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A Project report On L’OREAL INDIA
Submitted to: Prof. Ravindra Baliga KJ Somaiya institute of management studies and research
Submitted by: Kirthana S. (10-06-05) Omprakash Kabdwal (10-06-07) Swati Singh (10-06-11)
Index
No. 1
Particulars
Page No.
Introduction
General Overview Of The Company
3
History
5
L’Oreal In India
6
Brands Of The Company
8
Ethics
9
2
Inbound Logistics
11
3
Material Management
13
4
Production
15
Manufacturing Units
15
Production Development Process
15
Research and Development
18
5
Outbound Logistics
19
6
Sources of Information
23
2
1. Introduction General Over View of the Company: For the past century, L’Oreal has pursued its adventure in the beauty industry to cement its position as the world’s leading Cosmetics Company. Above and beyond its financial success, however, L’Oreal’s track record reflects an endless quest:
A quest for innovation, begun a century ago by scientist and inventor Eugene Schuler, driven by tireless research and buoyed by a steadfast pioneering spirit;
A quest for excellence through increasingly safe, imaginative and effective products;
A quest for diversity and a range of cultures to meet the needs of men and women around the globe and make beauty products available to as many people as possible;
A quest for purpose, a cornerstone of the L’Oreal approach, combining economic growth, ethics, social and environmental responsibility;
A quest filled with ion, transcending borders in a bid to make the world more beautiful.
At L’Oreal, they have made cosmetics the focus of all our energy and know-how for nearly a century. We are fully committed to putting all our expertise and research resources to work for the well-being of men and women, in all their diversity, around the world. L’Oreal India Pvt. Ltd. engages in the distribution of L'Oreal SA cosmetics products for men and women. The company was founded in 1991 and is based in Mumbai, India. L’Oreal India Pvt. Ltd. operates as a subsidiary of L'Oreal SA.
Mission (Beauty for All) : At L’ORÉAL, they believe that everyone aspires to beauty. Our mission is to help men and women around the world realize that aspiration, and express their individual personalities to the full. This is what gives meaning and value to our business, and to the working lives of our employees.
Strategy (Universalisation): L’Oréal has chosen a unique strategy: Universalisation. It means globalisation that captures, understands and respects differences. Differences in desires, needs and traditions. To offer tailormade beauty, and meet the aspirations of consumers in every part of the world. L’Oréal is driven by this vision of the world. 3
Vision: Striving For Excellence : Perfection is our goal. We are determined to continue enhancing our brand portfolio with innovative products and to meet the most demanding standards of quality and product safety at all times. A ion For Adventure: Our expertise drives our ion for new discoveries and innovation in cosmetics. Each new achievement - each step forward - is in itself a new beginning. Enrichment Through Diversity: Understanding and valuing each individual is an essential part of our corporate culture. Our staff come from many different backgrounds and work together to offer a full range of products through varied distribution channels. Our goal is to serve the beauty and well-being of our consumers in all cultures throughout the world. Valuing Individual Talent: Just as we are dedicated to enhancing the well-being of our consumers, we also make it a priority to ensure that each employee has the opportunity to develop his or her potential through personal and professional growth. Leading Innovation In Beauty Research is as much a part of our business as marketing, sensitivity to consumer needs is as important as scientific rigor, and know-how and expertise are as essential as intuition. Building on our unrivalled experience and expertise, fundamental research is a specific focus of investment that drives creativity and contributes to developing the cosmetics of tomorrow.
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History:
From 1909 to 1956 First step: the model takes shape.
In 1909, young chemist and natural entrepreneur Eugene Schuler sets up the company that will later become L’Oreal. Everything begins with one of the first hair dyes, which he designs, produces and sells to hairdressers in Paris. The move forges the first link in the chain that is to become L’Oreal “DNA”: using research and innovation to enhance beauty.
From 1957 to 1983 L’Oreal on the road to greatness
These are the formative years of “Le Grand L’Oreal”. At the instigation of Chairman François Dalle, the Group starts to expand internationally. Acquisitions of strategic brands mark the beginning of a period of spectacular growth for the company. Emblematic products come into being. The company motto is “Savoir saisir ce qui commence” (seize new opportunities). From 1984 to 2000 Becoming number one in the beauty industry These twelve years are marked by a great period of growth for L’Oreal, mainly driven by the significant investments made by the group in the field of research. Alongside these efforts are strategic product launches that not only make history, but also succeed in strengthening the Group’s brand image. In 1988, François Dale’s successor, the research and development pioneer Charles Zviak, hands over the reins of the company to Lindsay Owen-Jones, a truly outstanding director. Under his management, the Group would completely change in scope to become the world leader in cosmetics through the worldwide presence of its brands and strategic acquisitions.
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From 2001 to present day
The diversity of beauty throughout the world There is no single type of beauty; it is a multiple-faceted quality framed by different ethnic origins, aspirations, and expectations that reflect the world’s intrinsic diversity. With a portfolio of powerful, international brands, L’Oreal enters the 21st century by embracing diversity in its global growth agenda. Headed since 2006 by Chairman Lindsay Owen-Jones, and Chief Executive Officer JeanPaul Agony, the Group continues to make new acquisitions to cover the world’s varied cosmetic needs, and to undertake new socially responsible initiatives in the interests of sustainable development for all.
L’Oreal in India: L’Oréal, the world’s leading beauty company has been present in India as a wholly owned subsidiary of L’Oréal S.A. since 1994. The company has positioned itself as a transformative beauty leader that upgrades the consumers’ beauty regimes with more sophisticated, safe, qualitative and efficacious innovations. L’Oreal India’s strong commitment to their 2020 road map includes a tangible assurance to pursue sustainable growth in parallel with sustainable development Today L’Oréal India is present in all distribution channels with 15 brands, available in mass market channels (L’Oréal Paris, Garnier, Maybelline New-York, NYX Professional Make Up); in hair and beauty salons (L’Oréal Professionnel, Matrix, Kérastase, Cheryl’s Cosmeceuticals); in selective distribution (Lancôme, Kiehl’s, Yves Saint Laurent, Giorgio Armani, Ralph Lauren, Diesel) and in pharmacies (Vichy, La Roche-Posay). L’Oréal India employs over 1,600 people across four regional offices, including at its two manufacturing facilities in Chakan (Pune) and in Baddi (Himachal Pradesh), its Research and Innovation facilities, and at the headquarters in Mumbai. "These new requirements have a profound impact on the way buildings are designed, the way production units are organized and on the installation layout. GHP zones are protected by airlocks to allow for a controlled atmosphere, and processing vessels are isolated in dedicated areas physically separated from the rest of the facility," said a spokesperson for L’Oreal. A strong Indian corporate citizen: Balancing our company’s success with our responsibility to society has always been the way we do business. L'Oréal India is fully involved with concrete and bold commitments specific to India and aligned to the government’s developmental priorities. Our focus in India is to be the best practice leader in women’s empowerment, skill development and environmental sustainability.
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The L’Oréal India Beautiful Beginnings programme was established in 2009 with the objective of creating livelihood opportunities for young women from disadvantaged sections of society by providing skill training in beauty & hair care. By 2020 we will intend to train 10000 underprivileged women. Thus far, 85% of our graduates have been placed successfully in the industry or have begun their own home grown beauty salon/services. The L'Oréal India initiated the For Young Women in Science scholarship in 2003. Scholarships worth `2.5 Lacs each are awarded to promising young women who want to pursue their graduation in a scientific field. 250 scholarships have been awarded to date. Since we set up operations in India in 1994, we have been focused on skill development and up skilling and train over 150000 hair dressers every year. L’Oreal India at glance: L’Oreal, world leader in cosmetics, has a modern and efficient growth model that is always looking to the future. 100 years of expertise in cosmetics 5 key areas of expertise: hair care, hair color, skincare, make-up & fragrances 34 global brands Products distributed in 140 countries € 25.84 billion consolidated sales in 2017 (1st quarter) €850 million in R&D investments 473 patents filed in 2016 89,300 employees worldwide
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Brands of the Company: 1. Consumer products High technology products at competitive prices distributed through mass-market retailing channels.
L’Oreal Paris
Maybelline
Garnier
2. Professional products Portfolio of brands that meet the requirements of hair salons and provide customers with a wide range of innovative products.
L’Oreal professional Kerastase Matrix
3. Luxury products Prestigious brands which offer customers products and service in stores, specialty stores and travel retail outlets. Lancome Ralph lauren Biotherm Giorgo Armani Diesel
department
4. Active cosmetics Dermo-cosmetic products sold in pharmacies and specialist retailers and advice from pharmacists and dermatologists.
ed by
Vichy La roche posay
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Ethics: At L’ORÉAL, we believe that everyone aspires to beauty. Our mission is to help men and women around the world realize that aspiration, and express their individual personalities to the full. This is what gives meaning and value to our business, and to the working lives of our employees. We are proud of our work. EXECUTIVE COMMITTEE JEAN-CHRISTOPHE LETELLIER, MANAGING DIRECTOR – L'ORÉAL INDIA Jean-Christophe Letellier ed L’Oréal India in 2013 as the Country Manager. Prior to taking on this role, Jean-Christophe has been ASEAN General Manager for Consumer Products Division. Jean-Christophe started his career in L’Oréal in 1994 in L’Oréal Thailand before embarking on a fast and successful marketing track in D , at LaScad and Garnier. In 2002 he became Marketing Director Garnier Maybelline for Europe and took his first general management role in Belgium as D GM. In 2008 Jean-Christophe was appointed Country Manager Indonesia. With great strategic insights, he developed a successful growth model for D, PPD and Luxe and together with his teams put Indonesia on the list of strategic countries for both divisions. MOHIT JAMES, DIRECTOR, HUMAN RESOURCES – L’ORÉAL INDIA Mohit James has over 18 years of work experience in areas of Human Resource Management, Strategy and Information Technology. Mohit’s professional responsibilities have taken him through various aspects of the Human Resource and Organizational Development areas within the Textiles, Software and Consumer Products Industries in companies such as VIP Industries, Kale Consultants, Arvind Mills. He has served in senior management positions including Head – Organization Development for a HR Consulting Firm, Vice President – Strategy & Marketing for a Banking Software Company. He is currently employed as Vice President – Human Resources for one of India’s market leading consumer products & Lifestyle Company. In the past he has been involved in and led organizational renewal and change initiatives successfully for Mid- sized enterprises. Mohit has undergraduate qualifications in Engineering and Economics and has a Masters in Personnel Management from Symbiosis Institute of Business Management. He has been a visiting faculty to many B-schools and has helped develop curriculum in specific area of Compensation and Benefits Management. Mohit has been trained in assessment of managerial competencies, Appreciative Inquiry, brands and work culture linkages, environment and quality management systems amongst other areas of HR and Organizational behaviour.
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ASEEM KAUSHIK, L'ORÉAL INDIA
DIRECTOR,
PROFESSIONAL
PRODUCTS
DIVISION –
Aseem Kaushik, Director, L’Oréal Professional Products Division heads the operations of brands - L’Oreal Professionnel, Matrix, Kérastase & Kéraskin in salons across India, Srilanka & Bangladesh. He has been working with L’Oréal for 18 years, first, as part of the startup field team for 8 years in the Consumer Products Division which includes brands like Garnier, L’Oréal Paris, Maybelline and then for the past 10 years in the Professional Products division which deals in L’Oréal Group’s B to B business exclusive to salons. He has also been responsible for the launch and setting up of Matrix, the accessible Brand of Professional hair products in the country. He has also been instrumental in conceiving & setting up of the Modern ‘L’Oréal Collaboration salon’ concept which brought about the professionalization & transformation in the Hairdressing industry in India. As a Business: Their strategy for leadership is based on continuous investment in rigorous scientific research and development. This enables Their brands to deliver products which are innovative, highly effective, practical and pleasant to use, and which are manufactured to the most demanding standards of quality and safety. they aim for excellence, and constantly challenge ourselves and our methods. We place great value on honesty and clarity: Their consumer advertising is based on proven performance and scientific data. They are committed to building strong and lasting relationships with our customers and their suppliers, founded on trust and mutual benefit. They do business with integrity: They respect the laws of the countries in which we operate and adhere to good corporate governance practices. They maintain high standards in ing and reporting, and the fight against corruption. They deliver long-term, sustained shareholder value by protecting and making the most effective use of company assets. As an Employer: They aim to make L’ORÉAL a great place in which to work. We know that our employees are our greatest assets. They are entitled to a safe and healthy working environment: one in which personal talent and merit are recognized, diversity is valued, privacy is respected, and the balance between professional and personal life is taken into . They believe in offering our employees a stimulating environment, exciting personal opportunities and a chance to make a difference. They encourage an atmosphere of openness, courage, generosity and respect, so that all our employees feel free to come forward with their questions, ideas and concerns. As a Responsible Corporate citizen: They play our part in creating a world of beauty and fairness. They are mindful of our impact on the natural environment, including biodiversity, and constantly seek to reduce it: They are determined to avoid compromising tomorrow for the sake of today. We make a positive contribution to the countries and communities in which we are present, and respect local cultures 10
and sensitivities. They are committed to the respect of human rights. They want to help end the exploitation of children in the workplace and the use of forced labor. They want an end to animal testing in our industry, and we contribute to the development and acceptance of alternative methods. They actively seek out and favor business partners who share their values and our ethical commitments.
2. Inbound Logistics It is widely accepted that managing inbound logistics is significantly more complex and challenging than outbound logistics. After all, typically, outbound shipping originates from a handful of production facilities and/or DCs and makes numerous, regularly scheduled stops to deliver product. Compare this to timing the inbound delivery of hundreds to thousands of different raw materials, originating from dozens to hundreds of suppliers located at far-flung global locations. It is plain to see, this is a much more complex puzzle to solve. Especially with regard to beauty supplies manufacturing, which is known for using some pretty exotic raw materials sourced from unlikely locales. Awapuhi from Hawaiian mountainsides, Jojoba from Sonoran deserts, and other botanicals, fragrances, emollients, emulsifiers and pigments from all over the globe are routinely used in producing modern cosmetics. Getting all these materials delivered in enough time to meet purchase orders is difficult enough before factoring in the limitations dictated by shifting fashion trends. When a lake is filled to the brim it looks pristine, calm even. But when the water level drops, rocks and other hidden anomalies begin to surface. This is how Ralph Folkes, assistant vice president of corporate transportation, L'Oreal USA, describes the decision to invest in a new transportation management system (TMS) in 2008, as a receding economy began to expose submerged rocks within L'Oreal's supply chain. The U.S. division of the world's most recognizable cosmetics brand was challenged with holding vendors compliant to inbound transportation requirements. After much due diligence, L'Oreal USA chose Elmwood Park, N.J.-based UltraShipTMS' flagship solution, UltraShipTMS, to help automate its routing guide and attain greater visibility. Folkes, who was formerly transportation head of the manufacturer's consumer products division, also recognized that business units within the company needed to work closer together and to pool purchasing leverage volume to create cost savings and service improvements. L'Oreal had a TMS in place to oversee outbound transport from distribution facilities to customers. But it needed to gain greater control over inbound raw material flow to its manufacturers. Vendors were specifying their own carriers, not L'Oreal's preferred carriers. So the company decided to revamp the process by beginning at the top. "This approach was critical to improving the flow of components and raw materials into our manufacturing facilities," explains Folkes. "By controlling this part of the supply chain, we could dictate transportation and inventory management, expand visibility, and plan ahead more accurately." Using UltraShipTMS, L'Oreal triggered a transformation that comprised three phases: 11
1. Compliance."We needed to convey appropriate transportation instructions to our suppliers," says Folkes. "The cost savings from simply holding vendors and suppliers more able have been significant." 2. Mode selection."Shipments weighing 20,000 pounds should move truckload, not LTL," Folkes says. "The system, not the supplier, now dictates mode." 3. Optimization."We have now given our manufacturers the tools to go back to suppliers and figure out how to ship to us more efficiently. We cleansed the supply chain by delivering more accurate lead times. This allows our suppliers to pool shipments, and we have freight ready to build full truckloads," Folkes explains. Given the way the market was moving, L'Oreal's TMS roll-out was timely, but also necessary. "We had no low-hanging fruit," says Folkes. "The fruit was already on the ground." The objective for companies is to leverage the TMS and make it a supply chain tool, "to integrate it with any warehouse or transportation management system in place, and connect the links in the chain," explains Nick Carretta, president of UltraShipTMS. The manufacturer has been able to increase inter-plant transportation efficiency between manufacturing locations and distribution centers, but it still uses separate transportation management systems to manage inbound and outbound. Moving forward, it will migrate toward a system that incorporates both. This way it can use inbound freight data to optimize outbound movements. "Once a complete TMS is in place, collaboration with carriers and customers is boundless," says Carretta. Reacting to variable demand and marrying marketing and logistics efforts requires a great deal of collaboration. Personal care product manufacturers can choose from a wealth of resources and strategies, but these four tools of the trade are especially important. 1. Vendor-managed inventory (VMI)—Employing a VMI strategy can help businesses reduce the risk of carrying too much inventory and respond better to shifts in demand patterns. For example, a manufacturing facility running 100,000 SKUs four months out carries a considerable amount of stock that may or may notsell. Charging suppliers with inventory management leans the pipeline and leaves product in its least value-added form farther back in the supply chain. Companies can leverage this flexibility to rationalize packaging requirements for different retail channels closer to demand or even source all inventory from a centralized stock point. 2. Inbound Logistics—In the personal care product supply chain, demand sense and respond is a competitive differentiator. Controlling inbound transportation and product flow at each pivot in the supply chain—from manufacturing plants to distribution facilities to retail stores—helps businesses pull inventory to demand. Capturing demand signals from the point of sale, then sharing this information with marketing, logistics, and service providers upstream in the supply chain, enhances visibility, grows collaboration, and increases flexibility and economy.
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3. Freight Consolidation—SKU variability and differing carton sizes, multi-channel business requirements, and varying transportation demands make freight consolidation a must for cosmetics companies. From locating inventory in centralized DCs to controlling inbound transportation and pooling shipments, manufacturers can improve asset utilization and freight spend. 4. Packaging—Packaging is a hot topic and an executable solution for the health and beauty industry. It's a means of conveying information and appeal to a consumer, and reducing material footprint has an impact on load optimization and transportation needs. Marketing and logistics each have a hand in engineering packaging requirements, which can increase communication and collaboration in countless other ways.
3. Material Management Raw Materials / Suppliers Manufacturing our products requires a wide range of raw materials that are blended in our formulas. L’Oreal directly partners with suppliers that specialize in various technical groups, such as:
Polymers Fats Natural products Perfumes Sunscreens Vitamins
Packaging / Suppliers For L’Oreal, it is essential to offer our clients innovative, environmentally friendly Packaging that promote our products. To do so, we collaborate with a broad rangeof suppliers involved in various technological fields, such as:
Plastic bottles and jars Glass bottles and jars Molded parts Plastic tubes Aluminum tubes Spray cans Distribution systems Labels
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Pop – promo / suppliers In order to promote their products and make them stand out in sales outlets, as well as to attract their consumer and clients, Loreal has developed display cases, promotional objects and accessories.The purchasers work as partners with a broad range of specialized suppliers that are capable of offering.
Permanent POS Promotional POS Printing Promotional items etc.
Equipment / suppliers With numerous production plants worldwide, L’Oreal collaborates with a board community of industrial equipment suppliers divided into three categories:
Manufacturing equipment: production skids, weighing equipment, washing equipment, etc.
Packaging machines: fillers, labelers, distributors, multi pack machines etc.
Utilities: compressors, boilers, cooling systems, paletting, fire safety, etc. Indirect purchasing / Suppliers The indirect purchases team, which covers a broad range of activities within L’Oreal, has a direct relationship with numerous suppliers. The Group has therefore split its general expense sheet into various purchasing categories, such as
Intellectual services Travel, relocation Meetings/events Building fees Temporary employment IT and Telecommunications Human resources Office and technical supplies Energy & fluids Maintenance & spare parts Personnel-related services Express transport Insurance Documentation 14
Outsourcing partnerships / Suppliers Alongside the internal production of these products, the Group collaborates with a broad range of subcontractor companies, such as:
Packaging or finishing finished products
Manufacturing specific finished products (soaps, pencils, cloths, etc.)
Logistics
4. Production Loreal Vision for production PRODUCING SUSTAINABLY By 2020, L’Oréal will have reduced the environmental footprint of its plants and distribution centers by 60%(1),through the reduction of CO2 emissions(2), water consumption and waste management Research and innovation L'Oréal’s Research & Innovation center in India is the group’s sixth hub globally, and includes a Product Development center in Mumbai and an Advanced Research Center in Bangalore. The centers cater to all three lines of business – hair, skin care and make-up. Manufacturing L'Oréal India operates two manufacturing plants located in Chakan, Pune and Baddi, Himachal Pradesh which cater to 90% of its requirements in India. Production Development Process: Safety Evaluation L’Oreal takes safety very seriously and, well before it was required by law, we had put in place a safety evaluation team to ensure the safety of L’Oreal products for both professionals and consumers. L’Oreal International Safety Evaluation Division uses a multi-disciplinary scientific approach to evaluate the safety of L’Oreal products, ensuring that L’Oreal commitment to product safety is upheld at every stage in the product’s life.
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This safety assurance procedure includes an assessment based on the latest medical and scientific research, rigorous safety evaluations of ingredients as well as finished products, examination of the effects of cumulative product use and ongoing safety monitoring once a product is on the market. Product safety studies are designed and monitored and their results interpreted and evaluated by scientists who are specially trained and experienced in safety evaluations. Step 1: Review of Available Safety Information on the Ingredients This is the first stage in a new product’s life when its composition is defined by their scientists and each formula is ed in a dossier. If it is a plant extract the scientists will examine its botanical origin. Each ingredient of the product is then evaluated. Once each ingredient, natural or synthetic, has been defined chemically and analytically, as the case may be, all available use and safety information on the ingredient is investigated. At this preliminary stage their scientists also take into the anticipated consumer use of the finished product. The final step in this first stage is to check the regulatory considerations for the market where the product will be launched and ensure that by including these ingredients we are complying with the local law regulating the use of them. The use of numerous cosmetic ingredients is strictly controlled in many countries of the world today. Step 2: Safety of the Ingredient in the Context of the Finished Product. Following this initial analysis, they consider in detail how a new ingredient will be used when incorporated into a finished product. To do this, they look at which part of the body this finished product will be applied. They analyze whether it will be only used on the face, or under the arms, or around the eyes. They check to see whether there is a possibility that the ingredient may be ingested (toothpaste or lipstick for example). They also establish whether one or more ingredients could be inhaled (aerosol, for example). In tandem with this evaluation, they look at how much of the skin surface will come into with the ingredient in question. Is the ingredient going to be used in a cream that is specific for the hands? Or will it be in a body lotion that may be used all over the body? Then they analyze how often the ingredient will be used in the context of the product. Will it be something that is applied every day? Or once a month? Or even several times a day? They also examine how much of the product and, therefore ingredient, is used each time. For this we have data gathered from across Western Europe which allows us to know in detail how much of L’Oreal cream, lipstick or mascara is used each day by L’Oreal customers. Finally, they anticipate all the possible mis-uses of a product (for instance, a shampoo, used to wash the whole body; a lipstick, used on the cheeks to add color) to ensure that the ingredient is safe for use beyond the original intended use of the product.
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Step 3: Approving Safe Concentrations of the Ingredients. Once they have collected all the necessary information about the ingredients and the way the cosmetic product is likely to be used, they can carry out a analysis to establish a concentration at which a given ingredient may be used safely in these different cosmetic products. This analysis is a calculation that establishes the so called “Margin of Safety”. At L’Oréal this margin is typically a use level of the ingredient that is 100 times below what is known to be safe under experimental conditions and allows us to extrapolate from experimental conditions to real life. As a result of this calculation, different limits are imposed on the use of the same ingredients in different product types, e.g. higher concentration may be allowed in shampoo, because it’s rinsed off skin after use and a much lower concentration will be allowed in a face cream. This Margin of Safety procedure is described, among others, in the European document called “Notes of Guidance for the testing of cosmetic ingredients and their safety evaluation”, 6th revision (2006), written by the Scientific Committee on Consumer Products and issued by the European Commission’s Health and Consumer Protection Directorate General. On the basis of the information gathered in Steps 1, 2 and 3, a safety assessor endorses the use of each of the ingredients at a given concentration in a given finished product. This information forms part of the Regulatory Dossier for each ingredient. Step 4: Safety Testing of the Finished Product. Once the ingredient evaluation stage is completed and proved satisfactory, the European Cosmetics Directive does not require L’Oréal to go any further with its testing, but at L’Oréal we often submit the new product to further in-vitro tests and clinical tests with human volunteers The first stage of testing is done using in vitro studies in which a new product is often compared to another, similar and well known product. Clinical testing is carried out in human subjects when we know that the product is safe as we want to establish the tolerance of the product in potential customers. This is a more complex procedure as we look at objective signs as well as subjective feelings about the product. Step 5: Safety Validations for the Finished Product. Once the product has ed through steps 1-4 then one of L’Oreal safety assessors will give his or her approval and will sign a safety attestation. This attestation forms is included in the Regulatory Product Information File, supplied for each product. Step 6: Product Launch and Post-Market Surveillance L’Oréal continues to evaluate consumer use and potential sensitivities to L’Oreal products sold around the world on an ongoing basis. A ‘cosmetovigilance’ network was set up twenty-five years ago to provide this monitoring function. The network collects, validates and analyses,
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through the application of rigorous and recognized methodology, any undesirable events which may be related to the use of a product. Through their worldwide network of Consumer Services departments, consumers can advise us of a tolerance issue which is immediately communicated to L’Oreal ‘cosmetovigilance’ department who then examines the file, the formula and the ingredients. It then s the consumer and/or his or her doctor, if necessary, to help resolve the issue, carrying out additional investigation, whenever required, before reporting back to L’Oréal’s management on any potential implication involving L’Oreal product. Research and Development: Everything at L’Oréal begins with science and knowledge. All of L’Oreal products are based-on intensive scientific research. L’Oreal employ 3,000 scientists who work in state-of-the-art research centers around the world. In addition to developing new formulas and ingredients, L’Oreal scientists also study the structure and function of the skin and hair, discover new molecules, investigate best combinations of personal care products and how to maximize product performance and safety. The development of new products involves scientists from a variety of disciplines, such as chemistry and biochemistry, biology, microbiology, toxicology, packaging engineering, dermatology and quality assurance. At L’Oréal, we have a long-standing policy of allocating 1/3 of the company’s Research and Development resL’Orealces to fundamental research projects, which are targeted at progressing knowledge in three main disciplines: skin, hair and color. A decision, made almost twenty-five years ago, to invest in biotechnology and the life sciences in particular, has given us the means to better understand skin and hair, to reconstruct the skin, and to pave the way to develop products that fight ageing of the skin, hair and skin pigmentation disorders. Research into new cosmetic ingredients and formulations can take many years and often the research conducted by L’Oreal scientists leads to breakthroughs with a wider contribution to scientific knowledge. For example, we are now able to grow hair in test tubes in L’Oreal laboratories, enabling us to carry out numerous tests on new shampoo and conditioner ingredients. Operations: 42 factories around the world 88 PACKAGING AND PROCESSES PATENTS FILED IN 2016 95% of factories are ISO 14001-certified 95% of L’Oreal’s industrial sites audited with standard SA 8000 18
L’Oreal Innovation Model L’Oréal has always elected to develop strong research because where beauty is concerned, science is essential for innovation. Its Research and Innovation model enable it to respond to the world's vastly diverse beauty expectations. SCIENCE, THE DRIVER OF INNOVATION IN COSMETICS For over a century, L'Oréal has built its development on a conviction: only strong research can create cosmetic products that are capable of generating real results. Its Research & Innovation model, unique in the cosmetics industry, is organized around three major entities:
Advanced Research, tasked with continuously enriching scientific knowledge about skin and hair around the world, and discovering new active ingredients;
Applied Research, which develops formulation systems, which are then played out in the different families of products;
Finally, Development, which provides the brands with innovative formulas adapted to their identity and to consumer expectations around the world.
ASSETS FOR INNOVATION To stay ahead of the game and make major cosmetic innovations available to everyone, the group relies on three major assets: a unique collection of proprietary active ingredients, which Advanced Research enriches each year with new elements, molecules, or ingredients... ; expertise in formulation, this decisive phase that makes it possible to transition from the molecule to the finished product. Every year, thousands of formulas are developed by the teams at L'Oréal. One final asset is its expertise in evaluation, indispensable for bringing new products to the market by demonstrating their safety and effectiveness scientifically and rigorously. RESEARCH THAT LISTENS TO CONSUMERS At L'Oréal, innovation has always been nurtured by a constant dialog between science and marketing. It is founded on ever-more precise scientific knowledge of skin and hair around the world, but is also based on attentive listening to consumers on every continent and on the observation of their behavior where beauty is concerned. A true source of inspiration, the great diversity of beauty rituals opens up new fields of exploration. A GLOBAL VOCATION By strengthening its global presence through the six regional poles - Europe, United States, Japan, China, Brazil and India - L'Oréal's Research and Innovation comes closer to its major markets, but also to the wealth of scientific knowledge of each region. In each, the research teams develop strategic partnerships with scientific experts or local start-ups to explore new territories.
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ORGANIZATION
5 hubs (United States, Japan, China, India and Brazil)
23 research centers
16 evaluation centers
49 Scientific and technico-regulatory departments
More than 30 collaborations with universities, public research centers or start-ups
Governmental Regulation: In addition to the rigorous safety testing that L’Oréal conducts for each finished product before making it available for sale, they are also held able to governmental requirements for safety in the 140 countries where they market our products. Whether governed by the European Cosmetic Directive, the US Food and Drug and Cosmetic Act or any other local laws that regulate the sale of cosmetic products, L’Oréal meets or exceeds the legal obligation for product safety in each country where their products can be purchased.
5.Outbound Logistics L’Oreal’s Distribution Channel Worldwide With 290 subsidiaries, more than 100 distributors off-group and 42 plants, all spread out in about 130 countries, L’Oreal is the leader of the cosmetic industry. The group has begun its internationalization in 1912 by following three steps: •
First landing
•
Go native
•
Globalization
•
“First landing” - first, commercialization of professional shampoos to hair-dressers via distributors in near Europe (Spain, Italy, Great Britain, and Poland) and in the Americas.
•
“Go native“ - second, local firms are taken over for example in the USA (Redken 1993, Maybelline 1996 etc.), in Argentina (Miss Ylang 2000)
•
“Globalization” - third, subsidiaries (production, research and development) are directly created (Greenfield investment) without any first age via distribution. It is the case in Asia (Japan and Hong Kong) 20
The way L'Oréal is organized L'Oréal's national branches are primarily sales-based. The company develops and upgrades its products at laboratories in Paris (), the United States and Asia. Production takes place at factories spread throughout the world. Its sales orientation is reflected in the organizational structure of the company, which largely parallels the channels of distribution. There are three of these:
Specialist outlets
Hair salons
Retail
Kinds of Distribution Channel
Specialist Outlet : Luxury items such as Ralph Lauren, Giorgio Armani and Paloma Picasso perfumes and pharmaceutical products are sold exclusively through specialist outlets such as perfumeries, duty-free shops and pharmacies.
Hair Salons : The second sales channel encomes hair and beauty salons and the like. These not only use L'Oréal products themselves, but also sell them to their clientele.
Retail : But by far the largest channel is retail: the supermarkets, department stores and chemists where most of the public buy their cosmetic and beauty products. This channel of distribution s for more than half of total turnover (1998: 55.9 per cent), and the Consumer Division which supplies it is therefore the largest within L'Oréal.
L’Oreal 5 step approach to India
Understand the needs of Indian Consumers Launch product ranges specific to their needs Increase Distribution Channels Effective pricing strategy Reduce additional customer costs
A more agile and more digital supply chain To make sure consumers get the best service wherever and whenever they need it, L’Oréal’s supply chain is evolving as fast as digital technology itself. The challenge is to ensure total consumer satisfaction, both in stores and online, by taking on new challenges: the ramp-up of ecommerce, the personalisation of products, and the management of products data and different delivery modes. All the while with the same guarantee of quality, swiftness and safety.
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Operations orchestrates cutting-edge expertise in fields ranging from packaging design and product development, sourcing of packaging and raw materials, production to the distribution of all the group’s products. Cobotics (collaborative robotics) involves the use of a robotised system to assist an operator in a task that remains under human control. L’Oréal’s supply chain handles and optimises all information flows and physical product flows from suppliers to points-of-sale. CDP is an independent global organisation that evaluates companies’ achievements in their environmental performance. Developing connected beauty start-ups In May 2016, the group invested in Founders Factory, a London-based start-up incubator and accelerator, to become its exclusive partner in the beauty sector. L’Oréal and Founders Factory will assist five recently-founded companies and will together create two start-ups each year. The group’s aim is to intensify its digital innovation strategy by gaining access to a worldwide ecosystem of promising talent and cutting-edge technology. Steps for reaching out the customers: The various products are found in various outlets like perfumeries, hair salons, super markets, pharmacies, beauty outlets and even through direct mail. Besides this, the brand has its own website and has tie-ups with other shopping sites on internet.
With all the needed product information, the consumers can make purchases from any part of the world. In this changing times internet has become one of the most important outlet for successful purchasing and buying. . L’Oreal’s operations in India are on an ever-growing path as the awareness of the beauty products has resulted in the brands growth and popularity. Its operations in India are through its fully owned subsidiary “L’Oreal India”.
In one of its kind distribution strategy,L’Oreal has appointed skillfully trained hairdressers that work in their own salons and outlets by providing professional services to the consumers. This includes various treatments and product awareness campaigns that help in creating a new consumer base. This has led to a number ofL’Oreal salons in India, where consumers come for professional and efficient treatment and these salons are for both the gender men and women.
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6. Sources of Information http://www.wikipedia.com/ http://lorealindia.com/ http://suppliers.jimtrade.com/ http://www.cosmeticsdesign.com/ http://investing.businessweek.com/ http://www.supplychainshaman.com/supply-chain-2/supply-chain-excellence/loreal-abeautiful-supply-chain-2/ http://www.loreal-finance.com/en/annual-report-2015/supply-chain https://theloadstar.co.uk/loreal-supply-chain-transformation/ http://www.loreal.hk/en-hk/careers/whoyoucanbe/operations/operations-supplyc https://prezi.com/dvuw4q9txout/loreal-supply-chain/ http://www.pymnts.com/in-depth/2014/loreals-supply-chain-make-over/ http://www.loreal.co.in/brands/active-cosmetics-division.htm http://www.loreal.co.in/medias/financial-press-releases/first-half-2017-results-5900.htm http://www.loreal.com/group/our-activities/organization http://www.loreal.co.in/research-innovation/research-and-innovation-key-figures.htm
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Submitted to: Prof. Ravindra Baliga KJ Somaiya institute of management studies and research
Submitted by: Kirthana S. (10-06-05) Omprakash Kabdwal (10-06-07) Swati Singh (10-06-11)
Index
No. 1
Particulars
Page No.
Introduction
General Overview Of The Company
3
History
5
L’Oreal In India
6
Brands Of The Company
8
Ethics
9
2
Inbound Logistics
11
3
Material Management
13
4
Production
15
Manufacturing Units
15
Production Development Process
15
Research and Development
18
5
Outbound Logistics
19
6
Sources of Information
23
2
1. Introduction General Over View of the Company: For the past century, L’Oreal has pursued its adventure in the beauty industry to cement its position as the world’s leading Cosmetics Company. Above and beyond its financial success, however, L’Oreal’s track record reflects an endless quest:
A quest for innovation, begun a century ago by scientist and inventor Eugene Schuler, driven by tireless research and buoyed by a steadfast pioneering spirit;
A quest for excellence through increasingly safe, imaginative and effective products;
A quest for diversity and a range of cultures to meet the needs of men and women around the globe and make beauty products available to as many people as possible;
A quest for purpose, a cornerstone of the L’Oreal approach, combining economic growth, ethics, social and environmental responsibility;
A quest filled with ion, transcending borders in a bid to make the world more beautiful.
At L’Oreal, they have made cosmetics the focus of all our energy and know-how for nearly a century. We are fully committed to putting all our expertise and research resources to work for the well-being of men and women, in all their diversity, around the world. L’Oreal India Pvt. Ltd. engages in the distribution of L'Oreal SA cosmetics products for men and women. The company was founded in 1991 and is based in Mumbai, India. L’Oreal India Pvt. Ltd. operates as a subsidiary of L'Oreal SA.
Mission (Beauty for All) : At L’ORÉAL, they believe that everyone aspires to beauty. Our mission is to help men and women around the world realize that aspiration, and express their individual personalities to the full. This is what gives meaning and value to our business, and to the working lives of our employees.
Strategy (Universalisation): L’Oréal has chosen a unique strategy: Universalisation. It means globalisation that captures, understands and respects differences. Differences in desires, needs and traditions. To offer tailormade beauty, and meet the aspirations of consumers in every part of the world. L’Oréal is driven by this vision of the world. 3
Vision: Striving For Excellence : Perfection is our goal. We are determined to continue enhancing our brand portfolio with innovative products and to meet the most demanding standards of quality and product safety at all times. A ion For Adventure: Our expertise drives our ion for new discoveries and innovation in cosmetics. Each new achievement - each step forward - is in itself a new beginning. Enrichment Through Diversity: Understanding and valuing each individual is an essential part of our corporate culture. Our staff come from many different backgrounds and work together to offer a full range of products through varied distribution channels. Our goal is to serve the beauty and well-being of our consumers in all cultures throughout the world. Valuing Individual Talent: Just as we are dedicated to enhancing the well-being of our consumers, we also make it a priority to ensure that each employee has the opportunity to develop his or her potential through personal and professional growth. Leading Innovation In Beauty Research is as much a part of our business as marketing, sensitivity to consumer needs is as important as scientific rigor, and know-how and expertise are as essential as intuition. Building on our unrivalled experience and expertise, fundamental research is a specific focus of investment that drives creativity and contributes to developing the cosmetics of tomorrow.
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History:
From 1909 to 1956 First step: the model takes shape.
In 1909, young chemist and natural entrepreneur Eugene Schuler sets up the company that will later become L’Oreal. Everything begins with one of the first hair dyes, which he designs, produces and sells to hairdressers in Paris. The move forges the first link in the chain that is to become L’Oreal “DNA”: using research and innovation to enhance beauty.
From 1957 to 1983 L’Oreal on the road to greatness
These are the formative years of “Le Grand L’Oreal”. At the instigation of Chairman François Dalle, the Group starts to expand internationally. Acquisitions of strategic brands mark the beginning of a period of spectacular growth for the company. Emblematic products come into being. The company motto is “Savoir saisir ce qui commence” (seize new opportunities). From 1984 to 2000 Becoming number one in the beauty industry These twelve years are marked by a great period of growth for L’Oreal, mainly driven by the significant investments made by the group in the field of research. Alongside these efforts are strategic product launches that not only make history, but also succeed in strengthening the Group’s brand image. In 1988, François Dale’s successor, the research and development pioneer Charles Zviak, hands over the reins of the company to Lindsay Owen-Jones, a truly outstanding director. Under his management, the Group would completely change in scope to become the world leader in cosmetics through the worldwide presence of its brands and strategic acquisitions.
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From 2001 to present day
The diversity of beauty throughout the world There is no single type of beauty; it is a multiple-faceted quality framed by different ethnic origins, aspirations, and expectations that reflect the world’s intrinsic diversity. With a portfolio of powerful, international brands, L’Oreal enters the 21st century by embracing diversity in its global growth agenda. Headed since 2006 by Chairman Lindsay Owen-Jones, and Chief Executive Officer JeanPaul Agony, the Group continues to make new acquisitions to cover the world’s varied cosmetic needs, and to undertake new socially responsible initiatives in the interests of sustainable development for all.
L’Oreal in India: L’Oréal, the world’s leading beauty company has been present in India as a wholly owned subsidiary of L’Oréal S.A. since 1994. The company has positioned itself as a transformative beauty leader that upgrades the consumers’ beauty regimes with more sophisticated, safe, qualitative and efficacious innovations. L’Oreal India’s strong commitment to their 2020 road map includes a tangible assurance to pursue sustainable growth in parallel with sustainable development Today L’Oréal India is present in all distribution channels with 15 brands, available in mass market channels (L’Oréal Paris, Garnier, Maybelline New-York, NYX Professional Make Up); in hair and beauty salons (L’Oréal Professionnel, Matrix, Kérastase, Cheryl’s Cosmeceuticals); in selective distribution (Lancôme, Kiehl’s, Yves Saint Laurent, Giorgio Armani, Ralph Lauren, Diesel) and in pharmacies (Vichy, La Roche-Posay). L’Oréal India employs over 1,600 people across four regional offices, including at its two manufacturing facilities in Chakan (Pune) and in Baddi (Himachal Pradesh), its Research and Innovation facilities, and at the headquarters in Mumbai. "These new requirements have a profound impact on the way buildings are designed, the way production units are organized and on the installation layout. GHP zones are protected by airlocks to allow for a controlled atmosphere, and processing vessels are isolated in dedicated areas physically separated from the rest of the facility," said a spokesperson for L’Oreal. A strong Indian corporate citizen: Balancing our company’s success with our responsibility to society has always been the way we do business. L'Oréal India is fully involved with concrete and bold commitments specific to India and aligned to the government’s developmental priorities. Our focus in India is to be the best practice leader in women’s empowerment, skill development and environmental sustainability.
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The L’Oréal India Beautiful Beginnings programme was established in 2009 with the objective of creating livelihood opportunities for young women from disadvantaged sections of society by providing skill training in beauty & hair care. By 2020 we will intend to train 10000 underprivileged women. Thus far, 85% of our graduates have been placed successfully in the industry or have begun their own home grown beauty salon/services. The L'Oréal India initiated the For Young Women in Science scholarship in 2003. Scholarships worth `2.5 Lacs each are awarded to promising young women who want to pursue their graduation in a scientific field. 250 scholarships have been awarded to date. Since we set up operations in India in 1994, we have been focused on skill development and up skilling and train over 150000 hair dressers every year. L’Oreal India at glance: L’Oreal, world leader in cosmetics, has a modern and efficient growth model that is always looking to the future. 100 years of expertise in cosmetics 5 key areas of expertise: hair care, hair color, skincare, make-up & fragrances 34 global brands Products distributed in 140 countries € 25.84 billion consolidated sales in 2017 (1st quarter) €850 million in R&D investments 473 patents filed in 2016 89,300 employees worldwide
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Brands of the Company: 1. Consumer products High technology products at competitive prices distributed through mass-market retailing channels.
L’Oreal Paris
Maybelline
Garnier
2. Professional products Portfolio of brands that meet the requirements of hair salons and provide customers with a wide range of innovative products.
L’Oreal professional Kerastase Matrix
3. Luxury products Prestigious brands which offer customers products and service in stores, specialty stores and travel retail outlets. Lancome Ralph lauren Biotherm Giorgo Armani Diesel
department
4. Active cosmetics Dermo-cosmetic products sold in pharmacies and specialist retailers and advice from pharmacists and dermatologists.
ed by
Vichy La roche posay
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Ethics: At L’ORÉAL, we believe that everyone aspires to beauty. Our mission is to help men and women around the world realize that aspiration, and express their individual personalities to the full. This is what gives meaning and value to our business, and to the working lives of our employees. We are proud of our work. EXECUTIVE COMMITTEE JEAN-CHRISTOPHE LETELLIER, MANAGING DIRECTOR – L'ORÉAL INDIA Jean-Christophe Letellier ed L’Oréal India in 2013 as the Country Manager. Prior to taking on this role, Jean-Christophe has been ASEAN General Manager for Consumer Products Division. Jean-Christophe started his career in L’Oréal in 1994 in L’Oréal Thailand before embarking on a fast and successful marketing track in D , at LaScad and Garnier. In 2002 he became Marketing Director Garnier Maybelline for Europe and took his first general management role in Belgium as D GM. In 2008 Jean-Christophe was appointed Country Manager Indonesia. With great strategic insights, he developed a successful growth model for D, PPD and Luxe and together with his teams put Indonesia on the list of strategic countries for both divisions. MOHIT JAMES, DIRECTOR, HUMAN RESOURCES – L’ORÉAL INDIA Mohit James has over 18 years of work experience in areas of Human Resource Management, Strategy and Information Technology. Mohit’s professional responsibilities have taken him through various aspects of the Human Resource and Organizational Development areas within the Textiles, Software and Consumer Products Industries in companies such as VIP Industries, Kale Consultants, Arvind Mills. He has served in senior management positions including Head – Organization Development for a HR Consulting Firm, Vice President – Strategy & Marketing for a Banking Software Company. He is currently employed as Vice President – Human Resources for one of India’s market leading consumer products & Lifestyle Company. In the past he has been involved in and led organizational renewal and change initiatives successfully for Mid- sized enterprises. Mohit has undergraduate qualifications in Engineering and Economics and has a Masters in Personnel Management from Symbiosis Institute of Business Management. He has been a visiting faculty to many B-schools and has helped develop curriculum in specific area of Compensation and Benefits Management. Mohit has been trained in assessment of managerial competencies, Appreciative Inquiry, brands and work culture linkages, environment and quality management systems amongst other areas of HR and Organizational behaviour.
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ASEEM KAUSHIK, L'ORÉAL INDIA
DIRECTOR,
PROFESSIONAL
PRODUCTS
DIVISION –
Aseem Kaushik, Director, L’Oréal Professional Products Division heads the operations of brands - L’Oreal Professionnel, Matrix, Kérastase & Kéraskin in salons across India, Srilanka & Bangladesh. He has been working with L’Oréal for 18 years, first, as part of the startup field team for 8 years in the Consumer Products Division which includes brands like Garnier, L’Oréal Paris, Maybelline and then for the past 10 years in the Professional Products division which deals in L’Oréal Group’s B to B business exclusive to salons. He has also been responsible for the launch and setting up of Matrix, the accessible Brand of Professional hair products in the country. He has also been instrumental in conceiving & setting up of the Modern ‘L’Oréal Collaboration salon’ concept which brought about the professionalization & transformation in the Hairdressing industry in India. As a Business: Their strategy for leadership is based on continuous investment in rigorous scientific research and development. This enables Their brands to deliver products which are innovative, highly effective, practical and pleasant to use, and which are manufactured to the most demanding standards of quality and safety. they aim for excellence, and constantly challenge ourselves and our methods. We place great value on honesty and clarity: Their consumer advertising is based on proven performance and scientific data. They are committed to building strong and lasting relationships with our customers and their suppliers, founded on trust and mutual benefit. They do business with integrity: They respect the laws of the countries in which we operate and adhere to good corporate governance practices. They maintain high standards in ing and reporting, and the fight against corruption. They deliver long-term, sustained shareholder value by protecting and making the most effective use of company assets. As an Employer: They aim to make L’ORÉAL a great place in which to work. We know that our employees are our greatest assets. They are entitled to a safe and healthy working environment: one in which personal talent and merit are recognized, diversity is valued, privacy is respected, and the balance between professional and personal life is taken into . They believe in offering our employees a stimulating environment, exciting personal opportunities and a chance to make a difference. They encourage an atmosphere of openness, courage, generosity and respect, so that all our employees feel free to come forward with their questions, ideas and concerns. As a Responsible Corporate citizen: They play our part in creating a world of beauty and fairness. They are mindful of our impact on the natural environment, including biodiversity, and constantly seek to reduce it: They are determined to avoid compromising tomorrow for the sake of today. We make a positive contribution to the countries and communities in which we are present, and respect local cultures 10
and sensitivities. They are committed to the respect of human rights. They want to help end the exploitation of children in the workplace and the use of forced labor. They want an end to animal testing in our industry, and we contribute to the development and acceptance of alternative methods. They actively seek out and favor business partners who share their values and our ethical commitments.
2. Inbound Logistics It is widely accepted that managing inbound logistics is significantly more complex and challenging than outbound logistics. After all, typically, outbound shipping originates from a handful of production facilities and/or DCs and makes numerous, regularly scheduled stops to deliver product. Compare this to timing the inbound delivery of hundreds to thousands of different raw materials, originating from dozens to hundreds of suppliers located at far-flung global locations. It is plain to see, this is a much more complex puzzle to solve. Especially with regard to beauty supplies manufacturing, which is known for using some pretty exotic raw materials sourced from unlikely locales. Awapuhi from Hawaiian mountainsides, Jojoba from Sonoran deserts, and other botanicals, fragrances, emollients, emulsifiers and pigments from all over the globe are routinely used in producing modern cosmetics. Getting all these materials delivered in enough time to meet purchase orders is difficult enough before factoring in the limitations dictated by shifting fashion trends. When a lake is filled to the brim it looks pristine, calm even. But when the water level drops, rocks and other hidden anomalies begin to surface. This is how Ralph Folkes, assistant vice president of corporate transportation, L'Oreal USA, describes the decision to invest in a new transportation management system (TMS) in 2008, as a receding economy began to expose submerged rocks within L'Oreal's supply chain. The U.S. division of the world's most recognizable cosmetics brand was challenged with holding vendors compliant to inbound transportation requirements. After much due diligence, L'Oreal USA chose Elmwood Park, N.J.-based UltraShipTMS' flagship solution, UltraShipTMS, to help automate its routing guide and attain greater visibility. Folkes, who was formerly transportation head of the manufacturer's consumer products division, also recognized that business units within the company needed to work closer together and to pool purchasing leverage volume to create cost savings and service improvements. L'Oreal had a TMS in place to oversee outbound transport from distribution facilities to customers. But it needed to gain greater control over inbound raw material flow to its manufacturers. Vendors were specifying their own carriers, not L'Oreal's preferred carriers. So the company decided to revamp the process by beginning at the top. "This approach was critical to improving the flow of components and raw materials into our manufacturing facilities," explains Folkes. "By controlling this part of the supply chain, we could dictate transportation and inventory management, expand visibility, and plan ahead more accurately." Using UltraShipTMS, L'Oreal triggered a transformation that comprised three phases: 11
1. Compliance."We needed to convey appropriate transportation instructions to our suppliers," says Folkes. "The cost savings from simply holding vendors and suppliers more able have been significant." 2. Mode selection."Shipments weighing 20,000 pounds should move truckload, not LTL," Folkes says. "The system, not the supplier, now dictates mode." 3. Optimization."We have now given our manufacturers the tools to go back to suppliers and figure out how to ship to us more efficiently. We cleansed the supply chain by delivering more accurate lead times. This allows our suppliers to pool shipments, and we have freight ready to build full truckloads," Folkes explains. Given the way the market was moving, L'Oreal's TMS roll-out was timely, but also necessary. "We had no low-hanging fruit," says Folkes. "The fruit was already on the ground." The objective for companies is to leverage the TMS and make it a supply chain tool, "to integrate it with any warehouse or transportation management system in place, and connect the links in the chain," explains Nick Carretta, president of UltraShipTMS. The manufacturer has been able to increase inter-plant transportation efficiency between manufacturing locations and distribution centers, but it still uses separate transportation management systems to manage inbound and outbound. Moving forward, it will migrate toward a system that incorporates both. This way it can use inbound freight data to optimize outbound movements. "Once a complete TMS is in place, collaboration with carriers and customers is boundless," says Carretta. Reacting to variable demand and marrying marketing and logistics efforts requires a great deal of collaboration. Personal care product manufacturers can choose from a wealth of resources and strategies, but these four tools of the trade are especially important. 1. Vendor-managed inventory (VMI)—Employing a VMI strategy can help businesses reduce the risk of carrying too much inventory and respond better to shifts in demand patterns. For example, a manufacturing facility running 100,000 SKUs four months out carries a considerable amount of stock that may or may notsell. Charging suppliers with inventory management leans the pipeline and leaves product in its least value-added form farther back in the supply chain. Companies can leverage this flexibility to rationalize packaging requirements for different retail channels closer to demand or even source all inventory from a centralized stock point. 2. Inbound Logistics—In the personal care product supply chain, demand sense and respond is a competitive differentiator. Controlling inbound transportation and product flow at each pivot in the supply chain—from manufacturing plants to distribution facilities to retail stores—helps businesses pull inventory to demand. Capturing demand signals from the point of sale, then sharing this information with marketing, logistics, and service providers upstream in the supply chain, enhances visibility, grows collaboration, and increases flexibility and economy.
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3. Freight Consolidation—SKU variability and differing carton sizes, multi-channel business requirements, and varying transportation demands make freight consolidation a must for cosmetics companies. From locating inventory in centralized DCs to controlling inbound transportation and pooling shipments, manufacturers can improve asset utilization and freight spend. 4. Packaging—Packaging is a hot topic and an executable solution for the health and beauty industry. It's a means of conveying information and appeal to a consumer, and reducing material footprint has an impact on load optimization and transportation needs. Marketing and logistics each have a hand in engineering packaging requirements, which can increase communication and collaboration in countless other ways.
3. Material Management Raw Materials / Suppliers Manufacturing our products requires a wide range of raw materials that are blended in our formulas. L’Oreal directly partners with suppliers that specialize in various technical groups, such as:
Polymers Fats Natural products Perfumes Sunscreens Vitamins
Packaging / Suppliers For L’Oreal, it is essential to offer our clients innovative, environmentally friendly Packaging that promote our products. To do so, we collaborate with a broad rangeof suppliers involved in various technological fields, such as:
Plastic bottles and jars Glass bottles and jars Molded parts Plastic tubes Aluminum tubes Spray cans Distribution systems Labels
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Pop – promo / suppliers In order to promote their products and make them stand out in sales outlets, as well as to attract their consumer and clients, Loreal has developed display cases, promotional objects and accessories.The purchasers work as partners with a broad range of specialized suppliers that are capable of offering.
Permanent POS Promotional POS Printing Promotional items etc.
Equipment / suppliers With numerous production plants worldwide, L’Oreal collaborates with a board community of industrial equipment suppliers divided into three categories:
Manufacturing equipment: production skids, weighing equipment, washing equipment, etc.
Packaging machines: fillers, labelers, distributors, multi pack machines etc.
Utilities: compressors, boilers, cooling systems, paletting, fire safety, etc. Indirect purchasing / Suppliers The indirect purchases team, which covers a broad range of activities within L’Oreal, has a direct relationship with numerous suppliers. The Group has therefore split its general expense sheet into various purchasing categories, such as
Intellectual services Travel, relocation Meetings/events Building fees Temporary employment IT and Telecommunications Human resources Office and technical supplies Energy & fluids Maintenance & spare parts Personnel-related services Express transport Insurance Documentation 14
Outsourcing partnerships / Suppliers Alongside the internal production of these products, the Group collaborates with a broad range of subcontractor companies, such as:
Packaging or finishing finished products
Manufacturing specific finished products (soaps, pencils, cloths, etc.)
Logistics
4. Production Loreal Vision for production PRODUCING SUSTAINABLY By 2020, L’Oréal will have reduced the environmental footprint of its plants and distribution centers by 60%(1),through the reduction of CO2 emissions(2), water consumption and waste management Research and innovation L'Oréal’s Research & Innovation center in India is the group’s sixth hub globally, and includes a Product Development center in Mumbai and an Advanced Research Center in Bangalore. The centers cater to all three lines of business – hair, skin care and make-up. Manufacturing L'Oréal India operates two manufacturing plants located in Chakan, Pune and Baddi, Himachal Pradesh which cater to 90% of its requirements in India. Production Development Process: Safety Evaluation L’Oreal takes safety very seriously and, well before it was required by law, we had put in place a safety evaluation team to ensure the safety of L’Oreal products for both professionals and consumers. L’Oreal International Safety Evaluation Division uses a multi-disciplinary scientific approach to evaluate the safety of L’Oreal products, ensuring that L’Oreal commitment to product safety is upheld at every stage in the product’s life.
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This safety assurance procedure includes an assessment based on the latest medical and scientific research, rigorous safety evaluations of ingredients as well as finished products, examination of the effects of cumulative product use and ongoing safety monitoring once a product is on the market. Product safety studies are designed and monitored and their results interpreted and evaluated by scientists who are specially trained and experienced in safety evaluations. Step 1: Review of Available Safety Information on the Ingredients This is the first stage in a new product’s life when its composition is defined by their scientists and each formula is ed in a dossier. If it is a plant extract the scientists will examine its botanical origin. Each ingredient of the product is then evaluated. Once each ingredient, natural or synthetic, has been defined chemically and analytically, as the case may be, all available use and safety information on the ingredient is investigated. At this preliminary stage their scientists also take into the anticipated consumer use of the finished product. The final step in this first stage is to check the regulatory considerations for the market where the product will be launched and ensure that by including these ingredients we are complying with the local law regulating the use of them. The use of numerous cosmetic ingredients is strictly controlled in many countries of the world today. Step 2: Safety of the Ingredient in the Context of the Finished Product. Following this initial analysis, they consider in detail how a new ingredient will be used when incorporated into a finished product. To do this, they look at which part of the body this finished product will be applied. They analyze whether it will be only used on the face, or under the arms, or around the eyes. They check to see whether there is a possibility that the ingredient may be ingested (toothpaste or lipstick for example). They also establish whether one or more ingredients could be inhaled (aerosol, for example). In tandem with this evaluation, they look at how much of the skin surface will come into with the ingredient in question. Is the ingredient going to be used in a cream that is specific for the hands? Or will it be in a body lotion that may be used all over the body? Then they analyze how often the ingredient will be used in the context of the product. Will it be something that is applied every day? Or once a month? Or even several times a day? They also examine how much of the product and, therefore ingredient, is used each time. For this we have data gathered from across Western Europe which allows us to know in detail how much of L’Oreal cream, lipstick or mascara is used each day by L’Oreal customers. Finally, they anticipate all the possible mis-uses of a product (for instance, a shampoo, used to wash the whole body; a lipstick, used on the cheeks to add color) to ensure that the ingredient is safe for use beyond the original intended use of the product.
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Step 3: Approving Safe Concentrations of the Ingredients. Once they have collected all the necessary information about the ingredients and the way the cosmetic product is likely to be used, they can carry out a analysis to establish a concentration at which a given ingredient may be used safely in these different cosmetic products. This analysis is a calculation that establishes the so called “Margin of Safety”. At L’Oréal this margin is typically a use level of the ingredient that is 100 times below what is known to be safe under experimental conditions and allows us to extrapolate from experimental conditions to real life. As a result of this calculation, different limits are imposed on the use of the same ingredients in different product types, e.g. higher concentration may be allowed in shampoo, because it’s rinsed off skin after use and a much lower concentration will be allowed in a face cream. This Margin of Safety procedure is described, among others, in the European document called “Notes of Guidance for the testing of cosmetic ingredients and their safety evaluation”, 6th revision (2006), written by the Scientific Committee on Consumer Products and issued by the European Commission’s Health and Consumer Protection Directorate General. On the basis of the information gathered in Steps 1, 2 and 3, a safety assessor endorses the use of each of the ingredients at a given concentration in a given finished product. This information forms part of the Regulatory Dossier for each ingredient. Step 4: Safety Testing of the Finished Product. Once the ingredient evaluation stage is completed and proved satisfactory, the European Cosmetics Directive does not require L’Oréal to go any further with its testing, but at L’Oréal we often submit the new product to further in-vitro tests and clinical tests with human volunteers The first stage of testing is done using in vitro studies in which a new product is often compared to another, similar and well known product. Clinical testing is carried out in human subjects when we know that the product is safe as we want to establish the tolerance of the product in potential customers. This is a more complex procedure as we look at objective signs as well as subjective feelings about the product. Step 5: Safety Validations for the Finished Product. Once the product has ed through steps 1-4 then one of L’Oreal safety assessors will give his or her approval and will sign a safety attestation. This attestation forms is included in the Regulatory Product Information File, supplied for each product. Step 6: Product Launch and Post-Market Surveillance L’Oréal continues to evaluate consumer use and potential sensitivities to L’Oreal products sold around the world on an ongoing basis. A ‘cosmetovigilance’ network was set up twenty-five years ago to provide this monitoring function. The network collects, validates and analyses,
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through the application of rigorous and recognized methodology, any undesirable events which may be related to the use of a product. Through their worldwide network of Consumer Services departments, consumers can advise us of a tolerance issue which is immediately communicated to L’Oreal ‘cosmetovigilance’ department who then examines the file, the formula and the ingredients. It then s the consumer and/or his or her doctor, if necessary, to help resolve the issue, carrying out additional investigation, whenever required, before reporting back to L’Oréal’s management on any potential implication involving L’Oreal product. Research and Development: Everything at L’Oréal begins with science and knowledge. All of L’Oreal products are based-on intensive scientific research. L’Oreal employ 3,000 scientists who work in state-of-the-art research centers around the world. In addition to developing new formulas and ingredients, L’Oreal scientists also study the structure and function of the skin and hair, discover new molecules, investigate best combinations of personal care products and how to maximize product performance and safety. The development of new products involves scientists from a variety of disciplines, such as chemistry and biochemistry, biology, microbiology, toxicology, packaging engineering, dermatology and quality assurance. At L’Oréal, we have a long-standing policy of allocating 1/3 of the company’s Research and Development resL’Orealces to fundamental research projects, which are targeted at progressing knowledge in three main disciplines: skin, hair and color. A decision, made almost twenty-five years ago, to invest in biotechnology and the life sciences in particular, has given us the means to better understand skin and hair, to reconstruct the skin, and to pave the way to develop products that fight ageing of the skin, hair and skin pigmentation disorders. Research into new cosmetic ingredients and formulations can take many years and often the research conducted by L’Oreal scientists leads to breakthroughs with a wider contribution to scientific knowledge. For example, we are now able to grow hair in test tubes in L’Oreal laboratories, enabling us to carry out numerous tests on new shampoo and conditioner ingredients. Operations: 42 factories around the world 88 PACKAGING AND PROCESSES PATENTS FILED IN 2016 95% of factories are ISO 14001-certified 95% of L’Oreal’s industrial sites audited with standard SA 8000 18
L’Oreal Innovation Model L’Oréal has always elected to develop strong research because where beauty is concerned, science is essential for innovation. Its Research and Innovation model enable it to respond to the world's vastly diverse beauty expectations. SCIENCE, THE DRIVER OF INNOVATION IN COSMETICS For over a century, L'Oréal has built its development on a conviction: only strong research can create cosmetic products that are capable of generating real results. Its Research & Innovation model, unique in the cosmetics industry, is organized around three major entities:
Advanced Research, tasked with continuously enriching scientific knowledge about skin and hair around the world, and discovering new active ingredients;
Applied Research, which develops formulation systems, which are then played out in the different families of products;
Finally, Development, which provides the brands with innovative formulas adapted to their identity and to consumer expectations around the world.
ASSETS FOR INNOVATION To stay ahead of the game and make major cosmetic innovations available to everyone, the group relies on three major assets: a unique collection of proprietary active ingredients, which Advanced Research enriches each year with new elements, molecules, or ingredients... ; expertise in formulation, this decisive phase that makes it possible to transition from the molecule to the finished product. Every year, thousands of formulas are developed by the teams at L'Oréal. One final asset is its expertise in evaluation, indispensable for bringing new products to the market by demonstrating their safety and effectiveness scientifically and rigorously. RESEARCH THAT LISTENS TO CONSUMERS At L'Oréal, innovation has always been nurtured by a constant dialog between science and marketing. It is founded on ever-more precise scientific knowledge of skin and hair around the world, but is also based on attentive listening to consumers on every continent and on the observation of their behavior where beauty is concerned. A true source of inspiration, the great diversity of beauty rituals opens up new fields of exploration. A GLOBAL VOCATION By strengthening its global presence through the six regional poles - Europe, United States, Japan, China, Brazil and India - L'Oréal's Research and Innovation comes closer to its major markets, but also to the wealth of scientific knowledge of each region. In each, the research teams develop strategic partnerships with scientific experts or local start-ups to explore new territories.
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ORGANIZATION
5 hubs (United States, Japan, China, India and Brazil)
23 research centers
16 evaluation centers
49 Scientific and technico-regulatory departments
More than 30 collaborations with universities, public research centers or start-ups
Governmental Regulation: In addition to the rigorous safety testing that L’Oréal conducts for each finished product before making it available for sale, they are also held able to governmental requirements for safety in the 140 countries where they market our products. Whether governed by the European Cosmetic Directive, the US Food and Drug and Cosmetic Act or any other local laws that regulate the sale of cosmetic products, L’Oréal meets or exceeds the legal obligation for product safety in each country where their products can be purchased.
5.Outbound Logistics L’Oreal’s Distribution Channel Worldwide With 290 subsidiaries, more than 100 distributors off-group and 42 plants, all spread out in about 130 countries, L’Oreal is the leader of the cosmetic industry. The group has begun its internationalization in 1912 by following three steps: •
First landing
•
Go native
•
Globalization
•
“First landing” - first, commercialization of professional shampoos to hair-dressers via distributors in near Europe (Spain, Italy, Great Britain, and Poland) and in the Americas.
•
“Go native“ - second, local firms are taken over for example in the USA (Redken 1993, Maybelline 1996 etc.), in Argentina (Miss Ylang 2000)
•
“Globalization” - third, subsidiaries (production, research and development) are directly created (Greenfield investment) without any first age via distribution. It is the case in Asia (Japan and Hong Kong) 20
The way L'Oréal is organized L'Oréal's national branches are primarily sales-based. The company develops and upgrades its products at laboratories in Paris (), the United States and Asia. Production takes place at factories spread throughout the world. Its sales orientation is reflected in the organizational structure of the company, which largely parallels the channels of distribution. There are three of these:
Specialist outlets
Hair salons
Retail
Kinds of Distribution Channel
Specialist Outlet : Luxury items such as Ralph Lauren, Giorgio Armani and Paloma Picasso perfumes and pharmaceutical products are sold exclusively through specialist outlets such as perfumeries, duty-free shops and pharmacies.
Hair Salons : The second sales channel encomes hair and beauty salons and the like. These not only use L'Oréal products themselves, but also sell them to their clientele.
Retail : But by far the largest channel is retail: the supermarkets, department stores and chemists where most of the public buy their cosmetic and beauty products. This channel of distribution s for more than half of total turnover (1998: 55.9 per cent), and the Consumer Division which supplies it is therefore the largest within L'Oréal.
L’Oreal 5 step approach to India
Understand the needs of Indian Consumers Launch product ranges specific to their needs Increase Distribution Channels Effective pricing strategy Reduce additional customer costs
A more agile and more digital supply chain To make sure consumers get the best service wherever and whenever they need it, L’Oréal’s supply chain is evolving as fast as digital technology itself. The challenge is to ensure total consumer satisfaction, both in stores and online, by taking on new challenges: the ramp-up of ecommerce, the personalisation of products, and the management of products data and different delivery modes. All the while with the same guarantee of quality, swiftness and safety.
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Operations orchestrates cutting-edge expertise in fields ranging from packaging design and product development, sourcing of packaging and raw materials, production to the distribution of all the group’s products. Cobotics (collaborative robotics) involves the use of a robotised system to assist an operator in a task that remains under human control. L’Oréal’s supply chain handles and optimises all information flows and physical product flows from suppliers to points-of-sale. CDP is an independent global organisation that evaluates companies’ achievements in their environmental performance. Developing connected beauty start-ups In May 2016, the group invested in Founders Factory, a London-based start-up incubator and accelerator, to become its exclusive partner in the beauty sector. L’Oréal and Founders Factory will assist five recently-founded companies and will together create two start-ups each year. The group’s aim is to intensify its digital innovation strategy by gaining access to a worldwide ecosystem of promising talent and cutting-edge technology. Steps for reaching out the customers: The various products are found in various outlets like perfumeries, hair salons, super markets, pharmacies, beauty outlets and even through direct mail. Besides this, the brand has its own website and has tie-ups with other shopping sites on internet.
With all the needed product information, the consumers can make purchases from any part of the world. In this changing times internet has become one of the most important outlet for successful purchasing and buying. . L’Oreal’s operations in India are on an ever-growing path as the awareness of the beauty products has resulted in the brands growth and popularity. Its operations in India are through its fully owned subsidiary “L’Oreal India”.
In one of its kind distribution strategy,L’Oreal has appointed skillfully trained hairdressers that work in their own salons and outlets by providing professional services to the consumers. This includes various treatments and product awareness campaigns that help in creating a new consumer base. This has led to a number ofL’Oreal salons in India, where consumers come for professional and efficient treatment and these salons are for both the gender men and women.
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6. Sources of Information http://www.wikipedia.com/ http://lorealindia.com/ http://suppliers.jimtrade.com/ http://www.cosmeticsdesign.com/ http://investing.businessweek.com/ http://www.supplychainshaman.com/supply-chain-2/supply-chain-excellence/loreal-abeautiful-supply-chain-2/ http://www.loreal-finance.com/en/annual-report-2015/supply-chain https://theloadstar.co.uk/loreal-supply-chain-transformation/ http://www.loreal.hk/en-hk/careers/whoyoucanbe/operations/operations-supplyc https://prezi.com/dvuw4q9txout/loreal-supply-chain/ http://www.pymnts.com/in-depth/2014/loreals-supply-chain-make-over/ http://www.loreal.co.in/brands/active-cosmetics-division.htm http://www.loreal.co.in/medias/financial-press-releases/first-half-2017-results-5900.htm http://www.loreal.com/group/our-activities/organization http://www.loreal.co.in/research-innovation/research-and-innovation-key-figures.htm
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