l'oreal supply chain case study

Technology and Operations Management

Mba student perspectives.

• Assignments
• Assignment: RC TOM Challenge 2017

L’Oréal: A Gorgeous Supply Chain Makeover

L’Oréal, the world's largest cosmetics company, is a global leader in operational innovation and digitalization to serve their ever-evolving fashion customers worldwide.

L’Oréal, the world’s largest cosmetics company[1], remains an acclaimed winner on the annual Gartner’s Top 25 Supply Chains[2] ranking and a global leader in embracing operational innovation and digitalization. What you may ask, is the secret sauce to this beauty company’s story of supply chain success?

Understanding the Basics

L’Oréal’s operations are highly complex – with business across 140 countries, 150+ distribution centers, 42 factories, 34 brands, and 8 distribution channels (including hair salons, mass-market retailers, department stores, drugstores, e-commence, etc.)[3]. L’Oréal’s growth strategy requires a commitment to new product innovation (up to 50% of products refresh annually[4]) focused on new and emerging markets, expansion across e-commerce channels, and widened diversity of distribution. These unique challenges, present L’Oréal’s supply chain leaders with the need for great agility and adaptability to serve their ever-evolving customers worldwide. Leading industry transformation, L’Oréal has invested in cutting-edge technology solutions and supply chain automation.

Progress Through the Years

In 2014 Emmanuel Plazol, L’Oréal’s head of supply chain, told press “our current approach of segmenting by distribution channel needed to evolve”[5]. Therefore, L’Oréal re-designed supply chain capabilities and implemented a world-class integrated information system that provided collaborative compilation of volume forecasts across sales, marketing, supply chain, and finance teams, which were then shared worldwide with their factory and distribution centers[6].

The results[5], improved sales forecast accuracy rate of 60% to 71%, while logistics costs decreased, and shipments increased 40%+ over five years from 2009 to 2014. Intended to improve order precision and responsiveness across the supply chain, even L’Oréal customers at shelf noticed the more efficient stock management[7] and in 2016 retailer’s saw improved customer service levels by more than 2%, while holding inventory constant[4].

Emmanuel Plazol said, “We thought the transformation would come only if our supply chain was close to the markets and customers, and was end-to-end. And for this to happen our supply chain had to cover from the customer to the factories”[5].

Pathways to Just Digital Future

Beyond inventory management, L’Oréal has felt the significant operational impact of e-commerce and “change in order profiles” says Erik Rodriguez, director of supply chain for L’Oréal Americas. “The sheer volume of orders has increased, but the lines per order has decreased. Additionally, there’s pressure from our retail customers to reduce our lead times and improve our delivery times because they are running leaner inventories”[8].

To meet the needs of the dynamic market, L’Oréal leverages automation like robotics and slotting software to mechanize their distribution centers globally[8]. By implementing these new solutions, L’Oréal has stayed competitive in order fulfillment speed, reduced labor cost, continuous quality improvement, and meeting the surges during demand peaks. Now, what’s ahead for L’Oréal supply chain innovation?

Strategy Recommendations

Without a doubt, L’Oréal will continue to feel the pressure from the competitive landscape. L’Oréal’s 5%+ annual growth rate has caught the attention of small independent make-up labels piling into the market, noted in The New York Times[9]. Their supply chain transformation and digitalization most empower the company’s success!

As a power-house marketing company, L’Oréal must put the customers need at the center of their supply chain strategy. They must observe, analyze, and predict consumer trends so they can quickly monetize the beauty industry’s impulsiveness and spontaneity. I recommend:

1. L’Oréal should use scarcity to their advantage! If L’Oréal approached each product line as a test-and-learn model, for instance, launching only twenty thousand units of the exclusive Gigi Hadid Maybelline Mascara in USA Target stores; they could predict sales forecasts by region, consumer target, color palette, etc. before launching globally. This fast-fashion apparel business model[10] applied to the beauty industry means less inventory, more collections, and greater flexibility to react to the changing tastes of fashion consumers.

2. L’Oréal should improve their direct-to-consumer sales channel! Today, L’Oréal across its 34 brands, relies on the majority of sales to come from department stores, mass-market retailers, and drugstores. L’Oréal’s predominant e-commerce strategy has been sending consumers from their websites to Amazon.com, Walmart.com, or Target.com to purchase online – but as a result L’Oréal forfeits control of the consumer experience, potential of higher margin, and strategic data analytics. L’Oréal should make strides for a best-in-class e-commerce and omnichannel user experience, driving direct online sales for a stronger customer relationship and better data insights.

3. L’Oréal should build localized, entrepreneurial capabilities! The simple fact is Chinese beauty consumers demand something very different than Americans. L’Oréal must react to regional differences in consumer preferences, while using the same foundational supply chain capabilities. I believe, segmented innovation and regional agility must be at the core of L’Oréal’s organizational culture. Therefore, L’Oréal must build a supply chain for smaller production runs, quicker leadtimes, and more volatile demand cycles for localized market needs.

Key Outstanding Question

How do you manage costs and margins against the chase for customization, speed, and flexibility in L’Oréal’s global supply chain?

(Word Count 798)

[1] “L’Oréal – Statistics & Facts.” Statista Inc., The Statistics Portal, www.statista.com/topics/1544/loreal/. [2] “Gartner Announces Rankings of the 2017 Supply Chain Top 25.” The Supply Chain Top 25, Gartner, Inc., 25 May 2017, www.gartner.com/newsroom/id/3728919. [3] “L’Oréal Key Figures.” L’Oréal Group, www.loreal.com/group/our-activities/key-figures. [4] “The 2016 Supply Chain Top 25: Lessons from Leaders.” Supply Chain 24/7, 19 Sept. 2016, www.supplychain247.com/article/the_2016_supply_chain_top_25_lessons_from_leaders. [5] Marle, Gavin Van. “L’Oréal Completes Five-Year Supply Chain Transformation – ‘Because We’re Worth It’”. The Loadstar, 9 Oct. 2014, theloadstar.co.uk/loreal-supply-chain-transformation/. [6] “Improving Supply Chain Efficiency.” L’Oréal Group, www.loreal-finance.com/en/annual-report-2015/supply-chain. [7] “L’Oréal’s Supply Chain Make-Over.” PYMNTS, 15 Sept. 2014, www.pymnts.com/in-depth/2014/loreals-supply-chain-make-over/. [8] Trebilcock, Bob. “L’Oréal: To Automate or Not to Automate.” Supply Chain 24/7, 6 Oct. 2016, www.supplychain247.com/article/loreal_to_automate_or_not_to_automate/forte_industries. [9] “Luxury Cosmetics and Chinese Demand Drive Sales Bounce at L’Oréal.” The New York Times, 2 Nov. 2017, www.nytimes.com/reuters/2017/11/02/business/02reuters-loreal-results.html. [10] “Zara’s ‘Fast Fashion’ Business Model.” The Wharton School, The University of Pennsylvania, 18 Feb. 2016, kwhs.wharton.upenn.edu/2016/02/zaras-fast-fashion-business-model/.

Student comments on L’Oréal: A Gorgeous Supply Chain Makeover

This is great Darrin! Profitability and customer promise are usually trade-offs, especially in the short term!

I believe the giant beauty conglomerate L’Oréal is losing certain share to the small premium personal care brands boosted by digitization, such as Dollar Shave Club. To regain its share, as you wrote, L’Oréal must put consumer at the center of its supply chain strategy. Meanwhile, they must continue to invest on innovation and R&D. They must invest on building eCommerce as well – benefits include hugely valuable consumer data and higher margin. All these investments might hurt bottom-line in the short term, but it will bring sustainable growth in the long term, which L’Oréal must be able to convince its shareholders, bring them on board and ask for their patience. But this will be challenging undoubtedly.

Thanks for your write-up Darrin!

You touch on the core issue facing many of the traditional businesses, especially CPG companies. I looked up all of L’Oreal’s brands and was amazed at the breadth and diversity, from Giorgio Armani to Kiehl’s. I think the question is how to best position its suite of brands to face digitization. We saw in the Kiehl’s case that their online website provided the company with detailed information on its customers and allowed the company to better service them and earn a higher margin. Can this direct-to-consumer model also be achieved across the rest of the suite of products? Should it be?

When looking at planned scarcity, I am little doubtful that it can be done at the parent company level. I think it may work at the individual brand level and would require the buy-in of the brands’ management teams. I think L’Oreal needs to be careful that any marketing plan fits the vision and spirit of the brand. Additionally, I think that every brand may have different inventory days with the example of a high-end luxury retailer like Giorgio Armani vs. Kiehl’s.

To me, there are two things happening here. First is the impact of digitization on back-end operations. L’Oreal must leverage digital solutions to continually improve their supply chains. Based on the transformations you highlight (world-class information systems, automation in distribution centers, etc.), they are already making big investments here to stay competitive.

The second impact of digitization is more complex: the impact on consumer behavior and demand-side dynamics. Your strategic recommendations focus entirely on this second point, and rightly so. In today’s world, large incumbents like L’Oreal have to be two steps ahead to compete with tech-based, D2C small premium players like Dollar Shave Club, as Zoe mentions.

I’m not sure how I feel about the scarcity tactic. I agree with the prior comment, that this would need to be considered at the brand-level, as it best fits for higher-end brands but might isolate or frustrate core consumers of lower-end brands that should be focused on reliability and accessibility.

To your second suggestion – the importance of direct-to-consumer sales is paramount, I completely agree. There is enormous potential for margin capture, and more importantly, brand loyalty. Currently only a handful of their brands sell D2C on individual websites [1]. I wonder if there is potential for them to leverage the broader portfolio to create a single platform offering a differentiated customer experience and perhaps loyalty benefits, though. As you stated it, their mission should be to create “a stronger customer relationship.”

[1] https://consumergoods.com/loreal-grows-direct-consumer-channel )

Thanks for the article, Darrin! As its supply digitizes, L’Oréal seems to be facing a core tension around the large-scale implications of a digital supply chain and the small-scale implications of region-specific consumer demand. While L’Oréal has successfully used robotics and slotting software in global distribution centers, it seems challenging to apply these while also increasing the number of SKUs to account for different consumer demands. To some extent, L’Oréal might be motivated to train customers worldwide to have as similar tastes as much as possible, in order to reap the full benefits of digitization for its supply chain.

L’Oréal seems likely to face similar tensions as they develop their direct-to-consumer sales channels. Because their portfolio of brands runs the gamut from extreme luxury to a shampoo I can buy for ten dollars at CVS, they need to be wary of over-affiliating brands that should be kept segmenting. While they should certainly try to own the online consumer experience rather than sending customers to Amazon.com or Walmart.com, they will need to make sure to keep each brand experience individual and unique.

Very thoughtful arguments, Darrin. Thank you. I read it having little familiarity with L’Oreal or the broader cosmetics industry; please contextualize my comments as such.

There were two main points that struck me in your essay and in the comments it inspired. First, I very much agree with you, Zoe, and Lisa on the importance of investing in online direct-to-consumer sales. I appreciate Sarah’s caution about the danger of brand conflation, but I wonder if L’Oreal can mitigate that by investing in a basic e-commerce back-end template that allows them to have distinct consumer-facing experiences across all of their brand websites. Vox Media comes to mind; while not in the e-commerce space, they have basically adopted this approach to managing their complex, varied online footprint. Regardless of the specific solution, I do not think L’Oreal can afford to cede so much value to Amazon and others.

Second, I agree with Sarah’s instincts as they relate to increasing SKUs to accommodate regional tastes. I worry about complicating an improving supply chain system, and I wonder if we can achieve the same ends (happy, satisfied customers) by different means. Is L’Oreal’s brand strong enough that marketing could drive demand towards more consistent choices across geographies? I suspect the answer varies by brand; different brands might have different customer promises and, therefore, different pressures to customize regionally.

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L’Oréal’s ACD supply chain puzzle: Diagnosing the root causes of underperformance

This case depicts an actual, real sequence of events in L’Oreal’s Active Cosmetics Supply Chain. The case provides an illustration of the challenges facing large, multi-national organizations in aligning their supply chain planning along several dimensions. The span of the planning is from customers in several markets to the centralized production at the single source factory. The framework for laying out the facts of the case is the senior operations management request to conduct a supply chain planning audit on the Active Cosmetics planning process. The audit request was a direct response to complaints regarding customer service levels by general management. The case begins by setting the narrative that sets the audit in motion. Key actors across the supply chain speak their voices through testimony to the auditor, who serves as protagonist in the story of the case. This vehicle permits the case to express different points of view with objectivity, allowing the reader to consider the validity of each actor’s behaviour using that actor’s perspective. The case ends with a challenge to the reader to finish what the narrator has started. Having seen the case through his eyes, the reader must now experience the rest of the story as the narrator experienced, and prepare their own analysis and presentation for senior management.

• To illustrate the organizational challenges in large, multinational teams, where information is difficult to disseminate, alignment is difficult to obtain and incentives can distort good intentions.
• To deepen understanding of the technical and managerial challenges of supply chain planning in a complex, multinational configuration.
• To learn how to transform an analysis into a coherent presentation for senior management.

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L’Oréal Italy: Customer-focused makeover

• Call for Change
• When Tech Meets Human Ingenuity
• A Valuable Difference
• Meet the Team
• Related Capabilities

Call for change

Customers were already making ever-greater demands on the consumer-packaged goods (CPG) supply chain, then the pandemic struck, placing CPG companies under unprecedented pressure. In the wake of this disruption, many companies sought to make supply chains more agile to better serve retailers based on business priorities.

Similarly, the cosmetics company, L’Oréal Italy, wanted to reimagine and digitally enable its supply chain to be more customer focused. Smooth, streamlined processes that deliver the right product to the right customer at the right time would differentiate L’Oréal Italy in the market and contribute to growth.

In particular, the order-to-cash cycle is an important area of the supply chain to get right since it influences the quality of the customer relationship. Order-to-cash encompasses all customer interface processes, from retailer orders to financial reconciliation. Small hiccups with orders, for instance, can have an outsized effect on customer satisfaction. For this reason, L’Oréal Italy targeted order-to-cash for transformation.

Four product divisions carried out order-to-cash according to different methods. Each division used its own criteria to segment retail customers, meaning that several divisions might prioritize the same retailer differently, leading to multiple service levels and experiences, with different points of contact. In addition, different processes across divisions meant the company couldn’t exploit order processing and automation synergies or approve customer orders efficiently.

L’Oréal Italy sought assistance in cutting through the complexity. It needed new processes to transform the order-to-cash cycle and help employees make decisions in a systematic fashion rather than rely on specific employee experiences.

"The customer segmentation and process harmonization work Accenture performed is critical to our broader order-to-cash program at L’Oréal." — PIERO GAMBINO , Country Operations Director – L’Oréal

When tech meets human ingenuity

L’Oréal Italy teamed with Accenture to transform order-to-cash processes across its Consumer Products, Luxury, Active Cosmetics and Professional Products divisions. To kick off the strategic program, we helped the team develop clearer strategic guidelines across divisions and support customer collaboration. At the same time, we assessed order-to-cash processes across divisions, identifying pain points such as uncoordinated cross-functional communication workflows and disconnected processes for approving customer orders. To enrich our insights, we also used a process mining tool.

We created a new customer segmentation framework that aligned divisions across key retailer interaction areas, such as commercial, demand generation, supply chain collaboration, and customer administration and communications. We combined information like credit disputes, shipping points and payments, for instance, to create a holistic view of the retail customer. This enables L’Oréal Italy to better understand and coherently categorize its loyal and priority retail customers.

The new customer framework provides a view into each division, as well as across divisions, and serves as the foundation for process harmonization. The framework was helpful to identify areas of process improvement and interventions across divisions. The team also identified opportunities where innovative new technologies like robotic process automation (RPA), descriptive and predictive analytics, AI, and machine learning could enhance efficiency and mitigate risk.

A valuable difference

The new customer framework helps L’Oréal Italy serve retailers at mutually agreed levels to enhance the customer experience. It also provides a stronger base to build a service catalog for each segment and customer-specific service plans.

Better customer understanding and more precise retailer segmentation means L’Oréal Italy can take a proactive approach with customers to foster greater collaboration on projects and services like customized retailer promotions. In addition, employees can work more strategically by offering higher levels of service to high-priority customers by providing different service catalogues.

The program also helped identify other areas where each division could improve process harmonization and simplification. As a result, L’Oréal Italy now has 20 potential initiatives it can work on to improve operational efficiencies.

Thanks to the program, employees can better align and coordinate activities across functions—like supply chain or administration—and divisions to provide consistent service. For instance, improved alignment means that employees in different departments won’t waste time duplicating activities for the same customer.

With a more customer-centric approach, the company can align people and resources to bring the right products and services to the right retail customers at the right time. The harmonized order-to-cash processes are also helping to drive strategic investments in new, targeted services.

Meet the team

Luigi D’Alonzo

Antonio Milano

Related capabilities, supply chain & operations.

L'Oréal's Biotech Venture to Reshape Cosmetics Supply Chain

In a groundbreaking move set to transform the cosmetics supply chain, L'Oréal has entered into a strategic partnership with Abolis Biotechnologies and Evonik Industries.

This collaboration aims to research, develop and produce an increased volume of bio-based ingredients, addressing a critical sustainability challenge in the beauty and personal care sector.

The industry's carbon footprint is heavily influenced by raw material sourcing, which accounts for 30-50% of its emissions. This new venture seeks to mitigate this environmental impact through innovative biotechnology solutions.

Barbara Lavernos, Deputy Chief Executive Officer in charge of Research, Innovation and Technology at L'Oréal Group, emphasises the significance of this partnership: "We are proud to invest in Abolis and expand our collaboration, working together as a tight ecosystem alongside our historical partner, Evonik. 

“By mobilising our respective companies' research, innovation and manufacturing capabilities and expertise, we are building an end-to-end value chain that we believe has tremendous potential to be a game-changer in bio-based ingredients for beauty."

Boosting sustainability in the supply chain

L'Oréal, a global leader in personal care with annual earnings of US$45.85bn in 2023, has set ambitious sustainability targets . The company aims to power all its sites with 100% renewable energy by 2025 and halve greenhouse gas emissions from product transportation by 2030.

This new partnership aligns with L'Oréal's goal of sourcing 95% of its formula ingredients from bio-based sources, abundant minerals, or circular processes by 2030.

The journey with Abolis began in 2019, which led to an expanded lab setup in 2022. These developments have paved the way for further expansion of this collaboration.

Evonik, a German specialty chemicals company with operations in over 100 countries and revenues of US$17bn in 2023, brings its expertise to the collaboration.

Bernhard Mohr, Managing Director of Evonik Venture Capital, states: "With Abolis' competencies in strain development and metabolic engineering and our collaboration with L'Oréal, we aim to unlock new opportunities in cosmetics."

Driving the sustainable transformation

The partnership was solidified during Abolis Biotechnologies' 2024 investment round, which raised US$38.9m.

Samantha Etienne, Global General Manager of BOLD, L'Oréal's venture capital fund, adds: "This investment highlights our belief in Abolis' potential to create a more sustainable future across various industries, including beauty."

The French global leader in personal care, L’Oréal Group, boasts a workforce exceeding 90,000 and reported earnings of €41.18bn (US$45.85bn) in 2023.

Home to 37 renowned brands like Garnier, NYX Cosmetics and Maybelline, L’Oréal is steadfast in reducing its industrial greenhouse gas (GHG) emissions.

Over two decades, it has actively pursued energy efficiency, renewable energy use, and set explicit targets.

Its ambition stretches to powering all sites with 100% renewable energy by 2025 and slashing GHG emissions from product transportation by half come 2030.

Evonik's proactive climate stance is articulated through its GHG reduction targets, attested by the Science Based Targets initiative (SBTi) to align with a 'well below 2 degrees' trajectory. 

The partnership was solidified during Abolis Biotechnologies' 2024 investment round, which raised €35m (US$38.9m).

This tri-party agreement represents a significant shift in the cosmetics supply chain , potentially reducing reliance on traditional raw material sources and paving the way for more sustainable, bio-based alternatives.

Cyrille Pauthenier, CEO of Abolis Biotechnologies, expresses enthusiasm about the collaboration: "We are thrilled to receive this round of funding which will allow us to take the next step in pushing the boundaries of innovation in biotechnology. 

“Our collaboration with L'Oréal and Evonik will empower us to create ground-breaking solutions tailored to drive the sustainable transformation of the industries we serve including beauty, nutrition and healthcare."

With L'Oréal Group investing over €1bn (US$1.1bn) in R&I annually, a significant portion is dedicated to Green Sciences, primarily focusing on biotechnologies. This partnership is poised to accelerate the development of innovative, environmentally friendly ingredients for the beauty industry.

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An Insight Into Loreal Supply Chain Strategy

In this blog post, you can gain insights into Loreal supply chain strategy and the broader dynamics that shape the cosmetics industry’s supply chain landscape.

In the fast-paced world of cosmetics and beauty, where trends evolve as quickly as the seasons, an efficient and effective supply chain strategy is nothing short of essential. Among the global giants of this industry, L’Oréal stands out not only for its iconic products but also for its meticulously crafted supply chain strategy. So, let’s begin our exploration of Loreal supply chain strategy, uncovering the methodologies and principles that keep the beauty flowing, shelves stocked, and customers delighted.

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This blog post delves into the inner workings of L’Oréal’s supply chain, uncovering the strategies and practices that have enabled the company to maintain its position at the forefront of the beauty industry.

Table of Contents

The Crucial Role of Supply Chain Strategy

In the cosmetics industry, where trends can emerge and fade in a matter of weeks, having the right products available at the right time is paramount. A robust supply chain strategy is what enables companies like L’Oréal to synchronize their operations, from sourcing raw materials to delivering finished products. By doing so, they can respond swiftly to market demands, minimize waste, optimize costs, and ensure customer satisfaction.

Evolution of Loreal Supply Chain

The journey of L’Oréal’s supply chain strategy is a testament to the company’s adaptability, innovation, and commitment to staying ahead in the dynamic world of cosmetics and beauty. From its humble beginnings to its current global prominence, L’Oréal’s supply chain has evolved significantly, shaped by industry trends, technological advancements, and changing consumer preferences.

Early Days: Building the Foundation

In its early years, L’Oréal’s supply chain was characterized by traditional processes that focused primarily on manufacturing and distribution efficiency. The company’s growth was driven by its dedication to product quality and an expanding product line. During this phase, supply chain management was relatively more straightforward, focusing on meeting local demand.

Shift to Globalization: Scaling Up Operations

As L’Oréal expanded its reach beyond its home market in France, its supply chain strategy had to adapt to the challenges of global operations. The company’s expansion into new regions required efficient cross-border logistics, localized manufacturing, and streamlined distribution networks. L’Oréal began establishing a more extensive supplier base, diversifying sourcing to ensure a stable supply of raw materials.

Technology and Innovation: Transforming Operations

The turn of the millennium marked a significant shift in L’Oréal’s supply chain strategy by integrating technology and data-driven practices. Advanced supply chain management systems, predictive analytics, and digital platforms were adopted to enhance demand forecasting accuracy, optimize inventory levels, and improve production planning. This transition allowed L’Oréal to respond rapidly to market shifts and consumer preferences, reducing lead times and enhancing product availability.

Customer-Centric Approach: Personalization and Agility

As consumer preferences evolved towards personalization and customization, L’Oréal adapted its supply chain to cater to these demands. The company introduced flexible manufacturing processes allowing smaller production runs and quicker product launches. This agility enabled L’Oréal to respond to emerging trends swiftly, ensuring its products remained relevant and desirable in a competitive market.

Sustainability and Ethical Practices: Supply Chain Responsibility

In recent years, L’Oréal has strongly emphasized sustainability and ethical practices throughout its supply chain. This shift reflects a broader industry trend towards environmentally conscious consumerism. L’Oréal implemented measures to source responsibly, reduce waste, and minimize the environmental impact of its operations. These initiatives align with consumer values and contribute to cost savings and long-term viability.

The Present and Beyond: Continuous Innovation

L’Oréal’s supply chain evolution is driven by the company’s commitment to staying at the forefront of the beauty industry. Integrating artificial intelligence, machine learning, and advanced analytics continues to refine demand forecasting, optimize production processes, and enhance logistics efficiency. Additionally, L’Oréal’s focus on digital engagement and e-commerce necessitates agile supply chain solutions to meet the demands of online retail.

L’Oréal’s supply chain evolution reflects its ability to adapt, innovate, and align with changing market dynamics. From its early days of local manufacturing to its present-day global and tech-integrated operations, L’Oréal’s supply chain strategy is a blueprint for success in the cosmetics industry. By embracing globalization, technology, sustainability, and customer-centricity, L’Oréal continues to create a seamless and efficient supply chain that drives its success as a global beauty powerhouse.

Core Components of Loreal Supply Chain Strategy

L’Oréal’s remarkable success in the cosmetics industry can be attributed, in part, to its meticulously designed supply chain strategy. The company’s ability to consistently deliver high-quality products to a global customer base is underpinned by several core components that work in harmony to ensure efficiency, agility, and customer satisfaction.

1. Demand Forecasting and Planning

Its sophisticated demand forecasting and planning process is at the heart of L’Oréal’s supply chain strategy. The company utilizes advanced analytics and historical data to predict consumer trends and demand patterns. This allows L’Oréal to adjust production levels and inventory management strategies to meet anticipated market needs. By accurately forecasting demand, L’Oréal minimizes the risk of overstocking or understocking products, optimizing resource allocation and reducing costs.

2. Inventory Management

L’Oréal’s commitment to lean inventory practices helps balance maintaining product availability and reducing excess stock. Through real-time visibility into inventory levels across its distribution network, the company ensures that products are available when and where customers need them. Efficient inventory management also helps L’Oréal respond promptly to changing market demands and new product launches.

3. Manufacturing and Production

L’Oréal’s production process is characterized by flexibility and innovation. The company employs agile manufacturing techniques to adjust production volumes and introduce new product variations quickly. This flexibility is crucial in an industry where trends shift rapidly, allowing L’Oréal to keep its product portfolio relevant and precisely meet consumer preferences.

4. Distribution and Logistics

L’Oréal’s extensive distribution network spans the globe, and its logistics operations are finely tuned to ensure timely and accurate deliveries. The company leverages data analytics and technology to optimize routes, minimize transportation costs, and reduce delivery times. L’Oréal’s distribution centers are strategically located to serve different regions efficiently, enabling the company to reach its customers promptly while minimizing its carbon footprint.

5. Customer-Centric Approach

Understanding that consumers are at the heart of its success, L’Oréal employs a customer-centric approach throughout its supply chain. The company’s demand-driven strategy ensures that products are available when and where customers want them. L’Oréal’s focus on personalization and customization aligns with changing consumer preferences for unique and tailored beauty solutions.

6. Innovation and Technology Integration

L’Oréal embraces technological advancements to enhance its supply chain operations. From utilizing artificial intelligence for demand forecasting to implementing Internet of Things (IoT) sensors for real-time inventory tracking, the company integrates cutting-edge technologies to optimize efficiency and accuracy in its supply chain processes.

7. Sustainability and Ethical Practices

A hallmark of L’Oréal’s supply chain strategy is its dedication to sustainability and ethical practices. The company’s commitment to responsible sourcing, environmentally friendly packaging , and reduced waste aligns with consumer expectations for conscious consumption. This contributes to L’Oréal’s brand image and resonates with an increasingly eco-conscious customer base.

L’Oréal’s supply chain strategy is a harmonious fusion of diverse components that work cohesively to ensure product availability, responsiveness, and sustainability. By leveraging demand forecasting, efficient inventory management, agile manufacturing, robust distribution, customer-centric practices, technology integration, and ethical principles, L’Oréal has cultivated a supply chain that is a model for success in the cosmetics industry. This holistic approach has allowed the company to meet market demands consistently, stay ahead of trends, and deliver on its promise of beauty to millions worldwide.

Challenges and Future Outlook for Loreal Supply Chain Strategy

While L’Oréal has successfully developed a sophisticated and efficient supply chain strategy, it is not immune to the challenges and disruptions that can impact any global business. Looking ahead, the company must continue to innovate and adapt to address emerging trends and overcome potential obstacles in the ever-evolving cosmetics industry.

Challenges in the Changing Landscape

• Rapidly Shifting Consumer Preferences:  Consumer preferences in the beauty industry can change in the blink of an eye. Keeping up with these trends and ensuring that the supply chain is agile enough to respond swiftly is a significant challenge.
•   Sustainability Pressures:  As sustainability becomes increasingly important to consumers, L’Oréal’s supply chain must evolve to incorporate eco-friendly practices, responsible sourcing, and reduced environmental impact.
•   E-commerce Expansion:  The rise of e-commerce demands different supply chain capabilities, including efficient last-mile delivery and optimized online shopping experiences. Adapting to this digital landscape requires ongoing adjustments.
•   Global Uncertainties:  Geopolitical factors, trade regulations, and economic shifts can impact supply chain dynamics. L’Oréal must navigate these uncertainties to maintain a stable and efficient supply chain.
•   Supply Chain Disruptions :  Natural disasters, pandemics, and other unforeseen events can disrupt supply chains. Building resilience to such disruptions through contingency planning is essential.

Future Outlook and Strategies

• Digitalization and Technology Integration: L’Oréal’s future supply chain strategy will likely involve integrating emerging technologies like blockchain for transparent sourcing and IoT for real-time tracking. This will enhance supply chain visibility and decision-making.
• Personalization and Customization: As personalization continues to be a trend, L’Oréal might explore further customization options, requiring more flexible and responsive supply chain processes.
• Sustainability as a Driver: The company’s commitment to sustainability will drive innovative practices such as using recyclable materials, reducing waste, and exploring carbon-neutral transportation options.
• Data-Driven Insights: L’Oréal can leverage big data and analytics for more accurate demand forecasting, helping to optimize inventory levels, reduce costs, and meet consumer demands more effectively.
• Collaboration and Supplier Relationships: Strengthening collaboration with suppliers and partners can lead to better risk management, cost optimization, and innovative ideas for improving supply chain efficiency.
• Resilience Building: L’Oréal will likely invest in building a more resilient supply chain, with backup suppliers, diversified sourcing, and contingency plans to mitigate disruptions.

Loreal supply chain strategy has come a long way, driven by innovation, technology, and a commitment to excellence. However, the future landscape will bring both opportunities and challenges. By staying attuned to changing consumer behaviors, embracing technological advancements, prioritizing sustainability, and cultivating a proactive approach to challenges, L’Oréal is poised to continue its legacy as a global beauty leader. Through ongoing evolution and adaptation, the company can ensure its supply chain remains a cornerstone of its success in the ever-evolving cosmetics industry.

DFreight: Revolutionizing Shipping and Supply Chain Management for the Cosmetics Industry

Imagine a world where shipping cosmetics is as effortless as applying your favorite shade of lipstick. Enter DFreight, the trailblazer turning this vision into reality by infusing innovation into the heart of shipping and supply chain management within the dazzling cosmetics industry.

With brilliance, DFreight’s digital platform and mobile app have unraveled the complexities that often shadow the shipment of cosmetics. Like a makeup artist’s expert touch, DFreight’s technological finesse ensures real-time tracking that’s more precise than a cat-eye flick and document management as seamless as blending foundation.

Fragile as a glass perfume bottle, cosmetics demand exceptional care during transit—here, DFreight’s expertise truly shines, guaranteeing that each product glides through its journey with the grace it deserves.

From adhering to stringent regulations with the swiftness of a precision eyeliner application to catering to the ever-changing whims of the cosmetics market with the agility of a shimmering eyeshadow palette, DFreight has transformed shipping into an art form, enhancing supply chain visibility with every step.

With DFreight, cosmetics businesses receive logistical solutions and a partner that understands the vibrancy, fragility, and time sensitivity that defines the beauty world.

In a world where beauty is an ever-evolving canvas, L’Oréal has mastered the art and redefined the strokes. Through an insightful exploration of L’Oréal’s supply chain strategy, we’ve uncovered the harmonious symphony of innovation, sustainability, customer-centricity, and technological integration that drives the company’s success.

As we conclude this journey, it’s evident that L’Oréal’s supply chain strategy isn’t just about products; it’s a masterpiece carefully crafted to capture hearts, mirror trends, and exceed expectations in an industry where every shade, scent, and texture matters, L’Oréal stands as a beacon, guiding us through the remarkable intersection of cosmetics and supply chain brilliance.

How does L’Oréal manage its global supply chain network?

L’Oréal balances central oversight with regional autonomy, maintaining quality standards while adapting to local market dynamics.

What role does technology play in Loreal supply chain strategy?

Technology, including AI and data analytics, enhances demand forecasting, production planning, and real-time tracking.

How does L’Oréal ensure product availability through its supply chain?

L’Oréal uses advanced analytics to forecast demand and manage inventory, ensuring products are available globally.

How does L’Oréal address disruptions in its supply chain?

L’Oréal has a comprehensive risk management strategy to address disruptions, including alternative sourcing options, diversified suppliers, and contingency plans for unforeseen events like natural disasters or geopolitical changes.

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L’Oréal’s Dilemma: Aligning Beauty Trends With Ethical Goals

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On January 31, 2017, L’Oréal became a founding member of the Responsible Mica Initiative to combat safety concerns within their supply chain involving the mineral mica. Mica is affordable and holds unique qualities that make it very attractive in the cosmetic industry. However, it has received a lot of negative attention in recent years due to private investigations exposing inconsistencies between the message companies are sending to their customers, and what is actually happening within mining communities. As the leading cosmetic company in the world, L’Oréal’s actions have a large impact on these communities. This case study examines the approach L’Oréal has taken to combat these issues and possible extra steps they could take.

“Where the consumers are not concerned, the industry can just hide” Rob Harrison, Founder of CNA Insider

“We know perfectly the issue about mica. We have been working on this issue for a number of years. We have been cooperating and engaging with local non-governmental organizations to work on this issue of mica,” Emmanuel Lulin, L’Oréal’s senior vice-president and chief ethics officer

“People are dependent on mica and if we don’t work here, then we will all die. There are no other options for work.” Dimpi Devi, mica picker

Introduction

As Nicolas Hieronimus reflected on his first 6 months at the helm of L’Oréal, he couldn’t help but feel a deep sense of satisfaction. After all, the Paris-based beauty and personal care giant had bounced back from a disastrous 2020 marked by pandemic-induced lockdowns and retail store closures in grand fashion. Thanks to buoyant sales in China and strong e-commerce growth, the maker of Lancome and Maybelline cosmetics had reported 13% revenue growth in Q3 2021, following a scorching 33% increase during the previous quarter. L’Oréal was positioned as a shining example of a resilient and adaptable business that had emerged stronger from a period of global economic upheaval.

Hieronimus’ feelings of pride, however, were mixed with some doubt and unease. He knew that, despite impressive numbers and recent positive developments in terms of the company’s success, L’Oréal was not exactly perfectly positioned or free of risk. In fact, one of the greatest risks to the company’s reputation, and the supply chain, came from an unlikely yet vital source: mica.

A key component in cosmetics production, mica has rare properties that gives eyeshadow and lip gloss their sparkle and shine. Mica was cheap and plentiful, but L’Oréal had a history of buying mica from sources which mined the ingredient in an unethical way. Recent exposés on mica mining had revealed to the public that L’Oréal’s mica came from sources which used child labor and exposed miners - including children - to health and safety hazards. Since these articles had been published, L’Oréal had been a driving force behind industry efforts to eradicate abuse and enhance worker safety. Still, the new CEO couldn’t help but wonder whether bolder steps were needed to address this issue and reduce reputational risk (Moloney , 2017) .

The Ingredient Mica

Mica, a natural mineral found in many regions around the world, was used by L’Oréal due to its sparkling and glowing qualities for eyeshadow, lip gloss, and many other makeup products. It was listed as an ingredient by the names of ‘Mica’, ‘Potassium Aluminum Silicate’ or ‘CI 77019.’ The richest quality mica was known to be from India and Madagascar.

Within India, the largest mica mining communities were in the states of Andhra Pradesh, Bihar, Jharkhand, Maharashtra and Rajasthan. The regions of Bihar and Jharkhand alone produced 25% of the global total as of 2016 (Kate et al. , 2016) . These regions were also the site of the most dangerous and deadly mining conditions. The process for mining mica is not easy and has,in fact, been illegal in Jharkhand since 1980. To gather mica legally, it must be sifted through topsoil where it was less abundant and very dusty. The alternative allowed for much more quantity, but it was extremely dangerous. It required going into small underground tunnels and breaking surrounding walls to collect mica stones. The rock was then hammered down and sorted through to gather the highest quality sections of the stone. In 2021, At least 70% of India’s mining output was mined in this illegal, yet more profitable manner (Chia , 2021) .

The walk to the mines could be miles and the mining tunnels were unstable and collapsed frequently. In January 2021 alone, there were 3 official reports of mine collapses in Jharkhand although many such collapses go unreported. About 10-20 people lost their lives in these mines each month. The active mine shafts are hard to reach and therefore rarely inspected. An estimated 22,000 children as young as 4 years old work in mica mines in the Jharkhand region (Chia , 2021) . According to Schipper & Cowan (2019) , “Of all forms of hazardous work, mining is by far the most mortally dangerous sector for children, with an average fatality rate of 32 per 100,000 children between the ages of 5 and 17.”

Mica’s main uses were found in electronics, paints, construction, and cosmetics. Although the cosmetics industry was the 4th most common usage of the ingredient, making up only 10-18% of the mica market, this industry was easy to target because the ingredient is visible on every ingredient label (RMI , 2021) . Makeup customers were overall more aware of what they’re putting on their skin than construction workers and manufacturers were about their auto parts and paint ingredients. Additionally, makeup trends were becoming more focused on glittery, shiny, and mica containing products overall, causing a notable increase in demand. The low cost of these products was very attractive in wealthy markets, while poor areas such as Jharkhand suffer the consequences.

L’Oréal’s infamous mica publicity problem started around 2014. Humanitarian groups and research organizations began writing about the dangerous conditions behind the production of beauty products. Being one of the world’s leading beauty companies, L’Oréal was a great example to catch the attention of the consumer market. This publicity was particularly problematic for L’Oréal as the former CEO, Agon, had made the company the booming global business that it is today with a focus on sustainability and inclusion (Abbitt , n.d.) .

About L’Oréal

The L’Oréal Group was established in 1909 by the scientist Eugène Schueller. Early CEOs of L’Oréal viewed the company as a scientific venture and designed a wide variety of hair and beauty products. The company became the world leader in cosmetics by 1998 and began specifically focusing on ethics around 2000. They were one of the first companies in France to establish a Code of Ethics, which was available in over 45 languages, and received 3 ethics awards since 2008. When Jean-Paul Agon became CEO in 2006, he had the mission statement of making beauty accessible to all, by all. Throughout his career, he proved to have excellent global strategies, emphasizing product and employee diversity, and sustainable initiatives. He once indicated that, “Delivering financial performance while being a committed corporate citizen is probably our greatest source of pride. This is what motivates us to always go the extra mile” (L’Oréal , 2020a) .

As of 2021, L’Oréal owned 36 brands with their 4 product lines being consumer products, luxe, professional products, and active cosmetics. Each of these lines focused on bringing confidence and beauty to different groups of people around the world. Within its consumer products was the world’s leading cosmetic brand, L’Oréal Paris. They had operations in 150 countries where they employed over 85,000 individuals. Over 2,500 of their staff consists of scientists who keep up with the newest trends in the industry (Craft , n.d.) .

Their profits followed a historically increasing trend, with the exception of 2020 during the Covid-19 pandemic. During the Covid-19 dip in profits, L’Oréal saw a decrease in sales by 4.43% in 2020 from 2019 profits. This followed their 5.17% increase from 2018 and 8.15% increase from 2017 (Macrotrends , n.d.) . This was due to store closures and increased unemployment rates across the globe. In response, L’Oréal turned its focus to improving its online platforms and marketing their products around self-wellness. Instead of focusing on its most popular make-up brands such as Maybelline, L’Oréal turned to its dermatologist products in its active cosmetics line which proved especially successful in China. Its brands that brought the highest profits improvements were Vichy, La Roche Posay and CeraVe (White , 2020) . With continuing focus on e-commerce and its digital try-on feature, ModiFace, added in mid-2019, L’Oréal surpassed competition in China such as Louis Vitton and Hermes (L’Oréal , 2020b) . Once large economies such as the United States and China began Covid-19 economic recovery, profits surged 20% in its luxury line and 13.1% in overall sales in 2021 Q3. Sales for the first half of 2021 amounted to 15.19 billion dollars, putting them back on track for ongoing profit increases (Spencer & Morland , 2021) .

L’Oréal’s continued innovative approach allowed for projected annual growth to amount to 7.98% (Simply Wall St. , n.d.) . Their latest brand acquisition was a vegan band, Youth to the People, signed on December 8, 2021. This brand recorded about $50 million in 2021 and welcomed another modern brand to L’Oréal Luxe’s growing portfolio. This enhanced L’Oréal’s focus that marketed a fair world with consciousness to the planet (L’Oréal , 2021) .

L’Oréal’s online consumer engagement also encouraged their success. To ensure their customers’ awareness of the trendiest products to buy, their digital beauty magazine linked right to their products. Articles posted throughout the year highlighted new and preferred products, with many described as “shiny” and “glittery.” These excellent marketing strategies build a high degree of consumer engagement. L’Oréal knows that their customers love to feel beautiful and stand out… but at what cost?

Mica Mining Communities

Child labor in India sparked international attention around 2005. With the increased interest in mica mining practices, numerous documentaries filmed in India with firsthand accounts of the communities were released. A recent film by CNA insiders published in May 2021 received 2.2 million views on YouTube (CNA , 2021) . This documentary discussed the mining system’s dangers and followed the supply chain directly from the mica mines through to the exporter in Jharkhand. The directors of the film risked their lives to enter the isolated areas where illegal mining took place. They interviewed families who suffered from loss of loved ones and explained the link between these lethal hazards and the big industries who source from these areas. Another famous documentary was filmed by Refinery 29 in 2019 with 15.4 million views on YouTube (Lebsack , 2019) . In this short film, Lebsack, the senior beauty editor at Refinery29, went undercover into mining communities and had conversations with children about their life and the conditions they worked in. These documentaries, along with many more, demonstrated the severity of the ongoing harmful working conditions, and kept the problem in the public eye. Investigators and journalists were willing to take significant personal risks in order to accurately and powerfully keep this issue from being forgotten or overlooked. With nearly two decades of these issues being public knowledge, it was evident that there was still a lot to be done to change the dangerous process of Mica mining. Thousands of individuals, many of them children, continued to suffer in order to allow consumers to possess all the makeup products that we use.

The global mica market was forecasted to be worth nearly 700 million US dollars by 2024 with 1.2 million metric tons of the mineral being mined annually (Lebsack , 2019) . The previously mentioned state of Jharkhand had many rich natural resources such as coal, copper, and mica, yet about half of the population lived in extreme poverty. Many of the individuals working in mines lacked access to education, health care, and safety gear. Each kilo of mica sold for about 10 US cents, with families earning about 2 USD on a good day. To send kids to school and change the lives of many in these communities, about 56 cents per kilo was needed (Lebsack , 2019) . With the aforementioned wage, very little money was left for food and other necessities, especially for such physically demanding tasks. With the lack of nutritious foods, more than 40% of children in these areas were malnourished. It was not uncommon to only eat every other day. This targeted indigenous individuals at a much higher rate where their families suffered from being stuck in this cycle for decades, and some even centuries.

Outside of their jobs, many miners were not aware of what mica was used for. Once mined, mica was sifted and sorted, and sold to traders. It was then sold to local stores that more thoroughly sorted through and cleaned the mica. These individuals also suffered from the constant exposure of dust for over 10 hours a day while bringing home about 2 USD a day. This mica was then sent to manufacturing units who processed the mica into powder and shipped it off internationally.

Throughout this entire process, there was a lot of corruption and commercial exploitation. Mines were very isolated and carefully monitored by locals who needed to conceal illegal mining activity. A method used to mask the activity was to sell to traders who sold it under the license of a legal mining community in a different part of the country, such as Rajasthan. This way, the product being sold was not traced back to the child labor or underground mining practices in Jharkhand. A method that warehouses and exporters could take to mask illegal activity was to obtain a certificate of ethical conduct regarding child labor. These were acquired by paying for them from the government, not by demonstrating ethical behavior (Al Jazeera , 2020) . In order to respond to this issue, the entire system, including local and international business partners and the local government, needed to be willing and able to cooperate and work together for a better alternative.

Alternatives

L’Oréal was not the only beauty brand who faced criticism for mica usage. Lush Cosmetics, a UK based brand who publicized their use of all natural and organic products, were also quickly targeted in popular media. In 2014, Lush tried to gain supply chain traceability, but found it to be an impossible task. Therefore, they decided to create biodegradable synthetic mica called fluorphlogopite and were completely mica free as of January1, 2018. By replacing mica, Lush was able to guarantee 100% cruelty free products. Some found this solution to be much more ethical, but others criticized the abandonment of the communities in need of income (Lush Fresh Handmade Cosmetics , 2020) .

A more affordable mica alternative was plastic mica. This was commonly made up of aluminum and plastic and was categorized as a microplastic. These microplastics were being banned in more and more countries due to their negative environmental impacts. Microplastics were proven to flow into water systems, cycle into marine life that is consumed by humans, and to harm the overall environment. In the United States, the FDA banned these microplastics in “rinse-off” cosmetics such as facial cleansers, but were still allowed in other products such as highlighter and glittery eyeshadows (Siegel , 2017) .

While finding substitutions for mica in beauty products avoided negative publicity for mica mining conditions, abandoning the mining communities as a whole was also criticized. Some companies such as Estee Lauder partnered with organizations such as the Kailash Satyarthi Children’s Foundation that connects parents to new income streams. This allowed for more sustainable lifestyles where parents could send their children to school instead of working in life threatening conditions. School education then allowed the children to have more opportunities in the future and break the cycle of poverty and reliance on mining within their families and eventually entire communities.

L’Oréal also adopted some of these practices. To reduce involvement in illegal mines, they increased their United States mica sourcing to 60% of their overall mica usage (Copp , 2017) . They also switched to synthetic mica where they are able, in order to reduce the demand of imported mica. Yet, L’Oréal did not substitute all mica in their cosmetics due to mica’s unique glow and protective properties in makeup (Rincón-Fontán et al. , 2018) . In an effort to continue obtaining real mica in an ethical way, L’Oréal partnered with an organization to stay involved in trade with India, encourage increased income, and enhanced living and working conditions for miners.

Responsible Mica Initiative

In 2016, the first Mica Summit was held in Delhi, India where representatives from all over the world came to speak about these mica mining issues, especially in regards to child labor. The attendance consisted of large cosmetic companies, pigment and coating industries, and civil society organizations. A major participant was Terre des Hommes, a charity organization based in the Netherlands, who focused on humanitarian and children’s rights. They initiated numerous investigations in 2015 surrounding mica mining and were largely involved in organizing the summit. In the conclusion of the summit, they stayed active in pushing the attendees to remain focused on their plans and goals moving forward. They also established accountability in the form of yearly reporting on mica mining progress.

In 2017, 20 representatives, along with Terre des Hommes, met to form the Responsible Mica Initiative (RMI). L’Oréal was one of the co-founders and members alongside some other well-known companies such as H&M, Burt’s Bees, LVMH, Porsche, and Avient. The members established RMI as a non-governmental organization with a mission to eradicate illegal and unacceptable conditions of mining in the states of Bihar and Jharkhand by 2030. Their approach focused on three components: supply chain mapping and workplace standards, community empowerment, and legal frameworks (RMI , 2021) . As of 2019, they had 59 members, reached 80 villages, supported over 5,890 households, and enhanced living conditions for over 30,000 children (Fremont , 2020) .

However, 70% of mining in Bihar and Jharkhand remained illegal, and eradicating this by 2030 remains a very ambitious, and perhaps unachievable, goal.

Even with the good intentions of the companies who became members of RMI, there was slow progress within the mining communities in years following the establishment of RMI. People within these traditional mining communities still felt unheard. Many felt like they were stuck in an endless cycle, and if they got out, alternative sources of income were sparse and uncertain. Miners continued to perform work in sandals, old clothes, and improper equipment. Yet, they were dependent on the beauty industry and did not want to lose the source of income. Especially in 2020 with the Covid-19 lockdown and decrease in spending, mica mining communities were out of work entirely. People were jobless and scared and received little to no help.

The RMI faced numerous challenges. One was the extreme difficulty in forming a transparent supply chain that could be monitored and inspected. Illegal licensing, hiding children and women during inspections, local child working norms, and lack of government support were some contributing factors to these difficulties. To provide an example, a manufacturing company featured in the CNA documentary was Ruby Mica. This company was a member of the RMI yet a representative of the company acknowledged that the mica they use is mixed and not fully traced, but provided jobs that are needed for thousands of miners that would otherwise have nothing. Another barrier to change was local societal norms around India. Many families do not view child labor as an abhorrent practice, but rather as their children providing a necessary contribution to the family. On a larger scale, many authorities and companies involved in RMI simply deny the wide spread practice of child labor, making honest traceability and working condition documentation inaccurate (CNA , 2021) .

L’Oréal’s Ongoing Efforts

In 2021, L’Oréal claimed their mica was 99% sourced from verified sources. This is up from 97% in 2015 (Copp , 2017) . L’Oréal claimed that they exclusively use ethical sourcing and that working conditions and human rights were closely monitored. They also reported thousands of independent audits per year to ensure compliance surrounding corruption and child labor (Al Jazeera , 2020) .

A major flaw that was identified in this process was the illegally acquired licenses and certificates used at various stages of the supply chain. Local management hid illegal activity in their operations, making it impossible for RMI members to produce accurate reports. For example, the RMI member Merck had subsidiaries that supply mica to L’Oréal. Where there was proof of child labor, traders and exporters deny it. Merck historically denied interviews concerning this issue. In corporate documents, similarly to L’Oréal, they affirmed regulation and verified mine sourcing. When Merck representatives traveled to mining locations for inspections, they warned the exporters of their arrival. The exporters then made sure there were no children or women in the mines that day. The bribes and tactics throughout this system made it difficult to obtain accurate assessments of working conditions, or to hold perpetrators of abuses accountable (Al Jazeera , 2020) .

Additionally, there were many claims that change was slow. Communities were still in high poverty, dangerous mining was still taking place, and many children in these communities were still needing to work in order to sustain their families. While L’Oréal liked to uphold their deep concern, in their 403-page 2020 Annual Universal Registration Document including the company’s financial, legal, environmental, and integrated reports, mica was very minimally mentioned. The report contained 8 sentences mentioning their stance as one of RMI’s founding members and a summary of its goals. The document did not state anything about specific initiatives L’Oréal participated in, or if they achieved any of their goals. L’Oréal claims that “as of 2020, 99% of Indian mica used in the Group’s formulas came from suppliers committed to obtaining their supply from verified sources.” This did not mean ethically obtained, just that they knew the licenses come from legal mines. Even then, research proved otherwise (Babule , 2021) .

The Dilemma

L’Oréal made the decision to stay to help communities and even co-founded the Responsible Mica Initiative to demonstrate social responsibility. They persisted with their initiative, however, it could be argued that this change was not enough. L’Oréal was sourcing elsewhere through synthetic mica and using mica from the USA when they could. Even their sourcing efforts proved to possess many errors that they did not address. Their claims were therefore misleading to the public.

From a monetary perspective, mica was relatively cheap compared to other natural resources such as gold and diamonds. Therefore, the cost to trace and ensure responsibility did not outweigh the profits of the material. Cosmetics was a minority in the mica market and therefore could not solve these complex issues on their own. Raising awareness of the use of mica in other industries could increase consumer pressure on these industries and therefore drive more wide-ranging change in mining practices.

Should they have invested more in safety and improving living conditions? Was it L’Oréal’s responsibility when other industries make up a much higher portion of the mica market? Should they have left it up to RMI, or taken more of a stand on social responsibility? Should they have altered their investigation strategies to record more accurate information? Would this hurt their partnerships?

Recent documents posed many questions to the public such as these. This issue was not easy to address and did not have an easy answer. Yet, there were many promises being made and companies were responsible for providing accurate information to their consumers.

Another possible approach was to focus on a model mica mining community. L’Oréal could focus on a community that was using legal practices and ensure safety and education in one location for more control of activity. They could train the community on best practices with proper tools that would allow L’Oréal to still meet the demand for their mica. Once proven to meet demand while improving livelihoods and ensuring a 100% ethical supply chain, industries that use a larger share of mica imports could repeat the model and allow for a brighter future and positive public relations publicity. While this had higher upfront costs, the long-term efficiency and easily replicable example could outweigh the costs long-term.

After conducting thorough research on all of the claims, possibilities, and facts, Nicolas Hieronimus was ready for the next steps in combating the child labor, illegal practices, and misinformation throughout this industry.

Submitted : March 20, 2022 EDT

Accepted : April 19, 2022 EDT

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Spotlight on digitalising the supply chain

Slavik Wu, Head of Supply Chain, Consumer Products, L’Oréal China gives us a backstage look at the supply chain, which accelerated digitalisation to keep pace with the boom in e-commerce. Thanks to their talent, machine learning and artificial intelligence, logistics teams have reinvented their work to provide even more efficient and sustainable services.  

Can you tell us more about the digital transformation of the supply chain?

Our supply chain is digitalised, becoming data driven and powered by artificial intelligence. Let me show you. This is my team of diverse and super talented people. They are using data-driven tools to forecast demand and anticipate volatilities. Artificial intelligence mixed with machine learning algorithms is helping us to collectively make the right decisions. And this is just the beginning of the digital journey. 

Can you tell us more about the supply chain transformation in regards to e-commerce?

Our e-commerce is booming exponentially with crazy peaks of high demand. So, I have to be agile to offer the best consumer experience, no matter what. Our e-commerce business has grown over 100% in the last three years. This is all possible because of an increase in automated solutions.

And what's great is that I have the freedom to propose solutions myself as if it were my own business. Protecting the planet and our environment is an important mission. Look at these green parcels for example. Zero plastic and made of recycled cartons. 

What about green transportation?

One of the latest initiatives to make our supply chain more sustainable is green transportation. Throughout Shanghai city centre, as well as many other cities, these electric bikes are used for delivery.

That was Slavik from L'Oréal supply chain in China, with just a quick peak into the engineering world of L'Oréal! 

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L'ORÉAL: THE BEAUTY OF SUPPLY CHAIN DIGITALIZATION

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Product Description

Publication Date: December 08, 2021

Industry: Retail and consumer goods

Source: IMD

L'Oréal, the world leader in beauty products, began to rethink its vision for the industry. The world was on the cusp of a digital future full of possibilities. For a company known for its consumer-pleasing beauty products and owner of some the world's most iconic brands, this meant thinking about innovation in a different way. It would no longer mean only providing the best products but also continuously adapting the industry to market needs. Through a combination of goal setting, training and communication, the digital transformation began, first with efforts in marketing, sales and consumer outreach, but supply chain quickly moved to a prominent role in helping address questions about how digitalization would affect the company's products and consumer expectations. Starting with a vision of the CEO, Jean-Paul Agon, the company found itself on a journey to challenge its culture, its approach and even what its value proposition was. Along the way, the supply chain became a force for bringing together the different functions of a large, complex organization to identify and implement new business models in the digital age that cut to the heart of the company's operations.

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