Case Studies

Consumer Packaged Goods: Standardization Unlocks Unrealized Benefits of ERP Technology Upgrade

Fortune 500 Non-durable Goods Manufacturer, Cosmetics
United States

Project Background

The technology vendor had promised, “You don’t need to map or improve business processes—this ERP upgrade has built-in, automated, order-to-cash processes. It also includes artificial intelligence (AI) that delivers built-in ‘lean management’ capabilities. Over time, it can learn and improve.” Management was easily persuaded. After all, their previous business process improvement and automation efforts had always fizzled. Maybe technology could succeed where their teams failed. And all of the executives’ peers were installing the ERP upgrade. So, the costly, large-scale technology upgrade implementation proceeded with virtually no review or preparation of existing business processes.

Over one year after deployment of the upgrade, there was still no significant process automation. Departmental costs were higher due to the deployment (over budget), and the upgrade delivered no measurable operational gains in cycle times, accuracy, line-item fill rates, etc. And now, due to a recent acquisition of a similar business, supply-chain management had to rapidly increase productivity to handle 25 percent more volume to accommodate the integration. No headcount increases were authorized, but no matter, the tight labor market wasn’t yielding affordable, qualified candidates. And customers were pressuring for smaller minimum order sizes, more flexibility in order terms, and lower minimum retail inventories.

The executive team needed to realize the promise of their recently upgraded, technology-enabled, order-to-cash process to handle the increased volume from the acquisition. They were also under pressure to make the most of their investment in that ERP upgrade.

Project Overview

Project Sponsor: Senior Vice President, Order Management

Client: Cosmetics Group

Implementation Results
  • Capacity improvement: Up 30%

  • Order fulfillment cycle time: Down 25%

  • Order errors: Down 70%

  • Break-even point: 6 mos.

  • ROI (12 month): 3x

Client Description, Project Scope, Objectives

The company is a global cosmetics maker. The Americas Group supports 80 brands across its four divisions. Five countries generate over 80 percent of the group’s revenue. The company’s five distribution centers served every major channel, from its own ecommerce sites through the largest retail chains and discount clubs.

The scope of The Lab’s engagement covered the luxury division (2,800 employees) where the latest acquisition was slated for integration. The objective was to integrate the acquired business with a 20- to 25-percent productivity increase while retaining its brand identity and customer service levels.  

Initiative Objectives:
  • Cycle-time reduction

  • Service improvements

  • Technology integration

  • ERP value improvement
Project Scope: 
  • 80 brands 
  • Diverse retail channels 
  • Customer service 
  • Credit and collections
  • Master data and inventory 

Overview: Phase I, Analysis and Design

The order-to-cash process standardization and transformation initiative began with an eight-week, Phase I analysis. It documented the end-to-end (E2E) business processes from order-to-cash, for both the acquirer and the acquiree. The Lab’s standardized process map and discovery templates enabled granular documentation of more than 85 percent of work activities (approximately two minutes each, or less), while only requiring one hour per week of any subject matter expert’s (SME’s) time.

The Lab’s Standardization Platform and data science models mined, compiled, and generated insights for the maps from internal client applications: event logs, volumes, and cost-center data. The Lab’s external industry data provided benchmark comparisons, best-practice comparisons, and automation use-case comparisons. Coordinating and reconciling the E2E maps for both companies with internal data and external benchmarks resulted in maps that could easily be directly reviewed, refined, and validated by thousands of the supply employees—even with the company’s far-flung locations across the Americas region.

This Phase I effort delivered a self-funding business case and work plan that launched a six-month, Phase II transformation project that integrated the acquisition. The improved performance was achieved with process standardization, robotic process automation (RPA), workflow automation (minimal), and more effective and extensive use of the previously installed ERP upgrade.

Assets & Deliverables: Phase I, Analysis and Design
  • All major customer-facing and internal end-to-end business processes documented at nano-scale detail
  • Regional, departmental variance cataloged and reconciled
  • Self-funding implementation work plan drafted
  • Hundreds of improvement opportunities documented and prioritized:
    • Process standardization (175+ opportunities)
    • Business Intelligence, Data-driven (40+ use cases)
    • Automation: RPA, workflow (100+ use cases)
    • AI & Machine Learning (20+ use cases)

Phase II: Standardization Implementation

The eight-month Phase II implementation effort was able to increase productivity, compress cycle times, improve customer service, and deliver cost reduction. Line-item order fill-rates improved by 30 percent. Errors fell by 70 percent. Order fulfillment cycle time was reduced by 25 percent. Avoidable contacts to the customer service center were cut by half.
The Lab implemented more than 175 selected standardization opportunities and automations alongside the client’s internal resources. The senior executive sponsor of the initiative adopted a decentralized approach. Improvement goals were established by area and/or by E2E business process, and the organizations involved could perform the work with any mix of resources they chose: internal resources, The Lab’s resources, or others.

Improvement Examples: Order-to-Cash Standardization and Intelligent Automation

The Lab implemented 175 standardization improvements to improve efficiency and increase service levels. Examples:

Simplified customer order options. Customers faced a virtually unlimited selection of ordering options: labeling, packaging, and shipping. But only 15 percent of these combinations generated 78 percent of the total volume. The Lab standardized these popular options and automated related ERP and CRM entry tasks using RPA bots. Over two-thirds of the remaining ordering options were eliminated. Simplification enabled faster delivery, improved customer experience, and major cost reduction/productivity gains.

Order error preemption. Order-to-cash cycle errors were poorly tracked. The results: Delayed shipments from vendors, returned goods from customers, and avoidable customer contact. All these squandered roughly 15 percent of hard-won operating margin. Within the first month, The Lab implemented automated error-rate metrics, traceable to the individual employee-level. These hard-data findings pinpointed opportunities to error-proof the most error-prone data fields. Next, RPA bots were added to help “coach” both customers and employees on how to both avoid and correct the most frequent errors in real time.

Dedicated service teams for high-value accounts. The majority of orders and product volumes were concentrated among a few large customers. But each order was processed as a stand-alone item, receiving the same attention and service level, irrespective of customer. The Lab implemented dedicated order-to-cash service teams for high-volume accounts. Initially, these teams were all-employee. But after several weeks, it was feasible to digitally automate over 40 percent of the work activities, using capabilities from both the client company and its external customers. Examples: ERP, CRM, planning apps, RPA, AI, and others.

The Lab Makes it Easy

Organization-friendly engagement design

At The Lab, we’ve spent three decades refining every aspect of our transformation engagement model. We’ve made it easy for clients—from the C-Suite to the front line—to understand and manage the initiative:

  • Minimal use of client time: One to two hours each week, maximum.
  • Measurable benefits: Typical 12-month ROI is 3x to 5x.
  • Pre-built templates and tools: Process maps, data models, bots, and more.
  • U.S.-based, remote delivery: Nothing is ever outsourced or offshored.

Designed to reduce risk, increase success

Since 1993, The Lab has led the industry in eliminating risk for our clients. Whether your engagement involves a handful of bots or wall-to-wall transformation, we make it easy to do business with us:

  • Fixed pricing and clearly defined scope
  • Early-out checkpoints and options
  • Money-back guarantees

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