Since Nulogy set out on its mission to improve the performance of partnerships in the mass customization supply chain, in 2002, L’Oréal has been among the most fulfilling consumer packaged goods (CPG) firms with which we’ve partnered.
Most recently, it was a pleasure to share the stage with Barry Stewart, L’Oréal Vice President of Supply Chain Operations, at the Council of Supply Chain Management Professionals’ CSCMP EDGE annual conference last September. There, we discussed our progress with an ongoing Supply Chain Optimization Project; today, I am pleased to share news from myself and Barry on that project.
L’Oréal, the worldwide cosmetics leader, has a portfolio of 34 complimentary brands with €25.8 billion in annual revenues. The company continues to surpass growth expectations in many ways, including the continuous effort to improve operational performance–from R&D to point of retail sale. Barry explains the mission for supply chain operations:
We contribute to L’Oréal’s growth, from product development, sourcing, and production to distribution of all the Group’s products: an integrated value chain. As the ally of business, we develop and always seek out the most agile, innovative and responsible solutions to meet the specific needs and diversity of our consumers.
Pictured: L’Oréal’s Barry Stewart (L) and Nulogy’s Jason Tham at CSCMP EDGE 2017.
Specifically, Nulogy is supporting the deployment of a strategic solution to promote the three key metrics L’Oréal has determined will most drive its value in the marketplace:
1. On time in full order deliveries;
2. Cost avoidance; and
3. Continuous improvement.
L’Oréal’s path to determining these metrics as well as using them as a springboard for growth, is a testament to the promise of real-time connectivity and collaboration between CPGs and their partners.
Agility improvements amid geopolitical uncertainty, shorter & disruptive innovation cycles and the trend toward short-run promotional campaigns.
Personalization efforts to navigate changing consumer behaviors, shifting demographics and increased focus on the quality of the retail brand experience.
Data integration through process digitalization, real-time analytics, and breakthroughs in machine learning.
Connectivity through the cultural shift to digital channels, democratization of information and the proper and secure global exchange of intellectual property and benchmarking data.
This deep-dive into informational needs drove the development of goals for this supply chain optimization and collaboration project:
Turning toward implementation of the three key metrics across the supplier base, our team found varying levels of competence.
While other suppliers were lagging in their understanding, acceptance, and sharing of online metrics, we worked to show them the performance and cost benefits of modernizing, and the benefits of gaining a deeper collaborative relationship with L’Oréal.
Likewise, L’Oréal implemented a complementary toolkit to view its customization suppliers in a manner that is both unified and comprehensive. Instead of using old methods such as manual spreadsheets to solve “known” problems and link data from one “siloed” system to another, the new system eliminates manual data entry/errors, and opens up new vistas for discovering hidden or previously unknown opportunities. Despite the need to change a few minds, indications are that L’Oréal and its suppliers will see benefits including cost reductions (reduced overtime, cases of expedited shipping, overstocks) and, importantly, a new platform growth.
Nulogy’s vision for digitization is characterized by “Four Cs” in which the business processes and systems of all participants are connected, collaborative, comprehensive and cognitive — both at the intra-enterprise level of the individual organization and the inter-enterprise level between partners.
This “path to agility” provides a conceptual underpinning to the way L’Oréal used its metrics to measure variances to plan, establishing predictability; and to measure adherence to plan, establishing reliability. When an issue or variance was discovered, users of the new system were able to measure it, pinpoint root causes and follow-up with the source. This included tracking data throughout the following lifecycle of all orders sent to customization suppliers:
“Through the connectivity, and collaboration, we were able to unlock key metrics and gain visibility into our supply-chain reliability and predictability towards delivering a perfect order,” Barry told executives in our talk. “They say, ‘You can’t manage what you can’t measure,’ and now, not only are we able to measure the final execution of an order, but all the key milestones along its journey.
By establishing a platform in which both CPG and supplier share real-time data visibility across the order lifecycle we enabled L’Oréal to improve its own business while at the same time helping its suppliers increase their operational predictability & reliability
Furthermore, L’Oréal has been kind enough to share some of their findings…
One way digitization makes previously “invisible” data — and opportunities — visible, hence measurable, is through the dashboard presentation of supplier sites. The below example, using actual supplier data, allows L’Oréal personnel to view, by location, details relating to plant performance, labor productivity and week-over-week comparisons.
Another way to aggregate and analyze multi-supplier data can be seen in the below view of key milestones in the order-to-ship business process. Examining two of those processes, L’Oréal users can click for exploded views providing details of why, for instance, average completion at the start of co-pack production was three days late — and still have suppliers complete production and start shipments seven days and 10 days early, respectively.
These are just two examples of how digitization makes previously “invisible” processes measurable. Overall, supply chain digitization enables measurement in the following areas where previously measurement was impossible including reliability, responsiveness, availability/downtime, performance/variance, inventory accuracy, inventory aging, quality/rejects and non-conformances.
“Our ability to identify, understand, and act based on root cause analysis and non-conformance to plan is critical for improving our supply-chain operations and collaborating with our suppliers to improve,” Barry explained. In short, the new solution enables L’Oréal to identify instances of non-conformance, understand their root causes, and act in real time, alerting suppliers in the system to make corrective actions.
Today’s agile supply chains and tomorrow’s intelligent supply chains will bring exponentially more data to a growing number of partners, including retailers. As you read this, supply chain partners are building a foundation for many exciting things to come.
The first step toward that future is digitization, followed by data-sharing through collaboration. The third step is the use of data analysis for the purpose of continuous improvement, and this is the most exciting aspect we’re seeing. Because today, L’Oréal and other brands are now in the position of understanding their external customization operations as if those operations are being conducted within their own “four walls” — or internal, global organization.
What’s next on the technology horizon? Our data scientists are working on solutions to improve customization-related data analysis and automate corrective actions in more proactive, prescriptive ways. Further in the future, we’re targeting improvements related to cognitive, omnichannel interactions.
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Jason is a co-founder, CEO and brand ambassador for Nulogy. He is focused on corporate development, executive leadership, and understanding the evolving landscape of Nulogy’s clients. He is also on Nulogy’s board and speaks throughout the industry on the agile supply chain.