L'Oreal Supply Chain Analysis

This assignment delves into an in-depth analysis of the supply chain management strategies employed by the renowned cosmetics company, L'Oreal. It examines the effectiveness of their current order cycle system, inventory management, and the utilization of advanced technological systems like ERP and OM. The analysis highlights both the strengths and challenges faced by L'Oréal, including evolving customer needs and the complexities of the business environment. Furthermore, the assignment offers recommendations for implementing monitoring programs and campaigns to ensure continued success and growth in a competitive market.

Running head: Logistics management
Logistics management

Logistics management
Table of Contents
Introduction.................................................................................................................................................3
Interface.......................................................................................................................................................3
Production department interface..................................................................................................................4
Marketing department interface...................................................................................................................4
Accounting and finance department interface..............................................................................................4
Current order processing system..................................................................................................................5
Recommendation for current order cycle system.........................................................................................6
Current inventory management and recommendations................................................................................6
Conclusion...................................................................................................................................................7
References...................................................................................................................................................8
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Introduction
The report presents a brief overview of logistics management of the L’Oreal Company. It
explains the significance and function of the logistics management. In addition, the report also
describes the current order cycle system and current stock management of the company. It also
tells that how to interface and its core functional areas play an integral role in logistics
management.
L’Oreal S.A is a French cosmetics company which head office located in Clichy, France.
The company was founded on 30 July 1909 and its registered office is located in Paris. It is one
of the biggest cosmetic companies in the world. It deals in various cosmetics and beauty
products. It concentrates various activities in the field of cosmetics such as hair color, sun
protection, makeup, skin care, hair care and perfume. There are approx 89,300 people are
employed in the company. The Jean-Paul Agon is the CEO of the firm. The company is
expanding its business activities and operations day by day. The company provides various
cosmetics products to men and women globally. The total revenue of the company is approx
€25.837 billion. The company is listed in the stock market. The Proctor & Gamble Company and
the Estee Lauder Companies Inc. are the main competitors of the company. The firm is offering
the attractive and excellent quality of items and products to women and girls (Fernie & Sparks,
2014). It is one of the biggest cosmetic brands across the world. It is the French brand which
deals in various cosmetics and beauty products.
Interface
The interface is a method and technique that supports the association to collaborate,
converse and cooperate with various obstacles and barriers’ of the firm. The logistics
management is the core function of the every organization. The core functional areas of logistics
management are production department interface, marketing department interface and
accounting and finance department interface (Zhou,Chen, Li, Luo, Song, Duan & Yang, 2014).
The interface between logistics and important functional areas like marketing, accounting, and
finance and production interface are essential and mandatory for the company to meet the firm
long-term business goals and objectives. The harmonization and cooperation are mandatory to
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maximize the total value offered by the company. Further, the interface between the logistics and
core functional departments also play a significant role to ensure the optimum utilization of
resources. Further, the military theory of logistics management is very popular in the company.
The interface is an important and helpful technique for the L’Oreal Company. The three core
functional areas of logistics management of L’Oreal Company have been discussed below
(Christopher, 2016).
Production department interface
The production department of the L’Oreal should be done in such a way that the whole
actions and operations of the production and manufacture run efficiently and it helps the firm to
increase the revenue and productivity of the firm. The production of the company depends on the
cost and quality of the cosmetics products. The logistics management contributes in production
department interface. In this company, the managers, and top management check and evaluate
the quality and quantity of the products to gain the long-term goals and objectives of the
company. In this way, the company can attract more customers in the market. The production
department interface of this company checks and evaluates that how the firm maintains the
quantity and quality of the cosmetics products in the market. It is essential to production
department that it should understand the needs, expectations, and requirements of consumers
especially women’s. In this way, it will help to provide satisfaction to the customers in the
market (Mahon, Salvati, Bombelli, Lynch & Dawson, 2012).
Marketing department interface
There is a close relationship between logistics management and marketing department
interface. The marketing department interface includes the various areas such as product mix,
promotional activities, market research and pricing decisions. It will provide help to improve
packaging and better information flow. Further, it would be helpful for the distribution channels
and better customer service. In marketing department interface the company focuses on the four
key perspectives while edging with the market. These 4 perspectives include the intersections,
relabeling, unionist and traditionalist (Kose, Otrok & Prasad, 2012).
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Accounting and finance department interface
A strong logistics management helps to the company to provide the various economic
benefits in the market. The L’Oreal Company also takes the support of the logistics management
to achieve the outcomes and result of the company. The accounts and finance department check
and analyze the financial and accounting activities and transactions of the company. The various
costs and expenses are controlled by the accounts and finance department. This interface helps to
make an appropriate budget for purchasing and allocating of various resources. Moreover, the
finance and accounting department interface also beneficial to reduce the inventory cost,
production unit cost and packaging cost (Henderson & Ferreira, 2013).
Current order processing system
The order cycle refers to the moment between the placing of a single order and the
subsequent order. It is a particular time and instance period among the two orders that have been
sighted in order. The time period between placing and receiving of the order, it is called order
guide time. L’Oreal firm is using the excellent and effective order cycle methods and techniques
in order to gain growth and success in near future (Palmer, 2012).
After various researches, it has been evaluated that the current order dispensation system
of this company is unique and effective. It can be measured through the data and figures which
are calculated by the company that around 67% of United Kingdom girls and women use
L’Oreal cosmetics products. It has been analyzed that L’Oreal products and logistics business are
managed by the world-class qualified and effective consultant team. Therefore, it is improving
the effectiveness and efficiency of the current order processing method of the company.
However, it is also evaluated that the company takes various kind of information about the
product through Edicom’s CRP flow. The consultancy team of the L’Oreal Company is trying to
overcome all the issues and obstacles and it is making the current order processing system more
efficient and effective (Ashraf, Ashraf, Azhar & Anam, 2015).
It has been analyzed that the company uses order management software that helps and
supports to the company for providing accurate and correct order facts and information in a
single place that is available for every sales worker all over the firm. The use of this order cycle
method helps and guides the association in such a way to decrease the cost and time. Further, this
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system also helps to provide customer satisfaction at all levels of customers in the market
(Duflot, 2014).
Recommendation for current order cycle system
Although the current order processing method of the L’Oreal is excellent and efficient
but in today’s universal and competitive business and trade environment, it is necessary for the
firm to arrange proper review and monitoring to maintain and manage its efficiency and
effectiveness at all level in the market (Scott, Lundgren & Thompson, 2011). It is recommended
that the L’Oreal Company must manage and control changes in the current order processing
method according to changes in the technology and environment to confirm its sustainable
growth and success. Further, the association should properly update its order management
application and software to provide better services to its customers. It is also suggested that the
company should effectively and efficiently integrate the order administration function into the
order process to resolve various barriers associated with delivery time and speed. In addition, the
firm should provide its product at reasonable prices so that middle and lower category customers
can also purchase the products of the company (Šírová, 2015).
Current inventory management and recommendations
Inventory management is the important function of the company to gain the growth and
success of the market. It has been evaluated that after normalized and regulated stock supply
processes and wrapping in Europe, a supply chain cockpit founded by the association which
believes the targets and association KPIs. The cockpit is interconnected with manufacture
development information across 13 European plants. Further, the stock management and
appearance of the cockpit is also expanded by connecting it to above 100 dealers with the help of
web portal and straight exchange data from the Enterprise resource planning system of the
dealers. The supply chain cockpit is important and excellent to manage and control the stock of
the company across the world. It also pursues a method and strategy to maintain one month stock
in extra at the CFA level in the month beginning (Strydom, 2011). It also keeps one month
inventory in the warehouse. This approach increases and enhances the firm inventory holding
cost. In addition, Improper forecasting is a major issue in this company thus, it is mandatory for
the company to improve forecasts for reducing the firm inventory holding cost and it also
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increases the profit and revenue of the company. The use of advanced technologies like
CRP/VMI supports and guides to the company to optimize and utilize the resource and good
delivery at the point of sale. In this way, the firm maintains the adequate and proper inventory
level. The L’Oreal uses the supply chain index methodology which is used to estimate and
predict the supply chain in the company to manage the cost and time effectively (Kaynak,
Mockler & Dologite, 2014). The current inventory management of the company is very effective
and efficient. Further, the company has developed an integrated solution for industrial systems to
handle the order management, real-time material movement, and inventory management. The
implementation of ERP solutions and OM help to reduce the cost and risk related to the
inventory management.
Now it is suggested that the company must focus on aligning the needs and requirements
of logistics function, operation, inventory management and manufacturing function. Further, the
L’Oreal Company should focus on implementing and executing the real-time application which
is available 24*7 in order to ensure the efficiency and effectiveness of the inventory
management. It will also ensure the long-term growth, success, and survival of the company
(Corominas Sotero & García Santos, 2013).
Conclusion
Now it is concluded and analyzed that interface of logistics management is beneficial for
every organization in order to ensure the growth and success of the firm. It also ensures the
optimum utilization of resources and it also provides business growth and success. It is reducing
the production cost and enhances and provides customer satisfaction to people. Further, the
current order cycle system and inventory management are effective and efficient of the L’Oreal
Company. It has been evaluated that use of advanced technological systems, solutions, and
software such as ERP, OM, ISIS assist and support the managers to reduce the cost and manage
the risk of the firm. But at the same time, various key challenges and issues like changing
customer needs, requirements, speed, complex and difficult business nature. So it is
recommended that the company must implement some monitoring programs and campaigns to
ensure the success and growth of the company. In this way, the company can build and maintain
a strong position in the market to attract more men and women in the market.
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References
Ashraf, I., Ashraf, F., Azhar, N., & Anam, W. (2015). The Case Analysis of L’Oreal Corp. as
Market Leader. International Journal of Academic Research in Business and Social
Sciences, 5(8), 131-148.
Christopher, M. (2016). Logistics & supply chain management. Pearson UK.
Corominas Sotero, À., & García Santos, L. (2013). Qualitative and quantitative financial analysis
of L’ORÉAL.
Duflot, L. (2014). Collaboration and Information Sharing toward forecasting: A case study at
L’Oréal Sverige AB.
Fernie, J., & Sparks, L. (2014). Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Henderson, J., & Ferreira, F. (2013). The interface of language, vision, and action: Eye
movements and the visual world. Psychology Press.
Kaynak, E., Mockler, R., & Dologite, D. G. (2014). Multinational strategic management: an
integrative entrepreneurial context-specific process. Routledge.
Kose, M. A., Otrok, C., & Prasad, E. (2012). Global business cycles: convergence or
decoupling?. International Economic Review, 53(2), 511-538.
Mahon, E., Salvati, A., Bombelli, F. B., Lynch, I., & Dawson, K. A. (2012). Designing the
nanoparticle–biomolecule interface for “targeting and therapeutic delivery”. Journal of
Controlled Release, 161(2), 164-174.
Palmer, A. (2012). Introduction to marketing: theory and practice. Oxford University Press.
Scott, C., Lundgren, H., & Thompson, P. (2011). Guide to supply chain management. Springer
Science & Business Media.
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Šírová, V. (2015). Managing Marketing Report On L’oréal Group. CRIS-Bulletin of the Centre
for Research and Interdisciplinary Study, 2015(1), 31-46.
Strydom, J. W. (Ed.). (2011). Principles of business management. Oxford University Press.
Zhou, H., Chen, Q., Li, G., Luo, S., Song, T. B., Duan, H. S., ... & Yang, Y. (2014). Interface
engineering of highly efficient perovskite solar cells. Science, 345(6196), 542-546.
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