What went wrong with Revlon’s ERP implementation and how can Perpetual Inventory System help out?

Perpetual Inventory System_Revlon

Revlon has been in our lives since 1932, making its way to our dressing shelves and makeup studios. Other than cosmetic products, they also sell a wide range of deodorants, hair, and beauty care products. Revlon is the latest to join the list of biggest failures of ERP implementations, followed by Nike, University of Massachusetts, Word & Co., Lidl, and many more. 

What happened back then?

In 2017, Revlon acquired Elizabeth Arden Inc., and in the same year, they also acquired Cutex brands. With the acquisition of two brands, they decided to streamline their operations and work on some significant makeover for their products. As most of Revlon’s acquired brands ran on SAP, they decided to switch their model to SAP. Unfortunately, things took a wrong turn from there. In the own words of Revlon, they announced that,

“The implementation of SAP ERP was a disaster.” 

In addition to that, it was mentioned in tadvisor.com,

“We expected that this system deployment will provide big transparency of information on transactions in real-time that will allow us to make better and quicker decisions, to increase the efficiency of customer service and to improve rational use of current assets. However, in transition time on SAP, we faced problems because of which the plant began to increase capacities more slowly than it was expected” — the operating officer of Revlon Christopher Peterson.

Further, Christopher Peterson told investors 

“In early February [2018], we rolled out SAP for a large part of our North American business to integrate planning, sourcing, manufacturing, distribution, and finance… However, we experienced issues during the SAP changeover that caused the plant to ramp up capacity slower than anticipated.” 

What went wrong at Revlon?

To sum up, Revlon was looking for software that could help with its inventory problems. As mentioned earlier, they believed that SAP ERP was their biggest mistake; the legacy system has failed miserably and the list of things that went wrong can be compiled to:

  • Lack of inventory visibility
  • Unable to record timely inventory
  • Inaccuracy in recording customer orders in real-time
  • Demand could not be forecasted
  • Increased delays in shipment and production

Revlon wants something that can help with their inventory problems. This includes giving accurate inventory counts, predicting demand, and managing the shipping activities. Also, Revlon has numerous Point of Sales (POS) systems at its retail outlets. With a successful connection to their accounting software, they can record orders, track sales, allow them to identify inventory changes, and provide real-time decision-making pointers.

What needs to replace SAP?

The complexity of the company’s supply management needs a complex system. Stating so, it needs a system suitable to provide immediate and accurate information to stakeholders at every level, so that they can decide and execute straight away. This is where an Automated Perpetual Inventory System steps in! To manage the transparency of information, the Perpetual Inventory System can help Revlon sort most of its inventory problems. With the full range of products and continuous sales all across the globe, a perpetual inventory system is a more comprehensive method of tracking stock.

Let us see how the Perpetual Inventory System helps?

  • As Revlon products are purchased by the minute all over the world, the stock count keeps altering. Revlon being a multinational brand, the supply chain starts from manufacturing to the warehouse until stores to customer’s doorstep delivery. With a perpetual inventory system, accurate order numbers are passed across all the supply points on all the sales channels through their computerized system, which records stock and updates inventory levels as well. While using ERP, the stock count was tedious, and the physical count was involved. To sum up, in a few lines, it helps Revlon with ‘What you have and Where you have it!’ Perpetual Inventory System deals with Cost of Goods Sold, i.e., For eg.:
Revlon Warehouse StockNo. of ProductsProduct CostTotal Cost
Beginning Inventory300$10$3000
Further Added200$10$2000
Total Stock500$10$5000
Sales100$12$1200 COGS
Remaining Stock400$9.5$3800

If you can see, the Perpetual Inventory System gives an exact idea of the opening stock, sales figures, and Cost of Goods Sold. This activity, when carried across all the warehouses and stores of Revlon, the data received at the end of the day, will be no less than accurate. While ERP could not produce such a detailed report. In this way, Revlon can clearly understand how each warehouse/store is performing and accordingly adjust their stock.

  • Also, Revlon can put up excellent customer support by predicting the customers’ demands and forecasting sales. This way, the Perpetual Inventory System helps understand which products are in higher demand and prepare themselves well in advance.  Also, with the successful implementation of the Perpetual Inventory System, Revlon has the flexibility to redistribute the products across the warehouses or stores that are more in demand. This helps in enhancing productivity, sales, revenue, and ultimately, customer satisfaction. Moreover, while using ERP, Revlon faced huge losses as the production got slower than anticipated, as they were unaware of the future demands. 

For Eg.: Let’s assume Revlon has nearly 100 stores and 20 warehouses in India. And the Delhi warehouse has nearly 90 lip shades left in stock, while the demand is of 200 more lip shades. On the other hand, the Gujarat circle has 450 pieces of the same, with a demand of nearly 150 pcs. Thus, instead of waiting for the delivery from the head office (Bangalore), the Gujarat warehouse can send the deficit demand (110 pcs.) directly to Delhi, as the warehouse is overstocked and also, near Delhi. It will hence, save on time as well as shipping charges. 

  • Festive seasons are the most challenging time of the year. Especially when Revlon launches a new lip shade, and like all their products, the demand for their newly launched product is always high! When there is a huge demand for a product, it is challenging to track goods from the central warehouse to the sub-warehouse, to the retail stores, and finally to the customer’s doorstep. This way, Perpetual Inventory Control always keeps track of the sold products, remaining quantity in the warehouse, and also gives a heads up when running low on stock. 
  • What  is more interesting is that the Perpetual Inventory System helps with return or damaged goods as well! Of course, there are certain times when products return due to unforeseen circumstances, but we do have a method to track the same. Perpetual Inventory System ensures that the returned orders immediately enter the system, and the correct stock quantity is notified. To add the joy! The system also asks the reason for the returned order.

For eg.: If 10 Revlon eyeliners are returned, the entry for the same under the Perpetual Inventory system shows under two different accounts. It shows under Cost of Goods Sold as well as Inventory, unlike other inventory systems. Thus, the Perpetual Inventory System shows the exact numbers of eyeliner left in the inventory (after returns).

a. To top that, you can even understand the reason for product returns (there are several reasons to choose from the dragbar. 

b. Or if you want to resell further or refurbish the same along with quantities. 

  • Perpetual Inventory Control identifies discrepancies in inventories and helps in conducting regular inventory counts. Revlon is present in over 150 countries occupying the brick and mortar, e-retail, salon, and many more sectors. With Perpetual Inventory System, each product is accounted for, and quantities can be easily overviewed. Revlon can easily understand the stock present in their warehouse, sub-warehouse, or even at their store. As Revlon had stated, due to lack of information on inventory, the shipping was severely affected, costing them time, money, and customers; this way, they don’t have to worry about that anymore!
  • What more does Perpetual Inventory Control offer? It records inventory to-the-minute, helps in the  quicker decision-making process, maintains accuracy, and generates reports too!
  • Revlon is a brand that has online as well as brick and mortar presence. Thus, with the help of the Perpetual Inventory Control system, the exact quantities are available all across the platforms. This way, they can also make deliveries from the nearest outlet and thus maintain customer satisfaction. Perpetual Inventory System surely helps in timely shipments. Did you know? 
  1. To implement an Omnichannel business, a Perpetual Inventory System is essential.
  2. What is Omnichannel? It is a type of shopping experience where customers can buy and return via any platform, i.e. online or offline shopping.

For eg.: A customer from Bangalore has ordered a Revlon makeup kit. She needs it on an urgent basis; thus, she has requested to deliver within 48 hours. Bangalore is a city where distance is inevitable, but they also want to deliver within time, as the customer requested. This is where the Perpetual Inventory System helps. Through this, Revlon can track the nearest pickup point – warehouse or store. And whichever is closer to the customer’s residence, they will conduct the delivery through them. This way, Revlon can achieve customer satisfaction as well as timely product delivery.

Orderhive Inventory Control System / What can we offer?

A good Inventory System integrates with all departments such as warehouses, manufacturing, distribution, stores, and finance that can help the company maintain transparency. Revlon is a multinational company that has complex working platforms, thus, it needs an Inventory Control System that promises it the same efficiency as Revlon’s. Orderhive Inventory Control System is the solution to all the flaws that Revlon faced while working with SAP ERP. Moreover, Orderhive Inventory Control System maintains transparency along with all the indications that sum up to be a good Perpetual Inventory System.

Ankita Bora

Ankita Bora

I write to express and believe that words are powerful. Long drives and traveling are my weekend goals. I write poems when I am happy and enjoy a solo outing. My mind works best when I am by myself at a cafe with a tall glass of cold coffee and sandwiches. I dance in the rain and heat never bothers me. For me, winters are the worst! I laugh when I cry and bring a smile to everyone close to me. Content Writer at Orderhive, I present knowledge on technical aspects on weekdays and on weekends I write for myself.

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