Logistic Management of L'Oreal: Interface, Order Cycle, and Inventory Management

This report discusses the logistic management of L'Oreal, including the interface between core functional areas, the current order processing system, and inventory management. It also provides recommendations for improving the current system.

[Purchasing in logistics and supply chain management]

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Contents
Introduction...................................................................................................................2
Interface........................................................................................................................2
Production department interface..................................................................................3
Marketing department interface....................................................................................3
Accounting and Finance Department interface............................................................3
The current order processing system...........................................................................4
Recommendation for current order cycle system.........................................................4
Current inventory management and Recommendation...............................................5
Conclusion....................................................................................................................6
References...................................................................................................................7

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Introduction
This report is developed to discuss the brief introduction of the L’Oreal
Company Logistic management. This report contains detail functions and
significance of the logistic management. Moreover, this report also includes a detail
description of the current stock management and current order cycle system of the
company. The report also includes the different interface and core functional areas of
logistics management.
L’Oreal S.A is a France based Cosmetics company its head office is located
in Clichy, France. On 30th July 1909, Eugene Schueller founded the company and at
that time, the register office of the company was located in Paris. L’Oreal is the
world’s most famous and prestigious cosmetics company (Loreal, 2018a). The
company deals in various types of beauty and hair products such as skin care
products, hair care products, perfumes, sun protection, hair colour and many more.
Jean-Paul Agon is the present CEO of the company and the company is providing
approx. 89300 people employment opportunity (Loreal, 2018b). The strategy of the
company is continuous expansion and with that strategy, the company is expanding
its operations and business activities every day. The Approx. total revenue of the
company is € 25.837 billion (Loreal, 2018c). The Shares of the company is listed on
the stock market. The main objective of the company is they want to provide or offer
attractive and good quality beauty and hair products for the females. The main
Competitors of the company are Estee Lauder Companies Inc. and Proctor and
Gamble Company both are both companies are dealing in Beauty products for
females.
Interface
The interface is the technique that is used by the company to collaborate,
converse, and cooperate with the various barriers and obstacles faced by them. The
core function for every organisation is logistics management and the accounting and
finance department interface, marketing department interface and production
department interface are the core functional areas of logistics management
(Henderson & Ferreira, 2013). To develop an interface between the logistics and
essential functional areas like production, marketing, accounting and finance is very
important and mandatory for the company it will help them in meeting firm’s long-
term business objectives and goals. The cooperation and harmonization are the
essential tools that will help the company in maximizing its total value. The interface
between the core functional department and logistics also play important role in
managing the optimum utilization of resources. In the company, the military theory of
logistics management is very famous. For L’Oreal Company the interface technique
is very helpful and important (Loreal, 2018c). The three main functional areas of the
logistic management of L’Oreal Company have been discussed below.

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Production department interface
The production of the L’Oreal Company is done in such a manner that with
the help of which they can manage the operations of the manufacture and production
units effectively and will increase the revenue of the company. L’Oreal is responsible
for controlling the manufacture of its products. The company has chosen a largely
integrated industrial model for production, the company not only guarantee the
overall quality of the products but it also complied with environmental, ethical and
corporate principles (Annual Report Loreal, 2017). The interface between the
production department and logistics management contributes to the success of the
company. During the production, department interface the top management and
managers evaluate and check the quality and quantity of the products to attain
standard products. The company knows the importance of the quality of the product
if the company produce the quality products more customers will get attracted to the
product. The production department should understand the requirement, needs and
expectation of the customers from the product. The product is the main and
essential part of the logistics management and if products of the company are not
good then the complete logistic management process will get fail (Kose, Otrok &
Prasad, 2012). To make the process successful the top management of the
company keep their full control over the production process.
Marketing department interface
There is a very close relationship between the marketing department and
logistics management. To interface between the marketing department and the
logistics management includes various areas such as pricing decision, marketing
research, promotional activities and product mix (Jiles, 2014). The interface will help
the company in improving the better flow of income and packaging. Moreover, the
marketing department interface is helpful for the better customer care service and for
distribution channels. The company’s marketing department interface provides its
emphases on the four key perspectives while edging with the market. The four
perspectives are unionist, relabeling, traditionalist and intersections.
Accounting and Finance Department interface
The logistics management is a very useful tool for the company because its
help them in getting various economic benefits. The L’Oreal also uses logistic
management to achieve its objectives and desired results. The accounts and finance
department of the company analyse and check the accounting activities and financial
transactions of the company, in addition, the expenses and cost related to the
product and activities of the company are also controlled by the department (Wang,
et.al. 2015). The interface among the logistics and accounting and finance
department will help the company in developing an appropriate budget for
purchasing and allocation of various resources. The accounting and finance
interface also helpful in reducing packaging cost, production cost and inventory cost.

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The current order processing system
The order cycle refers to the time period between the placement of one order
and the another other. It is a gap between the placements of two orders. The gap or
times period that is involved in the placing of two orders are called order lead-time
(Hong & Doz, 2013). The company is using the effective and excellent techniques
and methods of order cycle to gain a success and revenue in the near future.
After conducting various research, it is been evaluated that the present order
dispensation system of the company is very effective and unique. The efficiency of
the system can be measured with the help of figures and data that are provided by
the company in their annual reports, in Singapore, around 48% of females are using
products of the company whether they are using beauty product or they are using
hair products (Annual Report Loreal, 2017). It has been analysed that the world-
class qualified and effective consultant team members are managing L’Oreal
products and logistics business. After the evolution of the current order processing
time, the team make out the improvements. In addition, it is been observed that
L’Oreal is taking various different types of information about the company’s products
through Edicom’s CRP flow (Annual Report Loreal, 2017). To make the present
order processing system of the company more effective and efficient the consultancy
team of the company is trying hard to overcome the problems, issues and obstacles
phased by them during the process.
It is been analysed that L’Oreal company is using order management software
for managing their orders. The order management software of the company helps
the company and provides support to the production, marketing and accounts
departments to have correct and accurate information and facts about the products
manufactured in the company (Hackley & Hackley, 2015). The order management
software of the company provides guidance and help to the employees in managing
the time and cost of the products. The software also helps the company in providing
satisfaction to the customers by reducing the price of the product.
Recommendation for current order cycle system
It is been stated in the above paragraphs that the order cycle or order
processing methods that are used by the L’Oreal are very efficient and effective but it
is also true that in present market conditions the competition is increased. It became
more important for the company to bring new and effective changes in the working
process of the company to get an edge over its competitors. The company should
conduct a proper review and monitoring to manage and maintain the effectiveness
and efficiency of the product. It is been recommended to the company that they
should bring new changes in the order processing method and keep their full control
on the changes they have made (Lee & Kashmanian, 2013). The company can
make changes according to the current changes in the technology, information
system, production process or environment that will help the company in managing
the sustainable growth. Further, it is been recommended to the company that they

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should update their software’s and other application in time to offer a better service
to the customers. It is also recommended to the company that they should integrate
the order administration functions into the order process efficiently and effectively
that will help the company in managing issues linked with the delivery time and cost.
To increase the amount of revenue the company should sell its products at
reasonable prices.
Current inventory management and Recommendation
Inventory management is the most important function for every company and
for L’Oreal also inventory management considered to be an important function.
Inventory management will help the company in gaining market share and growth. It
is been evaluated that the wrapping and normalised and regulated stock supply take
place in Europe. Supply chain of the company founded by the association by using
the KPIs. The supply chain of the company is connected with the with the
manufacturer development information system across 13 European factories (Annual
Report Loreal, 2017). With the help of the direct exchange, data with the help of
Enterprise resource planning system and web portal the company has expanded the
supply chain reach and the stock management of the company to connect around
100 dealers (Annual Report Loreal, 2017). The supply chain of the company is very
important and essential to managing the stock of the company available across the
world. The company also using various strategies and methods that are helpful in
managing one-month extra stock at the beginning of the month at the CFA level. The
storage capacity of the company is really good the company can keep one-month
addition stock at their warehouse. This process is increasing the inventory
management cost of the company. The company is using the Supply chain index
methodology to predict or estimate the amount of product to be manufactured for a
particular time.
The present inventory management system of the company is efficient and
effective, in their system the company has developed the integrated solution to help
the company in inventory management process, real-time material movement and
order handling the cost. The ERP system of the company and OM help the company
in reducing the risk and cost related to the inventory management. It is been
suggested to the company that they should focus on the aligning the requirements
and needs of the manufacturing functions, inventory management, operations and
logistic functions (Ashraf, Ashraf, Azhar & Anam, 2015). In the inventory
management system the forecasting about the product, arise as a big issue, the
company need to improve their methods of forecasting to reduce the cost. The
company can use various advanced technologies like CRP/VMI support that will help
them in managing their resources and maintaining the delivery time (Hong & Doz,
2013). With this, the company can maintain the proper and adequate inventory
level. It has become important for the company to implement the real-time
management system which is available 24*7 in order to ensure the effectiveness and

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efficiency of the inventory management. The system will ensure the survival,
success and long-term growth of the company.
Conclusion
To conclude, it is been evaluate that to ensuring the success and growth and
to provide various benefits the companies are using interface in there logistics
management. The interface also helps the company in growing their business and in
optimum utilisation of resources. It helps the company in reducing the production
cost to provide maximum customers satisfaction. The present inventory
management system and order cycle are working very effectively for the company. it
has been analysed that the company is using various software’s and advanced
technologies such as ISIS, OM, and ERP these are providing support to the
company in managing risk and reducing cost. However, the company is following all
the technique but still facing issues such as new updates in the system, continuous
change in technology, changing demand and needs of customers. To reduce the
effect of the problems and changes it is been recommended to the company that
they should include some monitoring programs to ensure the success.

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References
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finance.com/en/annual-report-2017/LOreal_Rapport_Annuel_2017.pdf
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
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Hackley, C., & Hackley, R. A. (2015). Marketing and the cultural production of
celebrity in the era of media convergence. Journal of marketing
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Henderson, J., & Ferreira, F. (2013). The interface of language, vision, and action:
Eye movements and the visual world. Psychology Press.
Hong, H. J., & Doz, Y. (2013). L’Oreal masters multiculturalism. Harvard Business
Review, 91(6), 114-118.
Jiles, L. (2014). Management accounting career readiness: Shaping your
curriculum. Journal of Strategic Finance, 96(2), 38.
Kose, M. A., Otrok, C., & Prasad, E. (2012). Global business cycles: convergence or
decoupling?. International Economic Review, 53(2), 511-538.
Lee, T., & Kashmanian, R. M. (2013). Supply Chain Sustainability: Compliance‐and
Performance‐Based Tools. Environmental Quality Management, 22(4), 1-23.
Loreal. (2018a). Our Activities. Retrieved from: https://www.loreal.com/our-activities
Loreal. (2018b). Who we are. Retrieved from: https://www.loreal.com/who-we-are
Loreal. (2018c).Publications. Retrieved from: https://www.loreal.com/publications
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