Logistic Management In L’Oreal Company: An Essay.

A manufacturer that you are familiar with and assume that ou are the logistics mana of this organization.'(Determine the areas in which ( logistics and the core functional areas (like production. marketing, finance and accounting) might interface and analyse the effectiveness of the current order cycle and inventory managementThase on your analysis, recommend improvements by applying the theories and concepts found in logistics management.

This report is developed to discuss the brief introduction of the L’Oreal Company Logistic management. This report contains detail functions and significance of the logistic management. Moreover, this report also includes a detail description of the current stock management and current order cycle system of the company. The report also includes the different interface and core functional areas of logistics management.

L’Oreal S.A is a France based Cosmetics company its head office is located in Clichy, France. On 30th July 1909, Eugene Schueller founded the company and at that time, the register office of the company was located in Paris. L’Oreal is the world’s most famous and prestigious cosmetics company (Loreal, 2018a). The company deals in various types of beauty and hair products such as skin care products, hair care products, perfumes, sun protection, hair colour and many more. Jean-Paul Agon is the present CEO of the company and the company is providing approx. 89300 people employment opportunity (Loreal, 2018b). The strategy of the company is continuous expansion and with that strategy, the company is expanding its operations and business activities every day. The Approx. total revenue of the company is € 25.837 billion (Loreal, 2018c). The Shares of the company is listed on the stock market. The main objective of the company is they want to provide or offer attractive and good quality beauty and hair products for the females.  The main Competitors of the company are Estee Lauder Companies Inc. and Proctor and Gamble Company both are both companies are dealing in Beauty products for females.        

The interface is the technique that is used by the company to collaborate, converse, and cooperate with the various barriers and obstacles faced by them. The core function for every organisation is logistics management and the accounting and finance department interface, marketing department interface and production department interface are the core functional areas of logistics management (Henderson & Ferreira, 2013). To develop an interface between the logistics and essential functional areas like production, marketing, accounting and finance is very important and mandatory for the company it will help them in meeting firm’s long-term business objectives and goals.  The cooperation and harmonization are the essential tools that will help the company in maximizing its total value.  The interface between the core functional department and logistics also play important role in managing the optimum utilization of resources. In the company, the military theory of logistics management is very famous. For L’Oreal Company the interface technique is very helpful and important (Loreal, 2018c).  The three main functional areas of the logistic management of L’Oreal Company have been discussed below.

The production of the L’Oreal Company is done in such a manner that with the help of which they can manage the operations of the manufacture and production units effectively and will increase the revenue of the company. L’Oreal is responsible for controlling the manufacture of its products. The company has chosen a largely integrated industrial model for production, the company not only guarantee the overall quality of the products but it also complied with environmental, ethical and corporate principles (Annual Report Loreal, 2017). The interface between the production department and logistics management contributes to the success of the company. During the production, department interface the top management and managers evaluate and check the quality and quantity of the products to attain standard products. The company knows the importance of the quality of the product if the company produce the quality products more customers will get attracted to the product. The production department should understand the requirement, needs and expectation of the customers from the product.  The product is the main and essential part of the logistics management and if products of the company are not good then the complete logistic management process will get fail (Kose, Otrok & Prasad, 2012).  To make the process successful the top management of the company keep their full control over the production process.

Production department interface

There is a very close relationship between the marketing department and logistics management. To interface between the marketing department and the logistics management includes various areas such as pricing decision, marketing research, promotional activities and product mix (Jiles, 2014). The interface will help the company in improving the better flow of income and packaging. Moreover, the marketing department interface is helpful for the better customer care service and for distribution channels. The company’s marketing department interface provides its emphases on the four key perspectives while edging with the market. The four perspectives are unionist, relabeling, traditionalist and intersections.    

The logistics management is a very useful tool for the company because its help them in getting various economic benefits. The L’Oreal also uses logistic management to achieve its objectives and desired results. The accounts and finance department of the company analyse and check the accounting activities and financial transactions of the company, in addition, the expenses and cost related to the product and activities of the company are also controlled by the department (Wang, et.al. 2015). The interface among the logistics and accounting and finance department will help the company in developing an appropriate budget for purchasing and allocation of various resources.  The accounting and finance interface also helpful in reducing packaging cost, production cost and inventory cost.

The order cycle refers to the time period between the placement of one order and the another other. It is a gap between the placements of two orders. The gap or times period that is involved in the placing of two orders are called order lead-time (Hong & Doz, 2013). The company is using the effective and excellent techniques and methods of order cycle to gain a success and revenue in the near future.

After conducting various research, it is been evaluated that the present order dispensation system of the company is very effective and unique.  The efficiency of the system can be measured with the help of figures and data that are provided by the company in their annual reports, in Singapore, around 48% of females are using products of the company whether they are using beauty product or they are using hair products (Annual Report Loreal, 2017).   It has been analysed that the world-class qualified and effective consultant team members are managing L’Oreal products and logistics business. After the evolution of the current order processing time, the team make out the improvements. In addition, it is been observed that L’Oreal is taking various different types of information about the company’s products through Edicom’s CRP flow (Annual Report Loreal, 2017).  To make the present order processing system of the company more effective and efficient the consultancy team of the company is trying hard to overcome the problems, issues and obstacles phased by them during the process.

It is been analysed that L’Oreal company is using order management software for managing their orders. The order management software of the company helps the company and provides support to the production, marketing and accounts departments to have correct and accurate information and facts about the products manufactured in the company (Hackley & Hackley, 2015). The order management software of the company provides guidance and help to the employees in managing the time and cost of the products. The software also helps the company in providing satisfaction to the customers by reducing the price of the product.     

Marketing department interface

It is been stated in the above paragraphs that the order cycle or order processing methods that are used by the L’Oreal are very efficient and effective but it is also true that in present market conditions the competition is increased.  It became more important for the company to bring new and effective changes in the working process of the company to get an edge over its competitors. The company should conduct a proper review and monitoring to manage and maintain the effectiveness and efficiency of the product. It is been recommended to the company that they should bring new changes in the order processing method and keep their full control on the changes they have made (Lee & Kashmanian, 2013). The company can make changes according to the current changes in the technology, information system, production process or environment that will help the company in managing the sustainable growth.  Further, it is been recommended to the company that they should update their software’s and other application in time to offer a better service to the customers. It is also recommended to the company that they should integrate the order administration functions into the order process efficiently and effectively that will help the company in managing issues linked with the delivery time and cost. To increase the amount of revenue the company should sell its products at reasonable prices.      

Inventory management is the most important function for every company and for L’Oreal also inventory management considered to be an important function. Inventory management will help the company in gaining market share and growth. It is been evaluated that the wrapping and normalised and regulated stock supply take place in Europe. Supply chain of the company founded by the association by using the KPIs. The supply chain of the company is connected with the with the manufacturer development information system across 13 European factories (Annual Report Loreal, 2017). With the help of the direct exchange, data with the help of Enterprise resource planning system and web portal the company has expanded the supply chain reach and the stock management of the company to connect around 100 dealers (Annual Report Loreal, 2017). The supply chain of the company is very important and essential to managing the stock of the company available across the world. The company also using various strategies and methods that are helpful in managing one-month extra stock at the beginning of the month at the CFA level. The storage capacity of the company is really good the company can keep one-month addition stock at their warehouse. This process is increasing the inventory management cost of the company. The company is using the Supply chain index methodology to predict or estimate the amount of product to be manufactured for a particular time.  

The present inventory management system of the company is efficient and effective, in their system the company has developed the integrated solution to help the company in inventory management process, real-time material movement and order handling the cost. The ERP system of the company and OM help the company in reducing the risk and cost related to the inventory management.  It is been suggested to the company that they should focus on the aligning the requirements and needs of the manufacturing functions, inventory management, operations and logistic functions (Ashraf, Ashraf, Azhar & Anam, 2015). In the inventory management system the forecasting about the product, arise as a big issue, the company need to improve their methods of forecasting to reduce the cost. The company can use various advanced technologies like CRP/VMI support that will help them in managing their resources and maintaining the delivery time (Hong & Doz, 2013).  With this, the company can maintain the proper and adequate inventory level. It has become important for the company to implement the real-time management system which is available 24*7 in order to ensure the effectiveness and efficiency of the inventory management. The system will ensure the survival, success and long-term growth of the company.    

Conclusion:

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

References:

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Hong, H. J., & Doz, Y. (2013). L’Oreal masters multiculturalism. Harvard Business Review, 91(6), 114-118.

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Lee, T., & Kashmanian, R. M. (2013). Supply Chain Sustainability: Compliance?and Performance?Based Tools. Environmental Quality Management, 22(4), 1-23.

Loreal. (2018a). Our Activities. Retrieved from: https://www.loreal.com/our-activities

Loreal. (2018b). Who we are. Retrieved from: https://www.loreal.com/who-we-are

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