Cosmetic Company Implements Prophix | Encore
 

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LUSH Drives Productivity and Insight, Prepares Strategically for the Future

Prophix’s capabilities for demand planning have allowed us to get the right products to the right place at the right time, and to streamline the inventory flow for our business.

—Mike A. Coulter
LUSH North America

Client Profile

Operating in North America since 1996, LUSH is a world-renowned cosmetics company with more than 700 stores in 43 countries. LUSH produces and sells handmade products, including face masks, soaps, hand and body lotions, and hair treatments.

LUSH aims to develop the best natural products and bring them to market with a compelling social message. Mirroring their philosophy is the company’s approach to managing its business processes. With customer satisfaction top of mid, LUSH saw an opportunity in streamlining this demand forecasting to better service their customers and improve efficiencies.  The company wanted to forecast product demand by leveraging purchasing patterns for any feature date.  They also knew that keeping the store shelves’ stock at optimal levels would raise LUSH’s sales, increase customer satisfaction and decrease costs. 


Situation

Historically, LUSH’s store managers would prepare orders after analyzing the previous year’s sales data.  They reviewed the number bi-weekly throughout the year, and more frequently during the Christmas season.  Unfortunately, the inability to accurately forecast demand carried the increase risk of lost sales, lower margins and poor customer service.  The cumbersome process of filing out purchase order requests reduced the amount of time the store managers could spend on the shop floor. Despite their best efforts, last minute stock requests forced costly air shipments.  Without the ability to properly forecast, stores would have to liquidate their overstock during the post-season sell-off, resulting in lower margins.

Solution

The implementation approach involved an examination of LUSH’s business processes.  This process review highlighted areas for automation and streamlining. Next, a solution was delivered that would leverage Prophix’s flexible CPM solution to quickly yield meaningful results for LUSH.

Benefits

PROPHIX 10 allowed LUSH to reduce their costs of goods sold, increase their profit margins, and minimize the amount of the leftover stock at each store.  Using Prophix for demand planning provided LUSH with a forward-looking view of their organization by empowering them to measure, analyze and validate corporate strategic plans against actual results. According to Mike Coulter, IT Director of LUSH North America, with Prophix up and running by America ‘Black Friday’ shopping holiday.  LUSH’s “shift from ordering scared to ordering smart” would save the company $500,000 in not-lost inventory that Christmas season. 

Since implementing PROPHIX10, the stores have realized an average revenue growth 15% year-over-year and have reduced this days on hand inventory by more than 7 days. Although the effect is difficult to quantify, Mike Coulter believes that customer satisfaction has increased significantly, with Prophix directing “the right products to the right places at the right time”. The accuracy and speed with which the Prophix solution products information has provided more than just a fiscal return for LUSH.

Additionally, with less frequent orders and fewer shipments from distribution centres by land and air, the company has not only been able to reduce its costs and improve its employees’ productivity, but also enjoy a reduction in its carbon footprint. With a 90% end-user adoption rate country-wide and by generating a return for LUSH within 7 weeks of going live, even a store without an experienced manager was able to apply the forecast that the Prophix solution suggested and accept the purchase orders generated by the system.

Built 100% on Microsoft SQL Server 2008 R2 stack, PROPHIX 10 adds further advantages via the solutions compatibility with existing technologies, including Microsoft Office, Microsoft SharePoint and Microsoft Dynamics.  For LUSH, this means leveraging their existing software investment to increase user adoption rates, reduce training requirements, and offer peace of mind when the time to upgrade comes.

Business Solutions
  • PROPHIX 10
  • Microsoft SQL Server 2008 R2
Benefits
  • 15% YOY revenue increase per store
  • More face time with customers
  • $500,000 in savings on not-lost inventory over a 2 month period
  • Reduction in inventory days-on-hand by 7 days
  • Decrease in the frequency of shipments to stores, saving money
  • Increasing sales opportunities
  • Reduced carbon footprint

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