Dupry Beauty Case Study

DUPRY BEAUTY CASE
Introduction
Jenny MacIntyre sat at her desk, contemplating her situation. She had two open positions in her
Material Management group of 16 (one person was promoted and one left the company). However, her
boss, Rodney Benson, would not approve her open positions. He wanted Jenny to find a way to operate
with her current staff. Rodney told Jenny that he thought that the team did a lot of work manually that
could be done in more efficient way.
Jenny was the Manager of the Materials Management group for Dupry Beauty Incorporated for
the last 18 months. She was promoted to this role after completing the two-year SCLP (Supply Chain
Leadership Program) rotation program. Dupry Beauty wanted their management team to have a broad
functional experience. Jenny had a role as a Production Supervisor, Logistics Analyst, and Demand
Planner, and had done well in each position. Coming into the role, some of her material planners
wondered if she would be able to lead the team without direct experience. Although Jenny knew this to
be true, she hoped that her critical thinking skills would help her to be successful.
The Materials Management (MM) team ordered all goods for the entire company. After
Procurement chose a supplier, the relevant information was setup in the ERP system. Then, the system
would generate requirements for all needed materials. The MM team would convert the requirements
into Purchase Orders which would be transmitted to the suppliers for confirmation. After that, the MM
team would monitor inventory levels of all materials. They would track key inbound materials, monitor
for timely deliveries, and communicate with suppliers on any delivery issues or concern. Overall, the
material managers needed to be organized and have strong communication skills to perform their jobs.
During her weekly staff meeting, Jenny asked her material planning leads for ideas to save time
in their daily tasks. Miguel Jimenez, a junior planner, brought up an idea that he had thought of two
years ago. He stated that all Purchase Orders were released manually, and that planners reviewed each
requirement in detail before placing an order. With over 400,000 Purchase Orders (P.O.’s) placed every
year, saving one minute in reviewing each P.O. would save approximately 6,600 hours per year, or the
work of 3 full time employees. Jenny embraced the idea as one that could solve her staffing problem.
However, other members of her team shared their opinion that this review was needed, because the
purchase requirements was often incorrect and not to be trusted. More than one person said to her
that they could not always “trust the system.” In fact, several of the employees with longer tenure
remember a time before the ERP implementation, and some of them seem to prefer to do their job
manually based on their own experience.
About the Company
Dupry Beauty was founded in 1952 by Martha Dupry, a self-made woman who started as a
counter girl at Marshall Fields department store in Chicago, but who had a dream to start her own line
of cosmetics. Martha Dupry would always share her credo: “Our Customers Deserve the Best.” Decades
later, the company is selling makeup and skincare products in over 30 countries worldwide with an
annual revenue of $2 Billion. Dupry continues to grow at an average of 7% a year through organic
growth, innovation, and new markets. Dupry’s mission is to “help every woman reflect their inner
beauty.”
Dupry has 14,000 employees and its headquarters is in Chicago, Illinois. It has 5 manufacturing
facilities and 4 main distribution centers (see Exhibit 1). Dupry manages a portfolio of around 1,200
products, while developing and retiring 100-200 products every year. The company has different
market positions across four main brands:
 Dupry brand: named after its owner, this brand represents quality and traditional values.
Mothers often introduce this brand to their daughters as their first makeup and skincare brand.
This brand has experienced significant growth in countries like China where consumers aspire to
this brand’s allure.
 Beautiful You brand: this brand includes a full line of makeup and skincare products. Beautiful
You offers products at competitive prices and offers promotions to bring value to its customers.
New product introductions were key to this brand’s growth.
 TreeBlossom brand: this brand focuses on skincare exclusively. It is made with organic
ingredients and promotes beauty as part of a healthy, natural lifestyle. This brand was acquired
by Dupry 3 years ago, and its production is done by several third-party manufacturers.
 Zhuzh brand: artistry in makeup defines this brand. Vivid colors and new looks make this brand
relevant for a younger demographic. Lipstick, eyeshadow, and blush are the main product
categories for this brand, and new products were introduced regularly to bring excitement to
the stores. Social media influencers drive this brand and the need for continuous innovation.
Supply Chain Management at Dupry
Supply chain planning, scheduling and execution is processed through the company’s ERP
solution. Dupry follows a traditional integrated planning model, linking all supply chain activities to
support the customer needs reflected in the demand plan (See Exhibit 2)
 Demand plans are developed and input monthly by sales, marketing, and demand planning
teams for a rolling 18 months. This is supported by the statistical forecasting part of the system.
 Distribution planning is calculated daily by the systems for a rolling 12 months, including
forecast, customer orders, finished goods inventory, and distribution planning parameters.
Deployment is run daily to determine shipments based on product availability for the next 7
days.
 Master Production Scheduling is calculated weekly by the ERP system for a rolling 12 months,
based on the output requirements of distribution planning and production scheduling
parameters. Capacity planning may adjust schedules based on rough cut planning. Short-term
schedules are updated daily by the production scheduler for the next 4 weeks, based on
detailed material, labor and equipment availability. Production shop orders are generated once
a week for the upcoming week by Wednesday and were closed at the end of each shift’s
production run.
 Material Requirements planning is calculated weekly by the ERP systems for a rolling 12 months,
based on production requirements driven through the Bill of Materials. Inventory of semifinished goods and raw materials are input along with material planning parameters. Purchase
Orders are typically generated on Thursdays each week after the production team have
performed their capacity planning and short-term schedules.
 Inventory Management records are kept in the system and are updated in real time based on
the transactions in this area. Closed production orders generate finished goods inventory and
decrement input materials using a backflush process. Deployment orders decrement inventory
at a source point and created in-transit records. Receiving inventory increment inventory and
update deployment records (finished goods) or purchase orders (raw materials and finished
goods from third party manufacturers.) Inventory reconciliation is completed two times per
year. Safety stock was input for finished goods, work in process inventory, and raw materials as
needed.
Assessing the Situation
Jenny knew that the solution to her resource crunch was to have her team become more
efficient in their tasks. Moving from a manual review to automated purchase order generation seemed
like a great opportunity to save time. However, to make that change, she needed to make sure that the
material planning process was robust and without errors.
She thought about the supply chain processes within the company that would affect the
materials plan accuracy. From her time on the production side of the business, she knew some of the
planners at the Schaumburg site where she had worked. She called Bill Wilkin, production scheduler for
the site to talk about the Master Production Schedule. Bill told Jenny that the production schedules
seemed to be always changing. Forecasts were updated monthly that brought requirements up or down
significantly. Customer orders created smaller adjustments but they came in every day. As far as his
process went, he would review the production requirements weekly. He reviewed the long-term
capacity and made changes where there was a constraint. He would then work on the short-term
schedule and sequence the Master Production Schedule at the SKU and daily level for the next 4 weeks.
After that, his production control planner would plan out the next week’s schedule by shifting and
releasing production orders by Friday.
Jenny understood the long term changes; she did not expect the plan to be static over a long
period. Part of her team’s standard process was to review exceptions if the long term material needs
changed. She asked Bill if that 4 week plan was reliable. He told her that he believed it was accurate,
although he did not have any data to confirm it. Bill said that sometimes the production team might not
make anything on the schedule if there was a machine breakdown, quality issue or something similar.
And in some cases, the operators might make more than planned if things were ‘humming on the line.’
Jenny left the meeting with a good understanding, but wondered how to quantify what she heard. She
also wondered if the same practices were happening at the other manufacturing sites.
With an initial view on the production input to Materials Planning, Jenny started to think about
the other data that was part of her team’s process. She went to see Supriya Patel, the master data
analyst in charge of her area. Jenny and Supriya started with the company around the same time and
went through new employee orientation together. Supriya explained the the Bill of Materials (BOM)
were develop by Product Development and sent over to her team for input. Changes to the BOM were
driven by Marketing, Sourcing, but ultimately funneled into a Change Request form that was approved
and sent by Product Development. Supriya thought that the processes were robust, but did hear of
cases where Production complained that the BOMs were not accurate. She also told Jenny that
inventory accuracy was sometimes a problem, but her team was not responsible for that transactional
data. Jenny asked who was responsible, but Supriya was not sure where to direct her.
There was also the question of new product introductions. Her team often complained that
those requirements changed dramatically over time. New products were critical to the company, with
some brands launching over 50 new products a year. She had heard the bill of materials were changed
as development sometimes went right up to the launch period. In business school, Jenny had learned
that a stage-gate process helped control changes for new product introductions, but Dupry did not have
anything like that. Currently, her team would double check any new launch material requirements,
calling several people to confirm before placing an order. Because they were essential to company
growth, errors in these material plans for launches would be painful to say the least. She wondered how
her team would manage this in the future.
Relevant Setups in the ERP System
One of the important tasks of Jenny’s project team is to review the relevant setups in Dupry’s
ERP system to enable and ensure the accurate and efficient purchase order generation process. Some
relevant ERP system setups aligned to the business processes described above are summarized in Exhibit
3, supplemented by screenshots in Exhibit 4. Note: SAP S/4HANA is used as a reference in this case.
SAP S/4HANA is SAP’s ERP for large enterprises. It is the successor of older versions, SAP R/3 and SAP
ERP, and is optimized for SAP’s in-memory database, SAP HANA.
Some of the primary benefits of maximizing the capabilities of the existing ERP system for procurementrelated activities include:
 Maximizing efficiency / minimizing cost of operations
 Reducing inventory loss through elimination of obsolete material
 Automation of the procurement and materials management activities
The Path Forward
Jenny needed to come up with a plan to make sure that her team’s purchase orders were
accurate. There were MPS accuracy and changes which were the main input. There was the Bill of
Materials that needed to be correct. Also, there were the inventory records, supplier master data and
more. She hoped that this project would be able to run down these variables. “Garbage In – Garbage
Out” was the motto they needed to follow.
She also wondered what it would take to convince her team, so that they would adopt this
time-saving process. If this project did not provide benefit, her team would be stretched too thin.
They were already close to a breaking point, and no new resources were coming to help them.
Jenny needed to kickoff this project quickly and get the support of her management. Jenny also
had to establish a team, including some of her staff as well as other functions. She would assign Miguel
to lead the process but needed to work with him to help work through the project details. Jenny knew
that they had to dig into the system and understand what needed to be checked for planning accuracy.
As she stared at her computer, she wondered what it would take to make this project successful.
Case Questions
Business questions
1. What are the supply chain processes that are involved in generating material requirements?
2. What are the data involved in generating material requirements?
a. What are the other data inputs involved?
b. What are the master data elements involved?
3. How can the Materials Management team assure that the material requirements truly reflect
the planned need?
4. Are there any situations where manual review of material requirements might be useful?
5. What kind of documentation or procedures should be put in place to ensure material
requirement accuracy?
6. How long might this project take? Which teams need to be involved?
ERP system questions
7. What are the configurations (configuration data and master data) in the ERP system that need
review and verification to ensure the purchase order quality?
8. What are the data and records (transaction data) in the ERP system that need review and
verification to ensure the purchase order quality?
Exhibit 1: Dupry Supply Chain Locations
Company Location Location Type Products Served Details
Schaumburg, Illinois
(US)
Manufacturing Makeup for all Brands Opened in 1955; includes
R&D prototyping and full
scale production
Freeport, Illinois Manufacturing Skincare for all brands
except TreeBlossom
Opened in 1957, includes
R&D prototyping and full
scale production
Suzhou, China Manufacturing Makeup and Skincare
for all Brands except
TreeBlossom
Opened in 1994, focusing on
high volume products for
sales in all regions
Utrecht, Netherlands Manufacturing Makeup and Skincare
for all brands except
TreeBlossom
Opened in 1980, focusing on
serving the European
market
Louisville, Kentucky Distribution
Center
Finished Products across
all brands
Serves Eastern United States
and Canada
Reno, Nevada Distribution
Center
Finished Products across
all brands
Serves Western United
States
St. Charles, Illinois Distribution
Center
Raw Materials only Supports Schaumburg and
Freeport facilities (1 day
lead time)
Utrecht, Netherlands Distribution
Center
Raw Materials and
Finished goods across all
brands
Supports manufacturing and
finished goods service for
European Markets
Suzhou, China Distribution
Center
Raw Materials and
Finished goods across all
brands
Supports manufacturing and
finished goods service for
Asian Markets
Exhibit 2: Supply Chain Process Flow
Exhibit 3: Review of Setups in the ERP System Essential for Automatic Purchase Order Generation
Task Description Exhibit
#
SAP
Overview /
Navigation
Basic SAP navigation, including the screens, menus, and buttons most
frequently used on the front page of the SAP GUI.
4a
Review
Supplier Data
Suppliers are established in both accounting and purchasing. The supplier
master record requires three views – general, accounting, and purchasing
in order to be active. Supplier data can be maintained centrally meaning
that all views are generated concurrently or responsibility can be
distributed to accounting and purchasing for creating and maintaining
their respective views.
4b
Review
Material
Data
Material master enables the company to store all the information about a
particular material (or product). The material master data is uniquely
identified by a material number which can be internal or external. Internal
numbers are automatically generated by SAP system while external
numbers can be explicitly chosen by users.
Users can choose the views that apply effectively to the materials when
review the setups related to the material.
4c1 &
4c2
Review Bill of
materials
A bill of material (BOM) describes the different components that together
create a product. For example- A computer is a product. It is a
combination of CPU, Keyboard, Monitor, Mouse etc. The bill of material
contains the item number of each component, quantity required in the
manufacture of a product and the unit of measure of the item.
4d
Review
Purchasing
Information
Record
Purchasing info record stores information on material and vendor,
supplying that material. For example, a vendor’s current price of a
particular material is stored in info record. Purchase info record can be
maintained at the plant level or at the purchasing organization level.
4e
Review the
Setups for
Automatic
Purchase
Order
Generation
With the accurate supplier data, material data and BOM, the ERP system
can enable automatic generation of Purchase Orders from the Purchase
Requisitions created in the system (manually or through MRP) for
different manufacturing sites, without manual intervention, and at regular
intervals of time with predetermined master data set up and with a
predefined job schedule to run at regular intervals of time.
In order to “automatically” create an accurate purchase order from a
Purchase Requisition in SAP, the following steps must be carefully
reviewed as prerequisites to the purchase order automatic creation:
1. Material Master (Purchasing View) must be accessed and
“Automatic PO” box checked or Vendor Master (Purchasing View)
must be accessed and “Automatic PO” box checked
2. Review/Change replenishment strategies and lot-sizing that will
impact the PO quantity
3. Maintain Source list for the vendor and material
4. Maintain the Purchasing Information Record for the material and
vendor
4f
Prerequisite for Material Master data – The material data must be
available and accurate in the system (per the above task on “review
material data”) AND “Autom PO” must be checked in the “Purchasing”
view.
Replenishment Strategies and Lot-sizing that will affect the PO quantity –
Replenishment strategies can be setup via the MRP type on the material
master’s MRP1 screen. In combination with lot sizing, various safety
stocks, lead times and other indicators, the replenishment strategy is
defined.
4f1
Prerequisite for Vendor Master data – The vendor data must be available
and accurate in the system (per the above step on “review supplier data”)
for the company code of the plant by which the PO will be created AND
“Autom PO” must be checked in the “Purchasing” view.
4f2
Maintain source list – It is a List created in the system under a plant for a
material which links to possible vendors for the material supply.
Furthermore, the source list will have validity and a vendor can be fixed in
the system for supply.
4f3
Purchase info record in SAP – A valid Info record must exist in the system.
Info Record is a record created in the system for a vendor and material for
the purchase Organization and Plant through which the PO is going to be
created. This can be reviewed and maintained using the Transaction code:
ME12.
4f4
Create a purchase requisition – A purchase requisition is a request or
instruction to Purchasing to procure a certain quantity of a material or a
service so that it is available at a certain point in time. Given that we have
set ourselves up for automatic purchase orders, if MRP run is made
scheduled to run at regular intervals of time for one or several
manufacturing sites, the Purchase Requisitions will get created
automatically. Assigned Purchase Requisitions will need to get processed
to convert into Purchase Orders. The run of the Transaction ME59N
(Automatic Creation of Purchase Orders from Purchase Requisitions) for
the required input criteria will convert the able Purchase Requisitions into
Purchase Orders automaticity without any manual intervention. In this
step if the ME59N transaction is scheduled to run at regular intervals of
time for the pre-defined input criteria, without any Manual intervention,
Purchase Orders will get created automatically.
4f5
Exhibit 4a: SAP S/4 HANA Overview/Navigation (Easy Access Desktop)
Note: Transaction codes, or “T” codes, act as short-cut keys to access requested transactions as opposed
to navigating the tree structure. T-codes, which are 4-digits, can be entered in the System Navigation
field to immediately access the transaction window.
Exhibit 4b: Review Supplier Data (Display Supplier)
Menu Path: Logistics ► Materials Management ► Purchasing ► Master Data ► Vendor ► Central ►
Display
Exhibit 4c1 & 4c2: Review Material Data (Display Material)
Menu Path: Logistics ► Materials Management ► Material Master ► Material ► Display ► Display
Current

Exhibit 4d: Review Bill of Material – BOM (Display BOM)
Menu path: Logistics ► Production ► Master Data ► Bills of Material ► Bill of Material ► Material
BOM ► Display
Exhibit 4e: Display Purchase Information Record
Menu Path: Logistics ► Material Management ► Purchasing ► Master Data ► Info Record ► Display
Exhibit 4f1 through 4f5: Automatic Purchase Order Creation Based on MRP Purchase Requisitions
Exhibit 4f1: Prerequisite for Material Master data (includes: Replenishment Strategies and Lot-sizing
that will affect the PO quantity)
Menu Path: Logistics ► Materials Management ► Material Master ► Material ► Display ► Display
Current

Exhibit 4f2: Prerequisite for Vendor Master data
Menu Path: Logistics ► Materials Management ► Purchasing ► Master Data ► Vendor ► Central ►
Change
Selected when a purchase
order to this vendor can be
automatically generated
Exhibit 4f3: Maintain Source List
Menu Path: Logistics ► Materials Management ► Purchasing ► Master Data ► Source List ►
Maintain
Exhibit 4f4: Prerequisite for Purchasing Information Record (Info Record)
Menu Path: Logistics ► Material Management ► Purchasing ► Master data ► Info records ► Change
Exhibit 4f5: Purchase Requisition
Menu Path: Logistics ► Materials Management ► Purchasing ► Purchase Requisition ► Create This
will produce the following screen.