试谈欧莱雅供应链诊断

L’OréalSupplyChainDiagnostic

March18,试谈欧莱雅供应链诊断第1页PresentationAgendaProjectScopeandActivitiesOverviewofOurSupplyChainFindingsProcessesInventoryReviewMaturityProfilesOrganization/PeopleandCultureTechnologySupplyChainRoadmapDiscussionofNextSteps2试谈欧莱雅供应链诊断第2页OurProjectApproachOverthepastthreeweeks,wehave:Interviewed5ExecutivesofL’OréalCanadaFacilitatedtwocross-functionalprocessworkshopsCollectedandanalyzeddataConductedahighlevelmaturityassessmentComparedL’OréalprocessandperformancetoCPGbestpracticeIdentifiedkeybusinessissuesandareasofimprovementSummarizedourfindingsinthispresentationdocumentProjectKickoffDataCollectionInterviewwithExecutivesProcessWorkshopsModelReview&ValidateBaseCaseReviewMetricsIdentify&ConsolidateIssues&OpportunitiesOpportunityPrioritizationBenefitsAssessmentFindings/RecommendationDevelopmentPresentRecommendationsDiscuss

NextSteps3试谈欧莱雅供应链诊断第3页Cross-FunctionalParticipantsSeniorManagement-SupplyChain

LaurentVenot(ProjectSponsor)JeanValoisPierreMassicotteValéryMayerSalesDominiqueDeCellesIsabelleGenestAnne-MarieNelsonDionGemmityCustomerServiceEliBengioPatriciaRaposoLogistics&ProcurementValérieLacerteYvesDubéNaityJacelInformationtechnologyPierreJournelMarcelyneCraftFinanceMartinDeschênes4试谈欧莱雅供应链诊断第4页PresentationAgendaProjectScopeandActivitiesOverviewofOurSupplyChainFindingsProcessesInventoryReviewMaturityProfilesOrganization/PeopleandCultureTechnologySupplyChainRoadmapDiscussionofNextSteps5试谈欧莱雅供应链诊断第5页ProcessesDemandPlanningSupplyPlanningOrderFulfillmentDevelopSalesForecastMaintainPromotionalPlanConsiderinventorylevels,backorderreports,safetystocklevelsConsolidateandconsiderexternaldata(POS,Nielsen,Customerdata)ReconcileDemandPlanwithBudgetNewProductIntroductionsNetInventoryandLeadTimesfromtheForecastDistributedRequirementPlanningCapacityRequirementPlanningCustomerAllocationsCommunicateforecasttoSuppliersReceivesuppliercommitmentProcessCustomerOrdersPlanandManageFinishedGoodsInventoryPickingandPackingManageOutboundProductFlowManageshipping&transportationGenerateInvoiceCreditmanagementandA/R(*)Outofscope6试谈欧莱雅供应链诊断第6页DemandPlanning–IssuesandOpportunitiesIssues ManualandInconsistentProcessesTheforecastprocessismostlymanual,inconsistentacrossbrandsanddivisions(duetodifferentlevelsofmaturity)aswellasbothtimeandresourceconsumingThereisnoformalprocessfordeterminingwhichproductsshouldbefocusedonduringtheforecastingmeetingsNoonedepartment“ownstheforecast”ThereisnomechanismforautomaticallygeneratingabaselineforecastToomuchtimeisspentonmanualprocesses,dataclean-upandgeneratingreports,leavinginsufficienttimetoanalyzedataandmanageexceptionsL’OréalCanada’sbrandforecastsarenotallaggregatedupintooneforecastlimitingvisibilityanddatasharing

L’OréalCanadadoesnothavesimulationor“whatif”capabilitiesManydisparatetoolsarebeingusedtofacilitateforecasting-Excel,Valo,SAPandOutilsGestion.Interfaceshavebeenbuiltbetweenthevarioustoolsandsystems,butmanualverificationisrequiredandthecurrenttechnologystilldoesnotmeetL’Oréal’srequirementsPOS,Nielsen,customerinformation,promotionalandadvertisinginformationarenotallintegratedinonecentralrepositoryOpportunityProcessRedesignSpendtimeforecastingproductsthatgivethehighestreturn.Notallproductlinesbenefitfromincreasedattention.Focusonhighmargin,lowvolume,bigticketitems,highprofileitemsanditemswithcomplementstomaximizeprofitabilityCommunicateandreconcileforecastassumptionsbyconductingaformalreviewaftereachplanningcyclewithallstakeholders.ReportforecasterrorandmodifyassumptionsasappropriateForecastingTool/BWImplementingaForecastingtoolwillenabletheautomaticgenerationofabaselineforecastbasedonsaleshistoryandadditionalvariables.Mostpackagesallowuserstoselectastatisticalmodel,enablethesystemtodeterminethemodelwiththegreatestfitoremployacompositemodelTheforecastingtoolselectedshouldallowforthegenerationofalertsbasedonpredefinedtolerances,highlightingtheproductsthatrequirefurtherconsiderationandmanualinterventionProductsshouldbereviewedtodeterminewhichonesarecriticalorhighmargintoplaninaForecastingtool,whilenon-criticalorstagnantproductsmaybeplannedinSAPR/3Theforecastingtoolselectedshouldprovide“WhatIf”simulationcapabilitiestodemonstratetheimpactofavariablechange(e.g.pricechange)CoordinatedatacollectionforallavailablesourcesandhouseitinacentralrepositorysuchasSAPBusinessWarehouse7试谈欧莱雅供应链诊断第7页DemandPlanning–IssuesandOpportunitiesIssues OpportunityPeopleEnsurethePlanningTeamisCross-FunctionalandCross-Trained:L’OréalwillneedtoevaluatetheirresourcesskillsanddetermineifadditionalresourcesarerequiredtogainforecastingexpertiseStatisticalproficiencyandsystemexpertiseshouldbebalancedwithindustry,companyandproductknowledgeCross-trainingsharpensskills,broadensperspectivesandimprovescommunicationCreateincentivestoimprovetheaccuracyofforecasts:EstablishforecastaccuracygoalsEstablishcompensationstructureMonitorandreviewcongruenceofgoalstorewardsThiswillremovetrade-offsbetweenforecastaccuracyandperformanceagainstforecast,leverageskeyinformationandhelpseliminatebiasesL’OréalCanadahasstartedtotiecompensationtoforecastaccuracy.ThispracticewillobtaingreateracceptanceamongemployeesonceatooltosupporttheprocesshasbeenimplementedDepartmentsInvolvedhaveDifferentPrioritiesWhilethegenerationoftheforecastisacollaborativeeffortbetweenSales,Marketing,FinanceandLogistics,theinvolvedpartiesdonotsharethesameviewoftheforecast’simportancenorappreciatetheimpactoftheirinput(orlackthereof)onotherdepartments’abilitytoexecutetheirfunctionsdownstreamSalesisseenastoodistantfromthecustomerandthereforelackingpertinentdatatoinputintotheforecastinge.g.whichstorecarrieswhichSKUSales’strategytopushproductsattheendofthemonthandyearbydecreasingprices,throwsofftheforecastL’OréalCanadarealizesthateveniftheyimplementaforecastingtool,withouttheproperprocessesorresourcesinplace,forecastaccuracywillnotlikelyimproveL’OréalCanadaexperiencesahighturnoveramongsalesandmarketingpeopleresultinginthelossofvitalcustomerandproductinformationTrainingforSalesandMarketingresourcesisinsufficient.Compensationre-evaluationhasbeguntoalignindividualgoalsandmetricswithorganizationalgoalswithrespecttoforecastaccuracyAlthoughL’OréalCanadahasmadegreatstridesinimprovingtheirforecastingprocess,theaccuracyhasnotimprovedsignificantlyleadingtofeelingsoffrustrationamongemployees8试谈欧莱雅供应链诊断第8页DemandPlanning–IssuesandOpportunitiesIssues OpportunityProductLaunchesAlthoughL’OréalCanadahasaccesstoothercountrieslaunchesaswellastolikeproducts’saleshistory,thereisnotoolorprocessinplacetoeffectivelyincorporatethisdataintotheirforecastsL’OréalCanadaisunabletoaccuratelyassessthecannibalizationeffectofoneproductonanotherNopost-mortemanalysisisconductedorcapturedonfailedproductlaunchesasinputtofuturelaunchesPromotionsThereiscurrentlynomeanstoaccuratelycleansepromotionalupliftsfromsaleshistoryPastpromotionalperformanceisnotadequatelymeasured,thereforemakingitdifficulttopredicttheimpactoffuturepromotionsPromotionsinvolvinggiftwarecanleadtoimbalancesindemand,makingitdifficulttopredicttruedemandfortheseproducts“OneShot”promotionsaredifficulttoplanProductAllocationProductallocationhasnotbeendeployedeffectivelyandhasevenledtoundesirableforecastingbehavioursProductLifecycleManagementInvestigateAPSfunctionalitytohandle:“LikeModeling”wherebysaleshistoryofasimilarproductisusedtoforecastanewproductPhaseIn/PhaseOutofproductswhichentailsweightingtheforecasttoreflectaproduct’slifecycleTheseparationofthepromotionalupliftfrombaselineforecastgenerationCannibalizationDataCleansingSufficienttimemustbespentcleaningdatasuchasSKUchanges,dataerrors,duplication,one-timeevents,stock-outs,promotions,outliersetc…toenableforecastingmodelstoseparatebusinessgrowthfromseasonalityandotherdeviationsProductAllocationAllocationisausefultoolforensurehigherprioritycustomers obtainincreasedservicelevelsincasesofshortages.L’Oréalshoulddevelopandimplementformalpoliciesforallocatingproducts(e.g.basedoncustomerforecasts)AllocationconfigurationshouldbemodifiedtoreflectthenewpoliciesinSAPR/3.Inthelong-termadditionalallocationfunctionalitycouldbeexploredinanAPStool9试谈欧莱雅供应链诊断第9页DemandPlanning–IssuesandOpportunitiesIssues OpportunityCustomerCollaboration

Cross-ShareForecastswithKey

CustomersIncorporatecustomerforecastswhicharedeemedasreliableintobaselineforecastsandchallengetheirnumbers(managebyexception)Onceforecastsaremoreaccurate,L’OréalshouldprovideawebsitetoalloweasyaccessfortheirCustomerstoentertheirforecastsandtopostL’Oréal’sconfirmedquantitiesforcustomerstovalidateinatimelymannerAggregation/DisaggregationDeterminetheappropriateleveltoforecaste.g.SKU/customerlocationforDSD,SKU/CustomerDCforwarehouseshipments…AnAPSsolutionwillfacilitatetheaggregationanddisaggregationoftheforecast,however,timeshouldbespentdeterminingtheappropriatelevelforforecasting.Top-downapproachescanmasktrendshiftswhilebottom-upapproachesmaynotconsidereffectssharedacrossbrandsMeasuringForecastInaccuracyOrderdateshouldbeusedasthepointforestablishingdemandsinceitgivesthemostaccurateinformationonwhendemandisinitiated.Otherwisestock-outs,lostsales,opportunitycostsandlostcustomersmaybemaskedEnsurethefullaggregatedcostsofforecasterroraremeasured:Insufficientinventory(stockouts)Excessinventory(returns,spoiled,destroyed,obsolete,slowmoving)SafetystockExpeditingcostsInventorycarryingcostsOvertimeCustomerCollaborationAlthoughsomeofL’OréalCanada’scustomersprovideforecastandPOSdata,L’OréaldoesnotpossesstheinfrastructureorprocessestoeffectivelyusethedataL’OréalCanadamustfirstfocusonimprovingit’sownprocessesbeforeextendingtheirprocessesanddataouttosharewithCustomersandSuppliersForecastAccuracyWhileforecastaccuracyisbetterattheBrandlevel,itvariesgreatlyattheSKUlevelregardlessofproductclassification(A,B,C)Only40%to50%ofitemsachievethetargetof±toleranceof20%(BIC75%ofSKUachievethistarget)SKUrankinghasbeenerroneousImpactsofForecastInaccuracyNumerousforecastmodificationrequeststothefactoriesCustomerServicelevels(linefillratein$)areat92%despitetargetsof98.5%(BICis99%)InventoryWrite-offsareat10.5%(BICforCPGis2%)InventoryTurnsare4(BICforCPGis17)SalesReturnsareat5.25%(BICis0.4%)

NOTE:WearecomparingL’OréaltoCPGcompanieswhichisnotafaircomparisoninsomecases.Thecomparisonismeantasaguideline.10试谈欧莱雅供应链诊断第10页SupplyPlanning–IssuesandOpportunitiesIssues InputTheunconstrainedforecastisthemaininputfordevelopingthepurchasingplan.GivenL’OréalCanada’spoorforecastaccuracy,thepurchasingplandoesnoteffectivelymeetcustomer’sdemandsasdemonstratedbythenumerousforecastmodificationorderssenttotheplantsandhighinventorylevelsProductsleadtimes,safetystocklevels,min/maxlevelsarenotreviewedonaregularbasisFactoryConstraintsThepurchasingfrozenhorizonssetbytheplantsseemexcessivelylongandarenotreviewedsufficiently.Therefore,L’OréalCanadamustplaceordersfarinadvance,oftenbeforetheyareabletoassesstrendsTheplantsconfirmbackallorderedquantitiessincereplenishmentleadtimeisused.Asaresult,L’OréaldoesnotobtainarealviewofsupplyorcapacityconstraintsThefactoriesareProductfocusedratherthanSales/Customerfocused.TheresultisaPushmodelratherthanPull.L’Oréal’sfactoriesoccasionallypushexcessstocktotheDCsratherthantryingtomatchcustomers’requirementsNoglobalsupplyplanningisengagedinatL’Oréal.EachL’OréalSalesCompanyisprescribedwheretobuyeachproductandcanonlylooktootherfactoriesincasesofshortage/capacityconstraintsOpportunityFactoryConstraintsCollaborativePlanningwiththeplantswouldinvolveL’OréalCanadapostingtheirforecastontheWebandallowingthefactoriestoconfirmthequantitiestheycansupplyagainsttheforecastinatimelymannerContinuetoroll-outoneofthenewerL’OréalCanadaprocesseswherebyproductsarestockedintheUSandshippeddirectlytocustomersinCanadatoreduceinventorylevelsandcostsLongTermOnceL’OréalCanadahasimprovedtheirforecastaccuracy,theywillbeinabetterpositiontoapproachthefactoriestodiscuss:ShorteningfrozenhorizonsCommunicatingissuesObtainingvisibilitytotheplant’sproductionschedulestogainabettersenseofsupplyplansandcapacityconstraintsReceivingASNstogiveL’OréalCanadaatruesenseoftheirATPtopassontotheircustomersDevelopnewpoliciesandeducationprogramacrossL’OréalcompaniestoensurecustomerservicelevelsaretheprimaryfocusratherthanfactorythroughputandcostsAllL’Oréalcompanyforecastsshouldberolleduptoacentralsupplychaingroupforglobalsupplyplanningpurposes.Thiswouldenableglobalfulfillmenttomatchsupplywithdemand11试谈欧莱雅供应链诊断第11页SupplyPlanning–IssuesandOpportunitiesIssues OpportunityAllocationTheUSFactoriesoughttobeallocatingstockinratiotoL’OréalSalesCompanies’forecasts.Thiswould:EncouragetheL’OréalSalesCompaniestoimprovetheirforecastaccuracyEnsurefairshareallocationinshortagesituationssinceeachSalesCompanywouldobtainstockinproportiontotheirforecastBeyondtheforecastedamountstockcouldbeallocatedona“firstcome,firstserve”basisTheUSFactoriesshouldmeasureandbecompensatedbasedontheirabilitytoserviceallofNorthAmericaandnotjusttheUSVMIImplementanAPStoolthatincludesVMIfunctionalityandchooseapilotcustomertomodelwithbeforeextendingthefunctionalityouttoothercustomersLeveragetheVMIexperienceofL’OréalUSA(e.g.Lancôme)ProductHarmonizationWherepossible,continuetorollouttheprocessofmanufacturingwithFinalAssembly,wherebyproductsareproducedandfinishedtothepointoflocalizationstepsFactoryConstraints(cont’d)Canadamakesuponly3%ofL’Oréal’sglobalsales,whiletheUSwhichsuppliesCanadamakesup28%ofL’Oréal’sglobalsales.Therefore,L’OréalCanada’srequirementsareonlyfulfilledoncetheUS’sneedshavebeensatisfied.ThereisnoformalprocesstoallocatestockbetweenCanadaandtheUSTheUSfactoryismeasuredbasedonit’sabilitytomeettheUSrequirementsinsteadofNorthAmerica’s.ThisKPIfurtherencouragestheUSfactorytodisregardCanada’sordersVMIAfewkeycustomershaveexpressedawillingnesstoestablishaVMIrelationship,butL’OréalCanadadoesnotyethavetheprocessandinfrastructuretofulfillthisrequestProductLaunchesTherushtobringnewproductsintothemarketiscausinglaunchdatestobepushedupwithaninsufficientbuffer.TheresultisthatthesupplydoesnotarriveintimetomeettheadvertisingtimelinesL’OréalanditscustomershavealreadycommittedtoProductHarmonizationManyproductscannotbeharmonizedduetolocallegalrequirementsincludinglanguageandDIN#s12试谈欧莱雅供应链诊断第12页OrderFulfillment–IssuesandOpportunitiesIssues CustomerSegmentationandServiceLevels

L’Oréalcustomershavebeensegmentedandtaskforceshavebeencreatedtoworkwithcustomers,yetL’OréalisstillstrugglingtoachievehigherservicelevelsL’Oréalis“notcloseenoughtoit’scustomers”,the“arrogantculture”preventsL’OréalfromlisteningsufficientlytoCustomers’requirementsProductallocationisnotbeingeffectivelyusedtoensureprioritycustomersaresatisfiedfirstincasesofproductshortageAvailableToPromise(ATP)

ATPaccuracyiscompromisedduetofactoriesvagueconfirmations(theyonlyagreetosupplyproductwithinamonthstimeframe).Asaresult,customerservicerepsareunabletoshareATPinformationwithcustomersL’OréalnolongerwidelyacceptsbackordersOrderDesk

CustomersmustcallL’Oréalmultipletimessinceseparateordersareplacedbybrand.SomeoftheordersareconsolidatedusingthetransportationmanagementsystemtoshiptothecustomerOpportunityCustomerServiceAnalyzecustomerprofilesandsubsequentlycustomizeserviceefforttiedtoprofitability,customerloyaltyandpurchasehistoryImplementconsistentcommunicationwithcustomerse.g.orderacknowledgements,orderstatusupdatesandcustomersatisfactionsurveysWorkwithL’OréalfactoriestoobtainmorespecificATPdates(i.e.ASNs)tosharewithcustomersDeterminewhetherthecurrentorderentryprocessissuitabletomeetcustomerneedsorwhetheramoreefficientprocessisrequired.Domostcustomershaveseparatebuyers/receivingdocksbybrandorwouldtheypreferamoreconsolidatedviewofL’Oréal?TechnologyOncetheorderentryprocesshasbeenreviewed,theremaybeaneedtomodifySalesAreaconfigurationinSAPSDFormalizeproductallocationbusinessrulestoensuretopcustomersreceivepriorityincasesofproductshortage.BeginbymodifyingproductallocationfunctionalityinSAPR/3beforeexploringAPSATPfunctionalityLongTermOnceL’OréalhasacquiredgreaterATPinformationfromthefactoriestheycouldexploreAPSATPfunctionalitysuchas:CustomizationandautomationoftheATPsearchpathbycustomer/productcombinationtodeterminewhetheralternatelocationsoralternateproductscanbeofferedtocustomersincasesofproductshortagesMulti-stepavailabilitycheckingagainstATP,productallocationandplannedindependentrequirements13试谈欧莱雅供应链诊断第13页ProjectScopeandActivitiesOverviewofOurSupplyChainFindingsProcessesInventoryReviewMaturityProfilesOrganization/PeopleandCultureTechnologySupplyChainRoadmapDiscussionofNextStepsPresentationAgenda14试谈欧莱雅供应链诊断第14页WereviewedinventorydatatoassesstheeffectivenessofL’Oreal’splanningprocessesDataUsedMonthendinventoryforJanuaryForecast&Sold-indataShipmentsdataQuantityreceivedfromplantsPeriodJanuary–January(13months)Products12L’OrealParisSKUsA,B,andCproductsfor4categories(HairCare,HairColor,SkinCare,andCosmetics)

InventoryDataReview15试谈欧莱雅供应链诊断第15页ObservationsLongfrozenhorizons,highminimumorderquantities,andinconsistentshippingpracticesfromL’Orealfactoriesresultinhighinventorylevelsandemergencyexpeditingcosts(outofscope)ThesameforecastingprocessshouldnotbeappliedtoallSKUs.Itwouldbebeneficialtore-evaluatethelogicusedfordifferentproductdemandtypes.Fourmainproductdemandtypeswereobserved:StabledemandpatternUnstabledemandpatternStablepatternexpectforpromotionsLowVolume-NegativeinventoryInventoryplanningpracticesduringPromotionalperiodsresultinlargeforecastingerrorsandlargeinventoryfluctuationsDataIssues:ItisourunderstandingthattheForecastdataprovidedisthelast“correctedforecast”ratherthantheoriginalforecastusedtomakeprocurementdecisions.Wewouldexpecttherealforecastingerrorwouldthenbehigherthantheaverage+/-32%calculatedforthe12L’OrealParisSKUsDespitenotacceptingbackorders,thereisamismatchbetween“Shipmentsout”and“Sold-in”forafewSKUs.Thereisnoclearexplanationforthis.16试谈欧莱雅供应链诊断第16页AbsoluteForecastingError

CategoryABCAverageHairCare21%28%66%39%HairColor26%15%21%20%SkinCare10%46%49%35%Cosmetics25%47%24%32%Average20%34%40%32%Asexpected,forecastaccuracyishigherwithAitems,exceptfortheHairColorcategory,whichneedsfurtheranalysisTheoverallforecastingerrorsuggeststhataforecastingtoolisneededL’OrealneedstoreviewitscurrentsafetystocklevelstoreflecttheforecastingerrorforeachSKUinordertopreventshortagesandreduceinventory17试谈欧莱雅供应链诊断第17页ManagingPromotionsPromotionalperiodsareknowntocreatedisturbancestodemandandinventoryplanningacrossproductclassifications18试谈欧莱雅供应链诊断第18页DataIssues

WeexpectedthedifferencebetweenSold-inandShippeddatatobeunder5%BClass–HairCareWefoundsomelargedeviations(upto36%)

betweenSold-inandShippeddata.Investigationintopossiblecausesisrequired.AClass–HairCare19试谈欧莱雅供应链诊断第19页SupplyIssuesfromL’OrealPlantsTherearestrongfactorsthatareoutofL’OrealCanada’scontrolandwouldrequireL’OrealinternationalinvolvementtomodifyDuringthemonthsleadingtoOctober,thesupplierhadover-shipped3timesinexcessofthemonthlyorderOneshipmenthadtobestoppedtopreventextremeinventorylevelsResultsininventoryimbalancesAitem–HairCareSupply:USPlantMinorderQty.=35,00020试谈欧莱雅供应链诊断第20页SupplyIssuesfromPlants(Cont’d)AmoreflexiblesupplyprocessresultsinlowerminimumorderquantityandstableshippingpatternsCitem–CosmeticsSupply:USPlantMin.orderqty.=28821试谈欧莱雅供应链诊断第21页DemandPatterns

StabledemandUnstabledemandStableexceptforpromotionLowVolume-NegativeinventoryAverageDemandvariability(σdemand)13%A-SkinCare79%C-HairCare148%(13months)10%(last9months)C-Cosmetics36%B-SkinCareAverageForecastvariability(σforecast)8%A-SkinCare54%C-HairCare144%C-Cosmetics56%B-SkinCareCommentsForecastingcanmakemattersworsee.g.HairCareC-item.ForecastingvariabilityishigherthandemandvariabilityForecastingtoolsareneededtoobtainagoodestimateHaveasingledemandpeakinMarchrelatedtopromotionExampleforC-Cosmetics:UsualSales=600MarchSales=7000OftencorrespondstolowdemandvolumesForex.:B-SkinCare.Stockoutfor2monthsSuggestionsDonotforecastManagebymin/maxRequireaforecastingtooltobeimplementedtoimprovedtheprocessRequireaforecastingtooltobeimplementedtoimprovedtheprocessReorderingtimingimprovementImprovedsafetystocksmaybeneeded22试谈欧莱雅供应链诊断第22页ProjectScopeandActivitiesOverviewofOurSupplyChainFindingsProcessesInventoryReviewMaturityProfilesOrganization/PeopleandCultureTechnologySupplyChainRoadmapDiscussionofNextStepsPresentationAgenda23试谈欧莱雅供应链诊断第23页MaturityProfile–ContextAqualitativeassessmentofyouroperationsfromdifferentperspectivesAjointassessmentofbusinessprocessesandpracticesAssessedonascaleof“innocence”to“excellence”whereexcellencereflectsthevisionforleadingpracticesInnocenceAnorganizationthatexhibitsfewornonoftheleadingpracticescommonlyadoptedaroundstrategy,processandsupportcapabilitiesAwarenessAnorganizationthathasarudimentary,loosely-wovensetofcompetitivecapabilitiesimplemented;lacksatrueunderstandingofleadingpracticesUnderstandingAnorganizationthatunderstandstherequiredcapabilitiesforcompetitivesuccessbuthasimplementedonlybasicstrategy,processesandsupportcapabilitiesCompetenceAnorganizationthathasnotonlydevelopedcompetitivecapabilitiesbuthasalsoactivelyintegratedthemintoitsdailyoperationsExcellenceAnorganizationthathasdifferentiateditselfbasedonstrategy,processandsupportcapabilitiesleveragingleadingpractices24试谈欧莱雅供应链诊断第24页InnocenceAwarenessUnderstandingCompetenceExcellenceMaturityProfiles-DemandPlanningSummaryL’OréalResponseAnalysisTotal#respondents:7Overallrating:UnderstandingRangeofresponses:InnocencetoCompetenceMostdisagreementregarding“SalesandOperationPlanning”Standarddeviationof1.1onascaleof1to525试谈欧莱雅供应链诊断第25页MaturityProfiles–SupplyPlanningSummaryInnocenceAwarenessUnderstandingCompetenceExcellenceL’OréalResponseAnalysisTotal#respondents:3Overallrating:AwarenessRangeofresponses:InnocencetoUnderstandingVerysmalldisagreementamongrespondentsforeachsub-elementAveragestandarddeviationof0.4outof1to5scale26试谈欧莱雅供应链诊断第26页InnocenceAwarenessUnderstandingCompetenceExcellenceMaturityProfiles–CustomerServiceSummaryL’OréalResponseAnalysisTotal#respondents:2Overallrating:Understanding27试谈欧莱雅供应链诊断第27页MaturityProfiles–EnablingProcessesSummaryInnocenceAwarenessUnderstandingCompetenceExcellenceL’OréalResponseAnalysisTotal#respondents:8Overallrating:UnderstandingRangeofresponses:AwarenesstoCompetenceVerysmalldisagreementamongrespondentsforeachsub-elementAveragestandarddeviationof0.9outof1to5scale28试谈欧莱雅供应链诊断第28页ProjectScopeandActivitiesOverviewofOurSupplyChainFindingsProcessesInventoryReviewMaturityProfilesOrganization/PeopleandCulture

TechnologySupplyChainRoadmapDiscussionofNextStepsPresentationAgenda29试谈欧莱雅供应链诊断第29页OrganizationCurrentState GeneralL’Oréal’sstrengthsareitsmarketing,productlaunches,strongbrandname,innovationsandinvestmentinR&D(4%ofrevenue)HealthandBeautyisagrowthindustryL’Oréaloperateslikeasmallbusinessinthatitisflexibleenoughtobeabletolaunchaproductin6monthwhileP&Gcantakeover2yearstolaunchaproductProcess-drivenorganizationwithcross-functionalteamsCustomersCustomershavebecomeincreasinglydemandingandstrongerinnegotiationsCustomersdescribetheirrelationshipwithL’OréalCanadaasa“Love/Hate”relationship.LOVEduetoL’Oréalproducts,brandstrengthanddynamicculturewhichhe