L’Oréal Australia Supply Chain Management
Table of Contents
L’Oréal Supply Chain Management Strategy and the Sustainability. 4
Current SCM Practices of the Organization. 5
Sustainability Strategy of L’Oreal Australia. 6
Matches between current SCM and Sustainability practices. 7
Companies struggle with the implementation of effective business strategy on the global platform, which meets the unique demands of their target customers. Effective supply chain management systems have aided companies to attain operational efficiency and value to their customers. The integration of effective supply management systems with the sustainability system is the current management model every company seeks to gain in order to attain trust and confidence in the market. L’Oréal develops its international business strategy through the integration of the Operations Management models and the CSR strategy to attain efficiency in manufacturing and environmental protection mechanisms. Although the company operates a responsible manufacturing trend through the several products it launches in the market, the firm equally supports community projects that add value to its direct and indirect stakeholders.
L’Oréal Australia Supply Chain Management Strategy and the Sustainability
The whole concept of beauty is among the most important activities undertaken by men and women in equal measures. Fortunately, the majority of men and women are continuing to embrace body and hair care, among other beauty products as an important of part of their daily phenomenon. Organizations have come up with various programs to inspire talent for upcoming cosmetic designers so that the professionalism is attained in the beauty care industry. L’Oréal Australia is a famous brand in the country to both the young and older generation. The company is among the world leading providers of personal care segment. Organizations have come up with various programs to inspire talent for upcoming hairdressers/beauticians so that the profession grows to higher levels. L’Oréal Australia has developed various brands driven by quality and value to its customers. The company focuses on new innovations and strategic alignments through effective supply chains to reach the targeted local and global consumers. The international value chain implemented in the company ensures that its products reach the intended customers within the various market segments.
L’Oréal Australia is the market leader in the cosmetic products. The products are divided into various categories, including those unique to women, men, and children. The company has several product segmentations to attain high-efficiency levels and serve particular dynamic needs of the customers in the cosmetic industry. Almost every individual interest in beauty care is taken care of by the company products. L’Oréal products are categorized into various divisions to ensure easy access for its customers.
L’Oréal Luxe division. This is a world of beauty division bringing together renowned international brands, personified in all the facets of true and uniqueness, elegance and refinement. The division manages three major categorizations of skincare, makeup, and perfume. The products are available in departmental stores, travel retail, and cosmetic stores. The products can equally be accessed from e-commerce sites and own-brand boutiques.
L’Oréal cosmetic division. The division meets a range of various skin conditions and needs of normal to blemish-prone. These products are marketed on the majority of healthcare outlets on the global platform such as pharmacies, drugstores, or Medi-spas. These products have superior endorsements from Pediatricians, dermatologists, and cosmetic doctors among other professionals in the beauty care industry.
The professional division. The division distributes products in salons worldwide. It develops a wider range of brands in order to meet the different hair care based on color and shape. In addition, styling shampoos with several other general hair care needs are part of this category. The company is a privileged partner of hairdressers given the high and innovation-driven aspects of its products.
Current SCM Practices of the Organization
To ensure the company is above its competitors through market outreach and product availability, the company integrates a dynamic and innovative supply chain management system that links its stores and manufacturing systems to the world (Joyce and Paquin 2016, p. 1476). L’Oréal operates integrated operations management (OM) solutions across its factories and worldwide offices. The technology and IT-based systems in the supply chain systems of the company are supported by the integrated warehouse systems across all the factories in the world.
To ensure risk reduction measures are incorporated into its operations, L’Oréal has implemented the OM decision in a systematic manner encompassing site by site through the ‘Core’ Model. This model allows the company to capture best practices in the operational logistics within the supply chain management. The Core model provides an operational focus on the primary supply chain support departments like production management, and quality management so as to drive in operational excellence uniformly in the entire company’s value chain. Reim, Parida, and Örtqvist (2015, p. 65) aver that the company employs systematic value chain system to attain high efficiency in the delivery of service or products that are gaining operational advantage within the industry of operations. By implementing the integrated OM system applications in each of the global sites, the company manages to generate high value that reflects the quality of its product. This, in turn, leads to better market presence for its products and enhanced customer satisfaction and improved allegiance.
L’Oréal’s OM decision are fashioned in integrity and ethical standards in order to demonstrate their commitment to living up to the company values of integrity and ethical standards. To ensure that L’Oréal stands out as a committed partner for the provision of quality products to its targeted global audience, the company operates a global international business strategy. The approach enables the company to have a global presence in almost every jurisdiction and market on the entire global platform. The company, therefore, works through several subsidiaries for its market presence.
The virtual platform and e-commerce marketplace operated by the company is another business model that ensures the company’s stability within its operations. The company operates an effective online business system linked to several locals and international stores. Under the online platform, the customers can now proceed with order placements as well as purchase products online through their commercial portal shared across the globe. Similarly, local dealers, chemists, and drugstores have an integrated access to the main products and sales lines for order placements and supplies.
Sustainability Strategy of L’Oréal Australia
Sustainability of a company is an important aspect of any organization since it defines the future operations. Companies dealing with beauty care products require an engagement mechanism with its customers and general stakeholders. Trust building is an important phenomenon in the sustainability of a company working on the global platform. Ortas, Álvarez, Jaussaud, and Garayar (2015, p. 677) assert that the sustainability of L’Oréal Company is influenced by the Customer social responsibility (CSR) strategy. The strategy is managed through the understanding of sharing growth and commitment to the community of the company. The foundations of sustainability in manufacturing provide approaches that lead to the production of desired quantities of products using the lean resources, while reducing wastages. L’Oréal operates an internal culture that is sensitive to lean models of supply chains leading to reduced waste within the company manufacturing units
L’Oréal manages a CSR program that seeks to identify limitations in the community. Hence, by dealing with those shortcomings in the society, the company is able to create hope and commitment to its products within the community. The company, therefore, pays attention to the needs of the community and engages in projects that meet the social needs of those societies. The projects supported, in this case, include aspects of the environmental protection mechanism that seek to create replenishment opportunities for the environment and reduce incidences of degradation. Other aspects of sustainability include programs that encourage global gender diversity and inclusion mechanism. Under those programs, the company received an accolade ranking it 1st in the global gender equality award in the year 2017.
The company equally builds strategic priorities that promote diversity while addressing waste reduction activities through the lean supply management strategies in its factories across the world. The largest priority for L’Oréal Company is stakeholder engagement as a sustainable mechanism to create value and vital resource base for its future operations. Porter and Kramer (2019, p. 335) indicate that companies within the early formation of the CSR focus on managing regulatory impacts while those with established systems focus on global sustainability issues. L’Oréal, therefore, focuses its sustainability synergies through managing rights and gender equality issues.
The sustainability aspects of L’Oréal Company can, therefore, be observed through the leadership efforts that inspire the achievement of current company needs by having practical considerations for the future. This is done through effective leadership that seeks to attain company goals and a motivated workforce that reduces wastages while increasing efficiency for the good of the company and its dependable stakeholders.
Matches between current SCM and Sustainability practices
The main approach of L’Oréal Company is to manage a three-tier sustainability strategy that is tied to its supply chain management systems. The strategy is premised on a solid foundation of innovating sustainably, producing sustainably, and living sustainably. This powerful culture envisions the overall operations of the company when it implements the OM strategy within its factories in the entire world.
The Core model of the integrated operations management systems ensures that the company focuses on the primary supply chain support departments to attain operational excellence while managing its sustainability models.
The production management. The theory of production underpins the principles by which a company forecasts the cost of products that it will produce and the requirement with regards to labor costs, raw material, and the fixed capital (Vernimmen, Quiry, Dallocchio, Le Fur, and Salvi, 2014, p. 7). The analysis of the outputs or products vis-à-via the inputs or factors of production are viewed with regards to the price of commodities. The theory equally takes cognizance of the variances between relationships, linking the prices of products and the factors of production.
The quest to attain the principles of the theories of production together with the expectations of the sustainability mechanism brings out technical balance for the company leadership. Therefore, L’Oréal develops brands that are sensitive to the environment through its production department system. The company manages the reduction of wastes and carbon emissions within its production lines in order to achieve superior products that maintain the company’s reputation with regard to environmental sensitivity.
L’Oréal develops its value systems not only to the customers but also to the employees and the general environment. This aspect leads to the attainment of a committed workforce dedicated to both operational standards like manufacturing targets and the aspects of the environmental protection mechanism. As the company identifies with its supply chain, the underlying objectives of its manufacturing sector focus on using the least quantities of raw material to generate superior products while reducing on the consumption of water.
Water is an important aspect in the manufacturing sector. On the other hand, Australia is struggling with the challenges of water with the manufacturing sector receiving the highest allocations for the supply of water (Frost, Gaynor, Gregory, Morgan, O’Hanlon, Spearritt, and Young 2016, p. 8). The discussion to accept recycled or desalinated water is fast gaining momentum. With such problem of water, it is important for companies to install effective operations standards that focus on value while limiting the amount of water used in their manufacturing systems. L’Oréal has developed production management systems that reduce the consumption level of water by more than 50%.
Quality management. This aspect is attained through structures that provide support to the procedures within the system of the company. L’Oréal has optimized the operation process that determines every process of the value chain by focusing on the Integrated Solutions for Industrial systems (ISIS). The system ensures that quality is carried throughout all the operational process in order to arrive at the products that not only meet the individual demand but also go beyond to strike equilibrium with the quality in the industry. The quality of the company products is attained through the integrated operations management systems managed through effective leadership and systematic models of manufacturing and distribution systems.
The launch of the ambitious commitments that are attainable by 2020 puts the company ahead of its competitors. The innovation will deliver gains for the environments and the communities who are the indirect stakeholders. The aspects of sustainability in production, living, and innovation provide a commitment to values and quality of products as well as protecting the environment. In this case, sustainability is the core management designs for global companies implementing an operation strategy.
Supply chain management systems support organizations to implement their business strategy effectively. However, the balance between profitability and the sustainability methods expected in today’s global market necessitates an alternative approach to issues of sustainability. L’Oréal Australia has managed to provide superior products to its global customer audiences while managing its CSR models that meet the needs of the community. The sustainability strategies of L’Oréal lead to the conservation of the environment and the protection of water systems. This is attained through the adjustment of the supply chain in order to bring about better manufacturing processes and improved product quality.
There are high competitions in the beauty care industry, where L’Oréal Australia operates. The alternative companies provide products at a friendly rate to the target customers, leading to revenue losses for the company. Since L’Oréal develops an international customer interface through its subsidiaries, the international strategy requires high model of operational efficiency and product differentiation. It is necessary that the branding mechanism of the company takes care of the expectations of both the premier customer at the high end and the moderate middle-range customers uniformly so that they are able to appreciate the quality of the products.
The company should also take advantage of its strong legacy in the cosmetic industry to encourage innovations and lean management system that will impact on reduced practices, which will take advantage of the non-served populations. The approach will ensure that the products trickle down to the non-served market together with an influential price strategy. The sustainability factors of the company are based on the over 2 billion global customers found on the internet. Therefore, the company should establish an online platform that will meet the expectations of the online clients through timely responses and easy connections to retail or departmental shops for easy product purchases.