automation, tools like automation and machine learning can make control environments more adaptive and resilient.

Intelligent controls provide benefits throughout consumer company operations. Examples include:

• Data integrity controls: Decrease errors and protect sensitive information by determining data is accurate, consistent, and reliable. 
• Automated workflows: Manage high transaction volumes by reducing manual operations.
• Role-based access and segregation of duties: Reduce fraud risk by preventing unauthorized access and actions. 
• Integration controls: Offer effective omnichannel experiences through a centralized, customer-focused system. 
• Continuous monitoring and traceability: Provide accountability through transparency, anomaly detection, and clear audit trails.

Implementation of controls for ERP: Leading practices for the consumer industry

Establishing strong controls for ERP in the consumer industry requires a thoughtful, proactive approach that balances risk management with operational agility. In my work with clients at Deloitte, I find that internal controls may be an afterthought to the implementation team. To avoid this pitfall, my team guides organizations as they build a broad control during their transformation. Leading practices can include risk assessments, cross-functional team involvement, regular oversight for control design, and proactive upskilling. Organizations can also leverage new technologies such as agentic AI and machine learning to control effectiveness through certain business processes. Stakeholders from throughout the organization, including the C-suite, should be incorporated into planning from the earliest phases, to promote systemic integration of ERP controls and reduce the need for rework later.As consumer companies shift from on-premise ERP systems to cloud-based platforms, controls for ERP will be critical for managing complex supply chains, determining regulatory compliance, and protecting brand reputation.

What role can Deloitte play?

Deloitte has experience assessing and implementing internal controls for cloud-based ERP in the consumer industry. We can provide advice on how your company can decrease risk, improve operational continuity, and realize strategic value. You can find out more in our new article on the importance of internal controls for ERP transformations. Reach out to us for more information. 

The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.

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