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L'Oreal Supply Chain

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Joshua Chelli

on 26 November 2014

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Transcript of L'Oreal Supply Chain

Increasing volatility of Customer Demand
Increasing customer expectations
Increasing cost pressures in logistics/transportation
Changing technologies and Innovation
New social and environmental pressures
Global Supply Chain risks
Potential Problems
L'Oréal Supply Chain
By: Muhammad Ashraf, Ruxandra Barbu, Joshua Chelli, Lauren Iradi, Amina Khaliq

Eugene Schueller
: first hair dye formula
Founded in 1909
Société Française de Teintures Inoffensives pour Cheveux (Safe Hair Dye Company of France)
French cosmetics and beauty company
Number 1 in beauty industry (1984-2000)
Today: embrace diversity of beauty worldwide
Company Overview
Core Business Units

L'oreal Group

World's largest cosmetic company
Currently present in 130 countries with 77,400 employees worldwide
Mission statement
: Provide the best in cosmetics innovation to women and men around the world by meeting their infinite diversity of beauty needs and desires.

Company Overview Cont.
S.W.O.T. Analysis
Heavily dependent on third party retailers
less control over brand image, consumer trends, and advice to customers
Hair care has been less dynamic
Contributed to its drop in market share in 2011
Less dynamic in natural/organic
Very popular after the case when Loreal used banned chemicals in certain countries
Focus on niche segments like anti-aging and men's products
anti-aging facial care market is one of the fastest growing segments
already developing, but not in production
Natural/organic brands
Less proactive since revival of The Body Shop
Clarisonic in China?
Prospective market because of skin care preoccupation
Growing competition in emerging markets
Estee lauder and Coty both targeting China
Growing counterfeit goods market
Caused by internet usage, international supply chain, and global economic downturn
Deprive revenues and destroy brand image
Internal Analysis
Segmented Portfolio
Strong international brands and presence in all distribution channels
Focus on differentiation through robust research and development (R&D) efforts
Quality teams ensure that the standards that characterise the L’Oréal brand are complied with and achieved.
Advertising/Branding strategy
Emotional connection, education, empowerment, aspiration
Financial performance
Diversity of Beauty Worldwide
28 International Brands

"Each division is developing a specific vision for each distribution channel, to respond to the needs of all lifestyles. The collection of international brands has tremendous growth potential: each one of them captures beauty desires, establishing an ever closer relationship with consumers"

Ethisphere's 2013 World's Most Ethical Company
Diversity Grand Trophy Prix
100 Most Sustainable Corporations
Major Global Players in Beauty and Personal Care Market

Risk Management for Supply Chains is Critical with Global Operations

involves monitoring potential risks and ensuring compliance within each link of the supply chain

risk management requires being aware of the potential risks of going global and considering these risks while redesigning the supply chain

have a budget set aside for the sake of resiliency

Shift risk of a global supply chain to multiple outsourcing partners with expertise

extensive market research based on the unique needs of customers in each region

Recommendations &
Financial Impact
L'Oreal on Reducing Carbon Footprint
L'Oreal's Logistical Flow
Industrial Logistics = plant procurement
International Logistics = oversee the procurement flow management, and coordinate product launches
Sales Logistics = manage demand and supply the retail outlets
Financial Impact
L’Oréal found that Japan and China are tough markets for lipstick; women in these countries tend to prefer pastel colors and glossy textures. So the company developed Water Shine—a gloss-effect lipstick—specifically for these consumers.

Act Local
Think Global
Research and Innovation Centers
Collect information on local markets

All the potential problems mentioned would cause severe negative impacts on L'Oreal's Supply Chain
cost pressures, volatility of demand, increasing customer expectations, etc all could have negative repercussions on their variable costs
The recommendations could be costly in some cases but are worth it in the long run.
The long run benefits outweigh the short term costs
Full transcript