LOREAL_Registration_Document_2017

Presentation of the Group Integrated report A CLEAR STRATEGY : BEAUTY FOR ALL

Fast-changing omni-channel logistics strategy The Group's supply chain organises and optimises all product delivery flows to all our customers and directly to e-commerce consumers. It is responsible for making sure that the products are delivered under optimum conditions, at the right time and at the best cost.

L’Oréal is unique in the cosmetics market in that it serves a global market through a diverse range of distribution channels (see diagram below: hair salons, mass-market retail channels, perfumeries, supermarkets, pharmacies, drugstores, medispas, branded retail, travel retail and e-commerce), with a broad portfolio of many different beauty and cosmetic product categories. L’Oréal continuously optimises all information flows and physical flows from suppliers to customers.

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HAIR SALONS

MASS-MARKET RETAIL CHANNELS

DEPARTMENT STORES PERFUMERIES

CONVENIENCE STORES NEW MARKETS

SUPPLY CHAIN

PHARMACIES DRUGSTORES MEDISPAS

E-COMMERCE

TRAVEL RETAIL

BRANDED RETAIL

Data management is a critical challenge, and represents a veritable opportunity, especially in the retail sector and in stores managed directly by L’Oréal. Data can provide a comprehensive overall view of business in a store, as well as improve the understanding of the consumer purchase journey. The goal is to increase agility to handle market variations on all distribution channels and to adapt to local consumer requirements. In 2017, L’Oréal inaugurated its first pilot RFID store ( Radio Frequency IDentification ) with the NYX Professional Makeup brand, near Paris in France. This is the first RFID cosmetics store in the world. The products have an RFID chip to improve the flows and organisation of the work of employees (simplified inventories, optimised stocks, etc.) and increase consumer satisfaction by offering a smoother purchase journey. Sustainable Development is also central to the supply chain strategy. To shrink the environmental footprint of transport

activities, L'Oréal launched a new global initiative to promote cooperation between carriers and to co-develop tailored solutions to address the specific needs of each geographical zone (Europe, Africa, Middle East, North America, Latin America, Brazil and Asia, Pacific). Global economic performance at the service of the brands and the commercial entities Operations have major economic responsibility for all the brands and markets and that impact total product costs. Economic optimisation efforts led by Operations involve tracking the Total Landed Cost , i.e. , the final full cost of a product, which includes the cost of packaging and raw materials, the value added by the plants and all supply chain costs.

REGISTRATION DOCUMENT / L'ORÉAL 2017

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