Premium Beauty News - 38 factories worldwide, a Purchasing department comprising today 600 employees, a budget of several billion euros ... a beautiful machine!
Barbara Lavernos - It’s true that when I arrived at the Group’s Purchasing department in 2004, the purchasing function was taken care of by dedicated teams spread in the plants with all the advantages but also disadvantages of such an organization. We wanted to implement a two-person management organization, with one person who would be focusing on suppliers and the other one who would be dealing with all our internal customers (marketing, research, production ..).
And when I say suppliers, if I chose for instance, packaging, I mean a specialised buyer for each sector. So I have specialists in glass, plastic, paper and cardboard, machines, and this, in every major part of the world where we are operating, in Europe, the United States, Brazil, China, etc. Of course, there are some strategic countries in packaging where we do not have any manufacturing facilities, such as Korea, or Japan, where we also have a buyer on the spot. On the other hand, for Africa and the Middle East, purchasing activities are coordinated from Paris with buyers in every major country in the area.
What is important is that the Purchasing managers also have a complete vision of the final product. In fact, they are real “Sourcing Centres” with an aim to optimize the supply chain.
Premium Beauty News - These centres must handle fortunes!
Barbara Lavernos - It’s true! We have Lead buyers who manage portfolios of between 50 and 150 million euros! Which certainly is considerable but on the other hand reinforces their responsibility. It is true that we have significantly strengthened the teams in recent years. Just for packaging, out of the 150 employees present today we hired 40 of them in 2 years time.
Premium Beauty News - What are the stakes?
Barbara Lavernos - They are huge. Simply imagine: L’Oréal renews each year about 1/3 of its products. In fact, it implies that we could potentially change all our suppliers every three years! But there is nothing to worry about, we are loyal people. I take this opportunity to recall that we do not want to account for more than 25% of our suppliers’ sales, in order not to weaken them or risk creating situations of interdependence, which in the end, wouldn’t be a good idea neither for us nor for them.
"Purchase" issues are particularly strategic. For this reason, we took advantage of these organizational changes to create SRM [1] transversal functions, but also key functions in control and economic analysis, global dashboards and scorecards.
Today, we are able to have a clear vision of our relations, at a given moment, with either one of our suppliers, with a global vision. And not to mention the permanent interactivity that such a tool allows us to have with them, especially as part of our calls for tender, the whole of it constantly showing due regard to the strictest codes of ethics.
Premium Beauty News - What about full service?
Barbara Lavernos - If you’re implying by that, "are we going to rely more and more on subcontracting?" The answer is no! We have our own factories, and a program has been set up to build new production sites for the three years to come. Our factories allow us to produce while being close to our consumers. We consider it a relevant model, and we are keeping it. Currently, there is a tendency towards automation. For some very specific domain, such as pencils, we resort to subcontracting companies that allows us to take advantage of their expertise.
Premium Beauty News - The Cherry Pack event you organized last year was the high point of this relationship that you wish to establish on a long-term basis with your suppliers?
Barbara Lavernos - In a way, yes! This operation, which took place wonderfully, is a perfect example of that. We had selected five suppliers and we offered them to present their latest innovations. This meeting was the occasion for a number of exchanges, so we will renew the experience this year. The next meeting is scheduled for late 2011.
Premium Beauty News - Presenting exclusive innovations to L’Oréal may be considered sensitive by some of your suppliers.
Barbara Lavernos - I see what you’re referring to! Indeed, we have maybe had in the past what could have been perceived as an arrogant attitude on this point. But be assured, it’s not the case. Innovation is at the heart of our business. L’Oréal and Innovation are one. So we’re very aware of these issues. And initiatives such as the Cherry Pack are taken very seriously and surrounded by all necessary guarantees in terms of confidentiality and intellectual property.
In addition, the new organization, which has been established in recent years, is also a guarantee for our suppliers. There are no more dilution of responsibilities in our departments, dilution that could result in some bad practices.
Premium Beauty News - Are other initiatives underway?
Lavernos Barbara - Yes! Six months ago, we decided for example to set up a Solidarity Sourcing program monitored by a department of its own, headed by Chéa Lun. The purpose being to dedicate a portion of the Group’s purchases to disadvantaged communities and to associate our suppliers to this program. These actions that we want to undertake on the basis of an "ecosystem" pattern for disable persons, for people in so-called "difficult" neighbourhoods but also more generally for populations living in areas of the world that are somewhat markedly lagging behind, as well as small businesses (less than fifty people), etc. We are aware of our responsibilities in this area and our approach is indeed part of a long-term commitment. More than a hundred projects are already under consideration.
