Coty gets a makeover for its purchasing processes

Cosmetics firm agrees deal to standardise control of growing procurement structure

Global beauty retailer Coty has signed a five-year managed services deal to standardise its purchasing processes.

The company, which makes beauty products for brands including Calvin Klein, Vivienne Westwood, Marc Jacobs, Jennifer Lopez and Nautica, is overhauling the way it buys $500m (£283m) worth of non-core goods and services.

‘We want to consolidate our total spending so that we can get the best possible pricing in the marketplace. We spend in the region of $500m every year, and of that $420m (£237m) is addressable spend,’ said Dave Berry, chief information officer at Coty.

The company’s recent acquisitions, including Unilever Cosmetics, which owns brands such as Calvin Klein and Cerruti, have left Coty without central purchasing for business services, travel, facilities management, telecoms, logistics, marketing and IT.

‘We’re in the midst of rolling out SAP around the world,’ said Berry. ‘To put in a central purchasing capability, complete with management reporting that would reflect the benchmarked savings we’re hoping to gain, was something we could not do all internally.’

The company will use IBM’s procure-to-pay hosted IT systems package, integrated into its own operational IT systems.

‘We are implementing the purchase-to-pay utility because it integrates with SAP enterprise-level systems using key interfaces for general ledger accounts, vendor files and other enterprise resource planning activities,’ said Berry.

The package includes commodity consultancy, global supplier purchasing contact and accounts payable processing centres, web-based requisitioning and automated ordering, and order status monitoring for timely supplier payment.

‘The benchmark here is if we save 10 per cent we’re doing well. Compounding that over five years amounts to some serious spending that we can use to help fund other activities,’ he said.

Installation in the US, UK and then the rest of Europe will begin imminently.