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ERP Implementation Failure at Revlon

ERP Implementation Failure at Revlon
Case Code: ITSY116
Case Length: 13 Pages
Period: -
Pub Date: 2020
Teaching Note: Available
Price: Rs.400
Organization : Revlon, Inc.
Industry :Cosmetics & Toiletries
Countries : United States
Themes: Enterprise Resource Planning/ Management of Information Systems / ERP Failure/Change & Risk Management in ERP implementation
ERP Implementation Failure at Revlon
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

This case is about the failure of ERP implementation at global cosmetics giant Revlon Inc (Revlon) and the impact this had on the company’s business. In early February2018, Revlon rolled out a new ERP SAPS/4HANA for a large part of its North American business to support new customer support technologies and improve performance. However, the company faced issues during the ERP changeover that caused its Oxford manufacturing facility to experience service level disruptions and impacted its ability to manufacture certain quantities of finished goods and fulfil shipments to several large retail customers in the US. The company cited lack of design and identified material weakness in its internal control over financial reporting due to the implementation of the new ERP system.

Revlon’s ERP system failed after it went live in 2018, resulting in a loss of sales, a dip in stock price, and investor lawsuits. Revlon implemented a robust service recovery plan and resolved the service level disruptions resulting from failure of the ERP. Though the company took several steps to remediate material weakness in its internal controls, it remained to be seen whether it could prevent such ERP related problems from recurring in the future. What could Revlon have done to understand and mitigate the inherent ERP implementation risks and ensure that its go-live ERP did not affect its operations? Going forward, how should Revlon manage ERP implementation concerns to reduce disruption of operations?

Issues

The case is structured to achieve the following teaching objectives:

  • Understand the importance of ERP in business, and the risks associated with it.
  • Examine the factors that lead to the success of ERP systems in an organization.
  • Understand the reasons behind ERP implementation failures, and the strategic impact of ERP failures.
  • Identify the steps Revlon should take to mitigate its exposure to ERP failure risks and related damages in the future.
  • Identify the lessons companies can learn from Revlon’s ERP implementation failure.

Contents

Keywords

Enterprise Resource Planning; ERP Implementation Failure; Information Technology and System; SAP Implementation Failure; ERP Implementation Risk; Change and Risk Management; Phased ERP implementation; SAPS/4HANA; Failure Mode and Effect Analysis; Critical Failure Factors in ERP Implementation

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