4 Lessons from Revlon’s SAP Implementation Disaster

We recently had a brief discussion about the SAP failures. Every case, including Hershey ERP failure and Lidl ERP failure, had its points to learn lessons and ensure that your company is not about to make the same mistake. Today, we will talk about Revlon, so you can see if you are also preparing to join the same path or not. You can check out the SAP failure rate as many companies fail to learn from previous failures.

Revlon revealed a couple of weeks ago that it was terrible to enforce its SAP. It was due to the inability to enforce the SAP that delayed financial reporting.

Within 24 hours of publishing the story, its stock decreased 6.9%, triggering an investor’s lawsuit. Not good for a well-established consumer product business, especially for publicly traded companies.

Revlon’s SAP failure

What have we learned from Revlon’s SAP failure?

  • Design and Controls are the keys to success 

 

Revlon reported a lack of design as one of the problems behind the failure of ERP. As a result of its internal controls, the company suffered “material weaknesses.”

It is important to look closely at the business processes to minimize the risk of material operational disruption.

You should ensure that the development team knows this when determining your future state and training your staff to configure and evaluate the program correctly.

system desgin d365
  • Negative ROI is a big red flag

 

Revlon also announced that: In addition to a breakdown in its North Carolina Plant’s operational controls and production problems:  

  • Sales lost by SAP failure could not be recovered.
  • Disruption in customer service.
  • The demands for their management and employees were growing, with an emphasis on other business goals cannibalized.
  • It produced substantial capital and operating costs.
  • The handling of sellers’ payments was challenging.
  • It couldn’t meet the timely or reliable federal, state, and local reporting and filing standards.
  • It had higher shipping costs than anticipated – due to the SAP failure of the customer burning.
  • It was ‘incapable of correctly or promptly filling customer orders, or at all’ (emphasis added).

We are sure that this wasn’t the expectation of Revlon.

  • Implementation risks should be well understood

 

Revlon did not seem to recognize the risks associated with its ERP implementation, as were many organizations adopting SAP S/4HANA and other ERP solutions. Worse still, efficient methods for reducing such risks should not be quantified or enforced.

Revlon endured delays in shipment and missed sales in North Carolina due to the production interruptions – the site of the first phase of its SAP live service.

If Revlon had known, quantified, and mitigated the risks associated with ERP introduction, steps would have been taken to ensure that its go-live did not significantly impact its operations.

project management implementation process
  • Risk Identification must be calculated  

 

In Revlon’s case, problems became apparent right after the device was implemented in Oxford, NC. The roll-out created service level disturbances that affected production and shipping capabilities directly.

Revlon clarified that they could impact their competitive position if such disruptions continue. Their client relationships, prospects, financial conditions, and cash flow may also influence them.

The company should have prepared for these setbacks with a comprehensive risk evaluation. The risks to implementing an ERP are inherent, and it is not reasonable to expect to go live without problems.

Payroll Processing and Calculations

DFSM ERP Failure Rescue Service

 

If you can find out the ERP implementation failure statistics increasing (from Gartner), you must not take a chance and hire professionals for consultation.

We support some big companies on their ERP implementation rescue plan to be glad to exchange notes and share some lessons from failures to successful projects.

Contact us to discuss any time – we’re pleased to be your digital transformation partner.

ERP Implementation Failure (Woolworths Australia)

ERP Implementation Failure 

(Woolworths Australia)

 

When we talk about ERP failures, we cannot just end up the debate with a single example of a case study. There are many popular and prominent case studies for ERP implementation failures teaching precious lessons to the companies. While we are getting into the ERP implementation failure examples, we have talked in the last post about Hershey ERP failure

 

Today, we have an interesting case study of Australia’s supermarket leader Woolworths Australia; 

 

Woolworths – ERP implementation failure a case study worth studying

 

If we check the ERP implementation failure statistics, Woolworths is still topping the list with the loss of AU$1.2 billion in 2016.

 

How did it start?

 

In the financial year 2016, CEO Brad Banducci announced some major changes in the operations sector.  It included the removal of unnecessary costs and bureaucracy. So, the reconstruction of Woolworths begins and the main aim was to improve the culture of the organization. They are now looking for the SAP solution and trying to get rid of the payroll system that is in use form the past 20 years.

 

So, the company seeks out for the SAP to ensure the end-to-end human capital management system. The different modules of it included: Performance objectives, talent and success, payroll and self-service, learning, and reward.

 

The times of Crises….

 

The main crisis was the tailor reports which managers were supposed to receive every week, but couldn’t generate it for 18 months. The root problem over here is said to be the lack of planning and less understanding of the own business processes. The company didn’t document the data for the last 6 years. So, as a result, it lost important institutional knowledge.

 

erp implementation project
enterprise software

The real cause of the Failure

 

The go-live of the platform mid-last year for Woolworths subsidiary Big W caused the retailer millions in lost sales after it was unable to submit orders to suppliers, leaving shelves empty. 

“It was one of the major reasons why we had availability issues in store. And there were points in time when we lost visibility on sales and profit performance in our business, and those were worrisome times because as retailers we need to know all the time where we’re at,” he said.

 

To avoid a failed ERP, companies need to have a full understanding of HCM solutions. and the staff needs extended training. 

 

 

Final Thoughts

 

Losing the tailored reports for individual stores was not just the lack of workforce planning. But it was also a result of poor understanding of the core business processes. The senior staff left the six-year transition process and then it couldn’t bake out in a new roll-out process. So, if you are also looking to invest in SAP solutions, make sure you have a workforce with business understanding. Moreover, get the experts to guide you through the implementation process. DFSM is helping organizations to rescue such failures by providing expert resue plans.

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