Global cosmetics brand Estee Lauder will finish a seven year-long project to implement a single SAP Supplier Managed Inventory (SMI) across 38 different countries next month, the company revealed.
Estee Lauder, which has 40,000 employees and turned over US$10.2 billion in revenue last year, needed to cut down transaction costs, leverage the business' investment in its SAP ERP Central Component (ECC) and roll out standardised, user-friendly systems.
By July, the company will have replaced 50 legacy order processing systems across all its global markets, and will have merged its order processes onto one console - an SAP Sales Proposal Manager (SPM) that has eliminated the "data silos" across the portfolio.
SPM is a business-centric user interface that customer service representatives can log into to manage transactions. It is installed and managed on top of the Estee Lauder group’s ECC.
“Before, our data went into a black box. It went into very technical solutions that nobody except for IT could manage. We had data all over the world but not in a useful format and the person managing the order management cycle didn’t have visibility,” Paul Keraga, director of order to cash solutions at Estee Lauder, told the SAP SAPPHIRE Now conference in Florida last week.
“We were working with different levels of sophistication with systems in different places. Germany had two ERP systems, Asia was working on spreadsheets - everyone had a different method. We had 38 countries, with two or three different methods per country.”
It was crucial for Estee Lauder to implement a global process for managing sale proposals. If there is limited supply following a large order, the Sales Order Management department will receive proposal orders. These orders are received, or created, through a variety of methods including Electronic Data Interfaces (EDI), manual creation or system generation after being sent from customers, consumers, partners or employees.
Complex rules need to be applied to the order data to ensure demand is always met despite limited supply. Estee Lauder needed to split or combine, validate, edit and transform sales data before completing the transaction. The complicated process was previously in the hands of IT, not the business, and further, every region’s order system worked differently.
Now, algorithms in Sales Proposal Manager (SPM) can generate sales data to split and process two orders if supply is low, but the end user (a customer or consumer) will only be aware of one single sales transaction.
In addition, all proposals have been set up with Estee Lauder’s automated rules, and the user only intervenes when there is an exception. For example, the SPM can predict problems by spotting accidental duplicates, and will put that order into a “sales review status” for someone to manually review, Keraga said.
Since deploying SPM, Keraga has seen a reduction in training as customer services representatives can easily use the interface. He said that rules that are applied across the varying global markets mean that transactions are processed quicker and problem solving time is reduced. Now, with a centralised system, reporting can be sent directly to Estee Lauder's SAP Business Intelligence tools to analyse customer data.
Improvement in sales and customer service
Keraga said that Estee Lauder's customer service has improved thanks to quick processing and improved communications with wholesale customers who regularly place orders. The SPM congregates emails so that numerous orders from department stores will be answered in just one email rather than tens or hundreds of separate ones, clogging inboxes.
The SPM has also improved sales, now that there are standardised rules set up to link inventory and availability. The system alerts users to customers who cannot complete an order, and have sometimes “thousands” left to spend due to low stock, suggesting similar products that customers can spend their money on, in the hope they will buy with Estee Lauder rather than taking their custom elsewhere.
Deciding on Sales Proposal Manager
Estee Lauder was torn between simply expanding the non-SAP satellite systems in each market, building logic in middleware or implementing various SAP user exits (routines that allow for the addition of customised programs without affecting the standard program and its features), but settled on the SAP SPM because it was the easiest to integrate with the company’s SAP ECC core. Further, its high standardisation capabilities, scalability and flexibility made it optimal for global rollout.
Estee Lauder is one of many companies who are in the process of integrating once disparate global systems across their portfolio. Unilever, Warner Bros' television distribution and T Mobile North America recently announced SAP convergences in certain departments.Picture credit: Flickr JFXie