Published on 05-Nov-2013
"We determined that it would have taken us quite an extensive period of time to build [the solution] ourselves. So we elected to go with a third party that could bring the three foundations to the engagement, and we selected IBM." - Rich Ullrich, vice president, indirect procurement, L’Oréal USA
Based in New York City, L’Oréal USA is a subsidiary of L’Oréal Paris.
L’Oréal USA sought cost-saving, streamlined processes and procedures for its indirect procurement practice to meet corporate goals.
IBM Global Process Services analyzed patterns, centralized and automated purchasing processes and educated stakeholders, yielding greater buy-in.
Consolidated sourcing processes and superior contract negotiations speed procurement processes and result in greater volume discounts.
In 1909, visionary scientist Eugene Schueller established L’Oréal. More than 100 years later, the company has become synonymous with superior quality hair care, hair color, fragrance, color cosmetics and skin care products sold through consumers and medical channels that believe they are “worth it.” The corporation is committed to progressive research and development, state-of-the-art manufacturing and quality products as well as a dedication to sustainability and diversity. L’Oréal prides itself on conducting business with integrity, respecting the laws of the countries in which it operates and adhering to good corporate governance practices as it promotes its 27 global brands to 130 countries around the world. Based in New York City, L’Oréal USA is a subsidiary of L’Oréal Paris.
When L’Oréal USA executives established a plan to generate USD500 million in cost savings, it wasn’t a pretty picture. Its decentralized, indirect procurement organization was paper-intensive and used disparate systems with incongruent data. As a result, it lacked the ability to attain the volume discounts or standard processes that could benefit the corporation. Responsible for 19 headquarters, manufacturing, distribution and research facilities, the company’s indirect procurement group recognized it lacked three fundamental elements – toolsets, resources and influence –,to quickly respond and direct its efforts toward the company’s savings goal. With little time to spare, Rich Ullrich, vice president of indirect procurement at L’Oréal USA, sought a third party that could bring together the three areas of expertise it required.
Ullrich selected IBM Global Process Services to consolidate and streamline L’Oréal USA’s indirect procurement practices. With data compiled using IBM® Emptoris® Strategic Supply Management solution, the Global Process Services team used this toolset to analyze and categorize L’Oréal USA’s spending history. Armed with historical trends and backed by the procurement resources of IBM, the team implemented a series of supply chain management best practices, including: centralizing and automating the company’s purchasing authority; implementing consistent, repeatable procedures; optimizing the supplier network using category-specific sourcing expertise; and executing stakeholder education programs that reinforce the processes and benefits of consolidated procurement efforts. Ulrich discussed the challenge of obtaining enterprisewide buy-in: “You’re changing the way that your stakeholders and the requisitioners who are on the stakeholder teams go about sourcing.” To address the challenge, IBM and Ulrich banded together to craft the benefit messages to influence stakeholders and presented the improved processes as unified team.
● Target double-digit cost procurement savings through IBM Strategic Sourcing processes and system automation
● Attain 90 percent compliance, significantly reducing rogue procurement while realizing greater net savings
● Sped up procurement processes with category management expertise and strong sourcing tools
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Products and services used
IBM products and services that were used in this case study.
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