Oriflame Cosmetics: innovation in global supply chains

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With a sales footprint extending across 60 countries and more than 1,000 products, Oriflame’s logistics operations are critical to its success. To support the Swedish cosmetics company’s growing online sales, it operates major distribution hubs across Europe. Global Logistics Director Gokhan Cakmak explains his principles for success and what other organizations can do to drive progress...

Leading and learning

My role as Global Logistics Director is not management of operations itself, but I concentrate on best practice sharing, trying to share the knowledge between day-to-day operations in different distribution centres in different regions in Oriflame. It’s the glue that brings together the day-to-day operations across different facilities.

We’re setting the baseline standards and then trying to raise the bar upwards in terms of KPIs, operational standards, trying to find ways to deliver a world-class service to our consumers. Externally, we are looking at what others are doing and trying to compare. Internally, there are elements that you need to share, but you need to be aware that if one facility does some things in a certain way, that doesn’t guarantee it’s going to work elsewhere.

Creating our own standards is important. Something might look old school or very new compared to peers, but it doesn’t mean anything without the context.

Set relevant targets not vanity metrics

In 2018, one of our main targets is helping our regions to create the right distribution footprint in terms distribution centres, as near as possible to final consumers, the right size, not to be short on seasonal capacity, but at the same time not to have too much inventory. As a direct sales company, that’s one of the biggest elements for Oriflame. In direct sales, one of the biggest advantages is that there’s a direct communication with customers, unlike retail where the supermarkets might be between you and your consumers.

Customer satisfaction is a very important KPI for supply chain teams, so we have customer experience directly in our area of responsibility. There are many attributes such as product availability, product quality, the design of the Oriflame catalogue, ordering experience, value for money and the website, but for logistics, one of the main reflections is the ‘wow’ impact when you open the box. In online sales, the box is a key way to interact with your client – it’s your shop window. We implement new attributes to the box to enhance that – it’s our 50-year anniversary so we’ve added that to the box, as well as a thank you note, because with their support we’ve reached this 50-year anniversary.

Our future plans are to enhance customization of packaging and delivery for the future. The challenge with semi-automated lines is that standardization doesn’t like customization. There are ways of doing it though and we have made a conscious decision to increase the “wow” factor.

Delivering happy customers

Another element where we can enhance the consumer’s satisfaction is the delivery experience. That’s mainly driven by logistics, availability and the circumstances through which they receive the order: expectations on lead times, their payment experience and delivery costs, the courier’s attitude, and what kind of information your received versus what you expected.

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Delivery updates: More isn’t always more

There is a myth that when a customer orders something, during a three-day delivery period, the more information you send the better. That’s just not true. If I order some shoes, I don’t need them super-urgently, so just let me know when I’m going to get them. I don’t need to know: “Monday: order at distribution centre, order picked, time packed”. It doesn’t mean  it’s a better service if I get seven notifications. Busy people don’t want a lot of emails or SMS messages. Just let them know that if they’re expecting it on Thursday, that’s when they’re getting it.

Customer feedback is key

The questions to ask consumers are: “Are you happy with the current level of information? Are you happy with the current lead time? Are you happy with the courier’s attitude? Did products arrive in good condition?”

When the answers come back, you already have certain thresholds, but you can now feel the pulse of the customers. Are they happy? If not, go to further levels of detail through surveys, trying to understand and pinpoint the source of dissatisfaction. We can then share those insights with our couriers to set the right level of communication, for example, two notifications  are enough. If consumers want a high level of detail, give them the opportunity to check in the app by themselves.

Know your different customers

This also depends on the culture, generations, segmentation and many varied factors. In different countries, what customers want is different, and that’s a constant process of understanding for us in supply chain. Developing the metrics has to happen alongside the segmentation, so bi-modal supply means that not every segment expects the same things.

We don’t necessarily follow every aspect of traditional bi-modal supply thinking, but it does drive the same methodology of understanding bottom-up needs, trying to answer those in a customised way in each country. Then you understand distribution channels of B2B, B2C, going deeper into ages, the type of consumer.

One standard method of customer service is not going to work for all. That’s for sure.  Even for neighbouring countries that speak the same language, you get different expectations. In England, there’s a distribution channel we don’t use anywhere else – the safe place, where the customer identified the safe point to leave a box. We’d never heard of that before in other countries.

Update your thinking for the modern era

In the past, companies thought they knew better than their clients and would work with one courier offering one solution that they pushed to all their customers. That’s an outdated way of thinking.

We accept that you must follow the customer’s needs. At Oriflame, we adapt well because it is part of our brand and values. Because it is a progressive company, it is part of our DNA not to just stay where we are, but to look for opportunities.

Be ready for new technology

Driverless trucks are being used in some sea ports to discharge containers between vessels and port, for example in Singapore. But will we see them soon travelling from Germany to France? I’m not sure that’s going to happen in the near future. The trend in industry is more automation for peak handling in particular. It will impact management as we will need different managers in the future who are better at managing technology than people, which requires different set of skills not only stereotype academic and career background.