L`Oréal`s Manufacturing Makeover
Summary: L’Oréal implemented a manufacturing systems overhaul to streamline processes, create a new technology framework and enable disparate locations around the world to share information and best practices more effectively. Jacques Playe, CIO, Operations, at the Paris-based cosmetics corporation, explains how the restructuring significantly increased processing capacity, reduced costs and improved quality.
Virtually everyone has heard of L’Oréal or used our products, but few people think about the massive challenges we face to produce high-quality, consistent products around the globe. Our company is driven by the philosophy that everyone aspires to beauty, so our core mission is to help people around the world realize that aspiration.
Achieving that mission has everything to do with how our products are made, and that fundamentally relies on the technology we use to support production. This is challenging for a company with more than 67,000 employees in 130 countries supporting 23 global brands.
We recently re-engineered our entire manufacturing process to work more efficiently, while still supporting the quality and integrity our brands have enjoyed for years. We needed to ensure that our products, which come from 42 factories around the world, are all created using uniform production, quality and process methodologies.
Given the scale of our operations, we knew that the manufacturing technology, processes and controls we put in place would be integral to the effectiveness of our global operations and the success of our brand. We also realized that our ERP system couldn’t support our goal of global product uniformity without consolidating disparate systems worldwide. There was an opportunity to improve productivity, safety and quality by standardizing on best-practice processes throughout the company.
There’s always a lot of talk about aligning IT with the business, but business process management projects, more than any other, push IT to work together with the business and foster change. Change is not easy, and when corporate tells branches around the world to change their processes and routines, it can seem intimidating.
Our manufacturing project required changes in employee habits, and we needed to foster knowledge-sharing across geographical and cultural boundaries. To help accomplish that, we dedicated significant resources to a structured approach to implementing change that employees would accept and follow.
For each core business process, we assigned a business owner who would diagnose the processes at each site and help define and implement changes. Then the Information Systems team would create the system design, implementation and management needed to support the solution.
A Global View, in Real Time
Here’s how it worked: We integrated SAP’s ERP system with Apriso’s FlexNet for operations management using a core model that’s replicated to each site. The Apriso solution was designed with a single global installation in mind, and FlexNet’s holistic approach to operations management enabled us to avoid having to patch a half-dozen pieces of software together. This gave us the real-time flexibility and information assurance we wanted.
We named this central IT system for process information ISIS (Integrated Solution for Industrial Systems). It consists of all the transactional processes, financial controls and purchasing integrated into the manufacturing operations system on the shop floor run by FlexNet.
ISIS is run on the central data center in Montpellier, France, where we keep the master data for the business. We run FlexNet on servers in individual factories so they can continue operation in case there’s a problem with the main servers.
FlexNet and ISIS support all factory processes—including production, quality and purchasing—while promoting the best practices we’ve developed. This centralization and global view allow us to experiment with new process changes and quickly implement them globally to perform IT updates in a fraction of the time.
When you have multiple versions of SAP running in different regions or countries, it can take two to five years to upgrade to the latest version. Since we implemented a single, global instance of SAP and FlexNet, our last upgrade took just one weekend. That’s a big deal for us because we were able to update our systems without disrupting the factories.
This also allows us to bring new factories on board much more quickly. For example, we recently acquired an Yves St. Laurent factory, which traditionally would have taken years to bring into the fold. Today we expect to integrate the factory with our quality assurance, safety and efficiency practices in just a couple of months.
We also have the flexibility to tailor processes to local needs. Sometimes, when a region wants to use a slightly different process, we learn that the process is actually an improvement that we can implement globally.
Each manufacturing site deals with hundreds, or even thousands, of different recipes for L’Oréal cosmetic products. Every ingredient must be tested for quality, and every worker needs to follow each recipe exactly. The level of complexity can lead to human error and hesitation, which can threaten quality, slow the workflow and create waste.
Our new system guides the operators through the recipe and automatically records the weight of each ingredient to ensure that the quantities are just right. Once raw materials are tested for quality, they’re given a label that must be scanned by the worker before adding to the recipe to ensure that all materials are tested. Shop workers are no longer rummaging around for information on raw materials or recipes.
The labels also give forklift drivers directions on which materials need to be taken to the packaging station, provide information on its shelf life and incorporate quality testing into the process. Interviews with shop workers confirm that the system is easy to use and has reduced stress and confusion.
We believe our overall capacity has increased, and the technology has improved the workplace substantially. There are also fewer discrepancies in actual-versus-planned production, fewer primary materials are wasted, and we’re able to keep lower, better managed inventories.
The overhaul of our manufacturing system was widely considered a success within L’Oréal, but it was not without its challenges. Based on our experiences, I would offer the following advice to CIOs who face similar challenges:
Successfully implementing change in an organization requires change agents to guide individual managers through the changes and to own the process. When change comes from the top down, employees will be more flexible and accepting. Getting managers to foster change is even more effective.
Taking a core approach that uses a “center of excellence” is one of the most efficient ways to manage large-scale operations-management implementations. An operations-management solution, when used in conjunction with ERP, can deliver greater combined benefits than separate, sequenced implementations.
To manage an integrated supply chain on a global scale that operates in near real time, warehouse management and logistic functions of operations management need to be real-time applications and available 24/7—or, at least, according to the same specification as the manufacturing-related functions.
In Jacques Playe’s role as CIO, Operations, at L'Oréal, he is responsible for providing IT leadership and guidance to achieve global manufacturing operational excellence. Playe is tasked with ensuring that the highest quality and production standards are attained while manufacturing 4.9 billion units within 23 global brands across 38 production sites.