A

Project report
On
LOREAL INDIA

Submitted to:
Prof. Ravindra Baliga
KJ Somaiya institute of management studies and research

Submitted by:
Kirthana S. (10-06-05)
Omprakash Kabdwal (10-06-07)
Swati Singh (10-06-11)
Index

No. Particulars Page No.

1 Introduction
General Overview Of The Company 3

History 5

LOreal In India 6

Brands Of The Company 8

Ethics 9

2 Inbound Logistics 11

3 Material Management 13

4 Production 15

Manufacturing Units 15

Production Development Process 15

Research and Development 18

5 Outbound Logistics 19

6 Sources of Information 23

2
1. Introduction
General Over View of the Company:
For the past century, LOreal has pursued its adventure in the beauty industry to cement its
position as the worlds leading Cosmetics Company. Above and beyond its financial success,
however, LOreals track record reflects an endless quest:

A quest for innovation, begun a century ago by scientist and inventor Eugene
Schuler, driven by tireless research and buoyed by a steadfast pioneering spirit;

A quest for excellence through increasingly safe, imaginative and effective products;

A quest for diversity and a range of cultures to meet the needs of men and women
around the globe and make beauty products available to as many people as possible;

A quest for purpose, a cornerstone of the LOreal approach, combining economic

growth, ethics, social and environmental responsibility;

A quest filled with passion, transcending borders in a bid to make the world more
beautiful.
At LOreal, they have made cosmetics the focus of all our energy and know-how for nearly a
century. We are fully committed to putting all our expertise and research resources to work for
the well-being of men and women, in all their diversity, around the world.
LOreal India Pvt. Ltd. engages in the distribution of L'Oreal SA cosmetics products for men and
women. The company was founded in 1991 and is based in Mumbai, India. LOreal India Pvt.
Ltd. operates as a subsidiary of L'Oreal SA.

Mission (Beauty for All) :

At LORAL, they believe that everyone aspires to beauty. Our mission is to help men and
women around the world realize that aspiration, and express their individual personalities to the
full. This is what gives meaning and value to our business, and to the working lives of our
employees.

Strategy (Universalisation):
LOral has chosen a unique strategy: Universalisation. It means globalisation that captures,
understands and respects differences. Differences in desires, needs and traditions. To offer tailor-
made beauty, and meet the aspirations of consumers in every part of the world. LOral is driven
by this vision of the world.

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Vision:
Striving For Excellence :
Perfection is our goal. We are determined to continue enhancing our brand portfolio with
innovative products and to meet the most demanding standards of quality and product safety at
all times.
A Passion For Adventure:
Our expertise drives our passion for new discoveries and innovation in cosmetics. Each new
achievement - each step forward - is in itself a new beginning.
Enrichment Through Diversity:
Understanding and valuing each individual is an essential part of our corporate culture. Our staff
members come from many different backgrounds and work together to offer a full range of
products through varied distribution channels. Our goal is to serve the beauty and well-being of
our consumers in all cultures throughout the world.
Valuing Individual Talent:
Just as we are dedicated to enhancing the well-being of our consumers, we also make it a priority
to ensure that each employee has the opportunity to develop his or her potential through personal
and professional growth.
Leading Innovation In Beauty
Research is as much a part of our business as marketing, sensitivity to consumer needs is as
important as scientific rigor, and know-how and expertise are as essential as intuition. Building
on our unrivalled experience and expertise, fundamental research is a specific focus of
investment that drives creativity and contributes to developing the cosmetics of tomorrow.

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History:
From 1909 to 1956
First step: the model takes shape.
In 1909, young chemist and natural entrepreneur Eugene Schuler sets up the company
that will later become LOreal.

Everything begins with one of the first hair dyes, which he designs, produces and sells to
hairdressers in Paris.

The move forges the first link in the chain that is to become LOreal DNA: using
research and innovation to enhance beauty.

From 1957 to 1983

LOreal on the road to greatness
These are the formative years of Le Grand LOreal.

At the instigation of Chairman Franois Dalle, the Group starts to expand internationally.

Acquisitions of strategic brands mark the beginning of a period of spectacular growth for
the company. Emblematic products come into being.

The company motto is Savoir saisir ce qui commence (seize new opportunities).

From 1984 to 2000

Becoming number one in the beauty industry
These twelve years are marked by a great period of growth for LOreal, mainly driven by
the significant investments made by the group in the field of research.

Alongside these efforts are strategic product launches that not only make history, but also
succeed in strengthening the Groups brand image.

In 1988, Franois Dales successor, the research and development pioneer Charles Zviak,
hands over the reins of the company to Lindsay Owen-Jones, a truly outstanding director.

Under his management, the Group would completely change in scope to become the
world leader in cosmetics through the worldwide presence of its brands and strategic
acquisitions.

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 From 2001 to present day
The diversity of beauty throughout the world
There is no single type of beauty; it is a multiple-faceted quality framed by different ethnic
origins, aspirations, and expectations that reflect the worlds intrinsic diversity.
With a portfolio of powerful, international brands, LOreal enters the 21st century by
embracing diversity in its global growth agenda.

Headed since 2006 by Chairman Lindsay Owen-Jones, and Chief Executive Officer Jean-
Paul Agony, the Group continues to make new acquisitions to cover the worlds varied
cosmetic needs, and to undertake new socially responsible initiatives in the interests of
sustainable development for all.

LOreal in India:
LOral, the worlds leading beauty company has been present in India as a wholly owned
subsidiary of LOral S.A. since 1994. The company has positioned itself as a transformative
beauty leader that upgrades the consumers beauty regimes with more sophisticated, safe,
qualitative and efficacious innovations. LOreal Indias strong commitment to their 2020 road
map includes a tangible assurance to pursue sustainable growth in parallel with sustainable
development

Today LOral India is present in all distribution channels with 15 brands, available in mass
market channels (LOral Paris, Garnier, Maybelline New-York, NYX Professional Make Up);
in hair and beauty salons (LOral Professionnel, Matrix, Krastase, Cheryls Cosmeceuticals);
in selective distribution (Lancme, Kiehls, Yves Saint Laurent, Giorgio Armani, Ralph Lauren,
Diesel) and in pharmacies (Vichy, La Roche-Posay). LOral India employs over 1,600 people
across four regional offices, including at its two manufacturing facilities in Chakan (Pune) and in
Baddi (Himachal Pradesh), its Research and Innovation facilities, and at the headquarters in
Mumbai.

"These new requirements have a profound impact on the way buildings are designed, the way
production units are organized and on the installation layout. GHP zones are protected by
airlocks to allow for a controlled atmosphere, and processing vessels are isolated in dedicated
areas physically separated from the rest of the facility," said a spokesperson for LOreal.
A strong Indian corporate citizen:

Balancing our companys success with our responsibility to society has always been the way we
do business. L'Oral India is fully involved with concrete and bold commitments specific to
India and aligned to the governments developmental priorities. Our focus in India is to be the
best practice leader in womens empowerment, skill development and environmental
sustainability.

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The LOral India Beautiful Beginnings programme was established in 2009 with the objective
of creating livelihood opportunities for young women from disadvantaged sections of society by
providing skill training in beauty & hair care. By 2020 we will intend to train 10000
underprivileged women. Thus far, 85% of our graduates have been placed successfully in the
industry or have begun their own home grown beauty salon/services.
The L'Oral India initiated the For Young Women in Science scholarship in 2003. Scholarships
worth `2.5 Lacs each are awarded to promising young women who want to pursue their
graduation in a scientific field. 250 scholarships have been awarded to date.
Since we set up operations in India in 1994, we have been focused on skill development and up
skilling and train over 150000 hair dressers every year.

LOreal India at glance:

LOreal, world leader in cosmetics, has a modern and efficient growth model that is always
looking to the future.
100 years of expertise in cosmetics

5 key areas of expertise: hair care, hair color, skincare, make-up & fragrances

34 global brands

Products distributed in 140 countries

25.84 billion consolidated sales in 2017 (1st quarter)

850 million in R&D investments

473 patents filed in 2016

89,300 employees worldwide

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Brands of the Company:
1. Consumer products
High technology products at competitive prices distributed through mass-market retailing
channels.
LOreal Paris
Maybelline
Garnier

2. Professional products
Portfolio of brands that meet the requirements of hair salons and provide customers with a wide
range of innovative products.
LOreal professional
Kerastase
Matrix

3. Luxury products

Prestigious brands which offer customers products and premium service in department
stores, specialty stores and travel retail outlets.
Lancome
Ralph lauren
Biotherm
Giorgo Armani
Diesel

4. Active cosmetics
Dermo-cosmetic products sold in pharmacies and specialist retailers and supported by
advice from pharmacists and dermatologists.
Vichy
La roche posay

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Ethics:
At LORAL, we believe that everyone aspires to beauty. Our mission is to help men and
women around the world realize that aspiration, and express their individual personalities
to the full. This is what gives meaning and value to our business, and to the working lives of
our employees. We are proud of our work.

EXECUTIVE COMMITTEE
JEAN-CHRISTOPHE LETELLIER, MANAGING DIRECTOR L'ORAL INDIA

Jean-Christophe Letellier joined LOral India in 2013 as the Country Manager. Prior to taking
on this role, Jean-Christophe has been ASEAN General Manager for Consumer Products
Division.

Jean-Christophe started his career in LOral in 1994 in LOral Thailand before embarking on a
fast and successful marketing track in CPD France, at LaScad and Garnier. In 2002 he became
Marketing Director Garnier Maybelline for Europe and took his first general management role in
Belgium as CPD GM. In 2008 Jean-Christophe was appointed Country Manager Indonesia. With
great strategic insights, he developed a successful growth model for CPD, PPD and Luxe and
together with his teams put Indonesia on the list of strategic countries for both divisions.

MOHIT JAMES, DIRECTOR, HUMAN RESOURCES LORAL INDIA

Mohit James has over 18 years of work experience in areas of Human Resource Management,
Strategy and Information Technology.

Mohits professional responsibilities have taken him through various aspects of the Human
Resource and Organizational Development areas within the Textiles, Software and Consumer
Products Industries in companies such as VIP Industries, Kale Consultants, Arvind Mills.

He has served in senior management positions including Head Organization Development for a
HR Consulting Firm, Vice President Strategy & Marketing for a Banking Software Company.
He is currently employed as Vice President Human Resources for one of Indias market
leading consumer products & Lifestyle Company.
In the past he has been involved in and led organizational renewal and change initiatives
successfully for Mid- sized enterprises.

Mohit has undergraduate qualifications in Engineering and Economics and has a Masters in
Personnel Management from Symbiosis Institute of Business Management. He has been a
visiting faculty to many B-schools and has helped develop curriculum in specific area of
Compensation and Benefits Management.

Mohit has been trained in assessment of managerial competencies, Appreciative Inquiry, brands
and work culture linkages, environment and quality management systems amongst other areas of
HR and Organizational behaviour.

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ASEEM KAUSHIK, DIRECTOR, PROFESSIONAL PRODUCTS DIVISION
L'ORAL INDIA

Aseem Kaushik, Director, LOral Professional Products Division heads the operations of brands
- LOreal Professionnel, Matrix, Krastase & Kraskin in salons across India, Srilanka &
Bangladesh.

He has been working with LOral for 18 years, first, as part of the startup field team for 8 years
in the Consumer Products Division which includes brands like Garnier, LOral Paris,
Maybelline and then for the past 10 years in the Professional Products division which deals in
LOral Groups B to B business exclusive to salons.

He has also been responsible for the launch and setting up of Matrix, the accessible Brand of
Professional hair products in the country. He has also been instrumental in conceiving & setting
up of the Modern LOral Collaboration salon concept which brought about the
professionalization & transformation in the Hairdressing industry in India.

As a Business:

Their strategy for leadership is based on continuous investment in rigorous scientific research
and development. This enables Their brands to deliver products which are innovative, highly
effective, practical and pleasant to use, and which are manufactured to the most demanding
standards of quality and safety. they aim for excellence, and constantly challenge ourselves and
our methods. We place great value on honesty and clarity: Their consumer advertising is based
on proven performance and scientific data. They are committed to building strong and lasting
relationships with our customers and their suppliers, founded on trust and mutual benefit. They
do business with integrity: They respect the laws of the countries in which we operate and adhere
to good corporate governance practices. They maintain high standards in accounting and
reporting, and support the fight against corruption. They deliver long-term, sustained shareholder
value by protecting and making the most effective use of company assets.

As an Employer:

They aim to make LORAL a great place in which to work. We know that our employees are
our greatest assets. They are entitled to a safe and healthy working environment: one in which
personal talent and merit are recognized, diversity is valued, privacy is respected, and the
balance between professional and personal life is taken into account. They believe in offering our
employees a stimulating environment, exciting personal opportunities and a chance to make a
difference. They encourage an atmosphere of openness, courage, generosity and respect, so that
all our employees feel free to come forward with their questions, ideas and concerns.

As a Responsible Corporate citizen:

They play our part in creating a world of beauty and fairness. They are mindful of our impact on
the natural environment, including biodiversity, and constantly seek to reduce it: They are
determined to avoid compromising tomorrow for the sake of today. We make a positive
contribution to the countries and communities in which we are present, and respect local cultures

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and sensitivities. They are committed to the respect of human rights. They want to help end the
exploitation of children in the workplace and the use of forced labor. They want an end to
animal testing in our industry, and we contribute to the development and acceptance of
alternative methods. They actively seek out and favor business partners who share their values
and our ethical commitments.

2. Inbound Logistics
It is widely accepted that managing inbound logistics is significantly more complex and
challenging than outbound logistics. After all, typically, outbound shipping originates from a
handful of production facilities and/or DCs and makes numerous, regularly scheduled stops to
deliver product. Compare this to timing the inbound delivery of hundreds to thousands of
different raw materials, originating from dozens to hundreds of suppliers located at far-flung
global locations. It is plain to see, this is a much more complex puzzle to solve. Especially with
regard to beauty supplies manufacturing, which is known for using some pretty exotic raw
materials sourced from unlikely locales. Awapuhi from Hawaiian mountainsides, Jojoba from
Sonoran deserts, and other botanicals, fragrances, emollients, emulsifiers and pigments from all
over the globe are routinely used in producing modern cosmetics. Getting all these materials
delivered in enough time to meet purchase orders is difficult enough before factoring in the
limitations dictated by shifting fashion trends.
When a lake is filled to the brim it looks pristine, calm even. But when the water level drops,
rocks and other hidden anomalies begin to surface.
This is how Ralph Folkes, assistant vice president of corporate transportation, L'Oreal USA,
describes the decision to invest in a new transportation management system (TMS) in 2008, as a
receding economy began to expose submerged rocks within L'Oreal's supply chain.
The U.S. division of the world's most recognizable cosmetics brand was challenged with holding
vendors compliant to inbound transportation requirements. After much due diligence, L'Oreal
USA chose Elmwood Park, N.J.-based UltraShipTMS' flagship solution, UltraShipTMS, to help
automate its routing guide and attain greater visibility.
Folkes, who was formerly transportation head of the manufacturer's consumer products division,
also recognized that business units within the company needed to work closer together and to
pool purchasing leverage volume to create cost savings and service improvements.
L'Oreal had a TMS in place to oversee outbound transport from distribution facilities to
customers. But it needed to gain greater control over inbound raw material flow to its
manufacturers. Vendors were specifying their own carriers, not L'Oreal's preferred carriers. So
the company decided to revamp the process by beginning at the top.
"This approach was critical to improving the flow of components and raw materials into our
manufacturing facilities," explains Folkes. "By controlling this part of the supply chain, we could
dictate transportation and inventory management, expand visibility, and plan ahead more
accurately."
Using UltraShipTMS, L'Oreal triggered a transformation that comprised three phases:

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 1. Compliance."We needed to convey appropriate transportation instructions to our
suppliers," says Folkes. "The cost savings from simply holding vendors and suppliers
more accountable have been significant."
2. Mode selection."Shipments weighing 20,000 pounds should move truckload, not LTL,"
Folkes says. "The system, not the supplier, now dictates mode."
3. Optimization."We have now given our manufacturers the tools to go back to suppliers
and figure out how to ship to us more efficiently. We cleansed the supply chain by
delivering more accurate lead times. This allows our suppliers to pool shipments, and we
have freight ready to build full truckloads," Folkes explains.

Given the way the market was moving, L'Oreal's TMS roll-out was timely, but also necessary.
"We had no low-hanging fruit," says Folkes. "The fruit was already on the ground."
The objective for companies is to leverage the TMS and make it a supply chain tool, "to integrate
it with any warehouse or transportation management system in place, and connect the links in the
chain," explains Nick Carretta, president of UltraShipTMS.
The manufacturer has been able to increase inter-plant transportation efficiency between
manufacturing locations and distribution centers, but it still uses separate transportation
management systems to manage inbound and outbound. Moving forward, it will migrate toward
a system that incorporates both. This way it can use inbound freight data to optimize outbound
movements.
"Once a complete TMS is in place, collaboration with carriers and customers is boundless," says
Carretta.
Reacting to variable demand and marrying marketing and logistics efforts requires a great deal of
collaboration. Personal care product manufacturers can choose from a wealth of resources and
strategies, but these four tools of the trade are especially important.

1. Vendor-managed inventory (VMI)Employing a VMI strategy can help businesses

reduce the risk of carrying too much inventory and respond better to shifts in demand
patterns. For example, a manufacturing facility running 100,000 SKUs four months out
carries a considerable amount of stock that may or may notsell.

Charging suppliers with inventory management leans the pipeline and leaves product in
its least value-added form farther back in the supply chain. Companies can leverage this
flexibility to rationalize packaging requirements for different retail channels closer to
demand or even source all inventory from a centralized stock point.
2. Inbound LogisticsIn the personal care product supply chain, demand sense and
respond is a competitive differentiator. Controlling inbound transportation and product
flow at each pivot in the supply chainfrom manufacturing plants to distribution
facilities to retail storeshelps businesses pull inventory to demand.

Capturing demand signals from the point of sale, then sharing this information with
marketing, logistics, and service providers upstream in the supply chain, enhances
visibility, grows collaboration, and increases flexibility and economy.

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 3. Freight ConsolidationSKU variability and differing carton sizes, multi-channel
business requirements, and varying transportation demands make freight consolidation a
must for cosmetics companies. From locating inventory in centralized DCs to controlling
inbound transportation and pooling shipments, manufacturers can improve asset
utilization and freight spend.
4. PackagingPackaging is a hot topic and an executable solution for the health and
beauty industry. It's a means of conveying information and appeal to a consumer, and
reducing material footprint has an impact on load optimization and transportation needs.
Marketing and logistics each have a hand in engineering packaging requirements, which
can increase communication and collaboration in countless other ways.

3. Material Management

Raw Materials / Suppliers

Manufacturing our products requires a wide range of raw materials that are blended in our
formulas. LOreal directly partners with suppliers that specialize in various technical groups,
such as:

Polymers
Fats
Natural products
Perfumes
Sunscreens
Vitamins

Packaging / Suppliers

For LOreal, it is essential to offer our clients innovative, environmentally friendly Packaging
that promote our products. To do so, we collaborate with a broad rangeof suppliers involved in
various technological fields, such as:

Plastic bottles and jars

Glass bottles and jars
Molded parts
Plastic tubes
Aluminum tubes
Spray cans
Distribution systems
Labels

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Pop promo / suppliers

In order to promote their products and make them stand out in sales outlets, as well as to attract
their consumer and clients, Loreal has developed display cases, promotional objects and
accessories.The purchasers work as partners with a broad range of specialized suppliers that are
capable of offering.

Permanent POS
Promotional POS
Printing
Promotional items etc.

Equipment / suppliers

With numerous production plants worldwide, LOreal collaborates with a board community of
industrial equipment suppliers divided into three categories:

Manufacturing equipment: production skids, weighing equipment, washing equipment,

etc.

Packaging machines: fillers, labelers, distributors, multi pack machines etc.

Utilities: compressors, boilers, cooling systems, paletting, fire safety, etc.

Indirect purchasing / Suppliers

The indirect purchases team, which covers a broad range of activities within LOreal, has a direct
relationship with numerous suppliers. The Group has therefore split its general expense sheet
into various purchasing categories, such as

Intellectual services
Travel, relocation
Meetings/events
Building fees
Temporary employment
IT and Telecommunications
Human resources
Office and technical supplies
Energy & fluids
Maintenance & spare parts
Personnel-related services
Express transport
Insurance
Documentation

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Outsourcing partnerships / Suppliers

Alongside the internal production of these products, the Group collaborates with a
broad range of subcontractor companies, such as:

Packaging or finishing finished products

Manufacturing specific finished products (soaps, pencils, cloths, etc.)

Logistics

4. Production
Loreal Vision for production

PRODUCING SUSTAINABLY
By 2020, LOral will have reduced the environmental footprint of its
plants and distribution centers by 60%(1),through the reduction of CO2
emissions(2), water consumption and waste management

Research and innovation

L'Orals Research & Innovation center in India is the groups sixth hub globally, and includes a
Product Development center in Mumbai and an Advanced Research Center in Bangalore. The
centers cater to all three lines of business hair, skin care and make-up.

Manufacturing

L'Oral India operates two manufacturing plants located in Chakan, Pune and Baddi, Himachal
Pradesh which cater to 90% of its requirements in India.

Production Development Process:

Safety Evaluation
LOreal takes safety very seriously and, well before it was required by law, we had put in place a
safety evaluation team to ensure the safety of LOreal products for both professionals and
consumers.
LOreal International Safety Evaluation Division uses a multi-disciplinary scientific approach to
evaluate the safety of LOreal products, ensuring that LOreal commitment to product safety is
upheld at every stage in the products life.

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This safety assurance procedure includes an assessment based on the latest medical and scientific
research, rigorous safety evaluations of ingredients as well as finished products, examination of
the effects of cumulative product use and ongoing safety monitoring once a product is on the
market.
Product safety studies are designed and monitored and their results interpreted and evaluated by
scientists who are specially trained and experienced in safety evaluations.

Step 1: Review of Available Safety Information on the Ingredients

This is the first stage in a new products life when its composition is defined by their scientists
and each formula is registered in a dossier. If it is a plant extract the scientists will examine its
botanical origin. Each ingredient of the product is then evaluated. Once each ingredient, natural
or synthetic, has been defined chemically and analytically, as the case may be, all available use
and safety information on the ingredient is investigated.
At this preliminary stage their scientists also take into account the anticipated consumer use of
the finished product.
The final step in this first stage is to check the regulatory considerations for the market where the
product will be launched and ensure that by including these ingredients we are complying with
the local law regulating the use of them. The use of numerous cosmetic ingredients is strictly
controlled in many countries of the world today.

Step 2: Safety of the Ingredient in the Context of the Finished Product.

Following this initial analysis, they consider in detail how a new ingredient will be used when
incorporated into a finished product. To do this, they look at which part of the body this finished
product will be applied. They analyze whether it will be only used on the face, or under the arms,
or around the eyes. They check to see whether there is a possibility that the ingredient may be
ingested (toothpaste or lipstick for example). They also establish whether one or more
ingredients could be inhaled (aerosol, for example).
In tandem with this evaluation, they look at how much of the skin surface will come into contact
with the ingredient in question. Is the ingredient going to be used in a cream that is specific for
the hands? Or will it be in a body lotion that may be used all over the body?
Then they analyze how often the ingredient will be used in the context of the product. Will it be
something that is applied every day? Or once a month? Or even several times a day?
They also examine how much of the product and, therefore ingredient, is used each time. For
this we have data gathered from across Western Europe which allows us to know in detail how
much of LOreal cream, lipstick or mascara is used each day by LOreal customers.
Finally, they anticipate all the possible mis-uses of a product (for instance, a shampoo, used to
wash the whole body; a lipstick, used on the cheeks to add color) to ensure that the ingredient is
safe for use beyond the original intended use of the product.

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Step 3: Approving Safe Concentrations of the Ingredients.
Once they have collected all the necessary information about the ingredients and the way the
cosmetic product is likely to be used, they can carry out a analysis to establish a concentration at
which a given ingredient may be used safely in these different cosmetic products.
This analysis is a calculation that establishes the so called Margin of Safety. At LOral this
margin is typically a use level of the ingredient that is 100 times below what is known to be safe
under experimental conditions and allows us to extrapolate from experimental conditions to real
life. As a result of this calculation, different limits are imposed on the use of the same ingredients
in different product types, e.g. higher concentration may be allowed in shampoo, because its
rinsed off skin after use and a much lower concentration will be allowed in a face cream.
This Margin of Safety procedure is described, among others, in the European document called
Notes of Guidance for the testing of cosmetic ingredients and their safety evaluation, 6th
revision (2006), written by the Scientific Committee on Consumer Products and issued by the
European Commissions Health and Consumer Protection Directorate General.
On the basis of the information gathered in Steps 1, 2 and 3, a safety assessor endorses the use
of each of the ingredients at a given concentration in a given finished product. This information
forms part of the Regulatory Dossier for each ingredient.

Step 4: Safety Testing of the Finished Product.

Once the ingredient evaluation stage is completed and proved satisfactory, the European
Cosmetics Directive does not require LOral to go any further with its testing, but at LOral we
often submit the new product to further in-vitro tests and clinical tests with human volunteers
The first stage of testing is done using in vitro studies in which a new product is often compared
to another, similar and well known product.
Clinical testing is carried out in human subjects when we know that the product is safe as we
want to establish the tolerance of the product in potential customers. This is a more complex
procedure as we look at objective signs as well as subjective feelings about the product.

Step 5: Safety Validations for the Finished Product.

Once the product has passed through steps 1-4 then one of LOreal safety assessors will give his
or her approval and will sign a safety attestation. This attestation forms is included in the
Regulatory Product Information File, supplied for each product.

Step 6: Product Launch and Post-Market Surveillance

LOral continues to evaluate consumer use and potential sensitivities to LOreal products sold
around the world on an ongoing basis. A cosmetovigilance network was set up twenty-five
years ago to provide this monitoring function. The network collects, validates and analyses,

17
through the application of rigorous and recognized methodology, any undesirable events which
may be related to the use of a product.
Through their worldwide network of Consumer Services departments, consumers can advise us
of a tolerance issue which is immediately communicated to LOreal cosmetovigilance
department who then examines the file, the formula and the ingredients. It then contacts the
consumer and/or his or her doctor, if necessary, to help resolve the issue, carrying out additional
investigation, whenever required, before reporting back to LOrals management on any
potential implication involving LOreal product.
Research and Development:

Everything at LOral begins with science and knowledge. All of LOreal products are based-on
intensive scientific research. LOreal employ 3,000 scientists who work in state-of-the-art
research centers around the world.
In addition to developing new formulas and ingredients, LOreal scientists also study the
structure and function of the skin and hair, discover new molecules, investigate best
combinations of personal care products and how to maximize product performance and safety.
The development of new products involves scientists from a variety of disciplines, such as
chemistry and biochemistry, biology, microbiology, toxicology, packaging engineering,
dermatology and quality assurance.
At LOral, we have a long-standing policy of allocating 1/3 of the companys Research and
Development resLOrealces to fundamental research projects, which are targeted at progressing
knowledge in three main disciplines: skin, hair and color.
A decision, made almost twenty-five years ago, to invest in biotechnology and the life sciences
in particular, has given us the means to better understand skin and hair, to reconstruct the skin,
and to pave the way to develop products that fight ageing of the skin, hair and skin pigmentation
disorders.
Research into new cosmetic ingredients and formulations can take many years and often the
research conducted by LOreal scientists leads to breakthroughs with a wider contribution to
scientific knowledge. For example, we are now able to grow hair in test tubes in LOreal
laboratories, enabling us to carry out numerous tests on new shampoo and conditioner
ingredients.
Operations:

42 factories around the world

88 PACKAGING AND PROCESSES PATENTS FILED IN 2016

95% of factories are ISO 14001-certified

95% of LOreals industrial sites audited with standard SA 8000

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LOreal Innovation Model
LOral has always elected to develop strong research because where beauty is concerned,
science is essential for innovation. Its Research and Innovation model enable it to respond to the
world's vastly diverse beauty expectations.
SCIENCE, THE DRIVER OF INNOVATION IN COSMETICS

For over a century, L'Oral has built its development on a conviction: only strong research can
create cosmetic products that are capable of generating real results. Its Research & Innovation
model, unique in the cosmetics industry, is organized around three major entities:

Advanced Research, tasked with continuously enriching scientific knowledge about skin and
hair around the world, and discovering new active ingredients;

Applied Research, which develops formulation systems, which are then played out in the
different families of products;

Finally, Development, which provides the brands with innovative formulas adapted to their
identity and to consumer expectations around the world.

ASSETS FOR INNOVATION

To stay ahead of the game and make major cosmetic innovations available to everyone, the
group relies on three major assets: a unique collection of proprietary active ingredients, which
Advanced Research enriches each year with new elements, molecules, or ingredients... ;
expertise in formulation, this decisive phase that makes it possible to transition from the
molecule to the finished product. Every year, thousands of formulas are developed by the teams
at L'Oral. One final asset is its expertise in evaluation, indispensable for bringing new products
to the market by demonstrating their safety and effectiveness scientifically and rigorously.

RESEARCH THAT LISTENS TO CONSUMERS

At L'Oral, innovation has always been nurtured by a constant dialog between science and
marketing. It is founded on ever-more precise scientific knowledge of skin and hair around the
world, but is also based on attentive listening to consumers on every continent and on the
observation of their behavior where beauty is concerned. A true source of inspiration, the great
diversity of beauty rituals opens up new fields of exploration.

A GLOBAL VOCATION

By strengthening its global presence through the six regional poles - Europe, United States,
Japan, China, Brazil and India - L'Oral's Research and Innovation comes closer to its major
markets, but also to the wealth of scientific knowledge of each region. In each, the research
teams develop strategic partnerships with scientific experts or local start-ups to explore new
territories.

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ORGANIZATION

5 hubs (United States, Japan, China, India and Brazil)

23 research centers

16 evaluation centers

49 Scientific and technico-regulatory departments

More than 30 collaborations with universities, public research centers or start-ups

Governmental Regulation:
In addition to the rigorous safety testing that LOral conducts for each finished product before
making it available for sale, they are also held accountable to governmental requirements for
safety in the 140 countries where they market our products.
Whether governed by the European Cosmetic Directive, the US Food and Drug and Cosmetic
Act or any other local laws that regulate the sale of cosmetic products, LOral meets or exceeds
the legal obligation for product safety in each country where their products can be purchased.

5.Outbound Logistics

LOreals Distribution Channel Worldwide

With 290 subsidiaries, more than 100 distributors off-group and 42 plants, all spread out in about
130 countries, LOreal is the leader of the cosmetic industry. The group has begun its
internationalization in 1912 by following three steps:

First landing

Go native

Globalization

First landing - first, commercialization of professional shampoos to hair-dressers via

distributors in near Europe (Spain, Italy, Great Britain, Germany and Poland) and in the
Americas.

Go native - second, local firms are taken over for example in the USA (Redken 1993,
Maybelline 1996 etc.), in Argentina (Miss Ylang 2000)

Globalization - third, subsidiaries (production, research and development) are directly

created (Greenfield investment) without any first passage via distribution. It is the case in
Asia (Japan and Hong Kong)

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The way L'Oral is organized

L'Oral's national branches are primarily sales-based. The company develops and upgrades its products at
laboratories in Paris (France), the United States and Asia. Production takes place at factories spread
throughout the world. Its sales orientation is reflected in the organizational structure of the company,
which largely parallels the channels of distribution.

There are three of these:

Specialist outlets

Hair salons

Retail

Kinds of Distribution Channel

Specialist Outlet : Luxury items such as Ralph Lauren, Giorgio Armani and Paloma Picasso
perfumes and pharmaceutical products are sold exclusively through specialist outlets such as
perfumeries, duty-free shops and pharmacies.

Hair Salons : The second sales channel encompasses hair and beauty salons and the like. These
not only use L'Oral products themselves, but also sell them to their clientele.

Retail : But by far the largest channel is retail: the supermarkets, department stores and chemists
where most of the public buy their cosmetic and beauty products. This channel of distribution
accounts for more than half of total turnover (1998: 55.9 per cent), and the Consumer Division
which supplies it is therefore the largest within L'Oral.

LOreal 5 step approach to India

Understand the needs of Indian Consumers

Launch product ranges specific to their needs
Increase Distribution Channels
Effective pricing strategy
Reduce additional customer costs

A more agile and more digital supply chain

To make sure consumers get the best service wherever and whenever they need it, LOrals
supply chain is evolving as fast as digital technology itself. The challenge is to ensure total
consumer satisfaction, both in stores and online, by taking on new challenges: the ramp-up of e-
commerce, the personalisation of products, and the management of products data and different
delivery modes. All the while with the same guarantee of quality, swiftness and safety.

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 Operations orchestrates cutting-edge expertise in fields ranging from packaging design
and product development, sourcing of packaging and raw materials, production to the
distribution of all the groups products.
Cobotics (collaborative robotics) involves the use of a robotised system to assist an
operator in a task that remains under human control.
LOrals supply chain handles and optimises all information flows and physical product
flows from suppliers to points-of-sale.
CDP is an independent global organisation that evaluates companies achievements in
their environmental performance.

Developing connected beauty start-ups

In May 2016, the group invested in Founders Factory, a London-based start-up incubator
and accelerator, to become its exclusive partner in the beauty sector. LOral and
Founders Factory will assist five recently-founded companies and will together create
two start-ups each year. The groups aim is to intensify its digital innovation strategy by
gaining access to a worldwide ecosystem of promising talent and cutting-edge
technology.

Steps for reaching out the customers:

The various products are found in various outlets like perfumeries, hair salons, super
markets, pharmacies, beauty outlets and even through direct mail. Besides this, the brand
has its own website and has tie-ups with other shopping sites on internet.

With all the needed product information, the consumers can make purchases from any
part of the world. In this changing times internet has become one of the most important
outlet for successful purchasing and buying. . LOreals operations in India are on an
ever-growing path as the awareness of the beauty products has resulted in the brands
growth and popularity. Its operations in India are through its fully owned subsidiary
LOreal India.

In one of its kind distribution strategy,LOreal has appointed skillfully trained

hairdressers that work in their own salons and outlets by providing professional services
to the consumers. This includes various treatments and product awareness campaigns that
help in creating a new consumer base. This has led to a number ofLOreal salons in India,
where consumers come for professional and efficient treatment and these salons are for
both the gender men and women.

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6. Sources of Information
http://www.wikipedia.com/

http://lorealindia.com/

http://suppliers.jimtrade.com/

http://www.cosmeticsdesign.com/

http://investing.businessweek.com/

http://www.supplychainshaman.com/supply-chain-2/supply-chain-excellence/loreal-a-
beautiful-supply-chain-2/

http://www.loreal-finance.com/en/annual-report-2015/supply-chain

https://theloadstar.co.uk/loreal-supply-chain-transformation/

http://www.loreal.hk/en-hk/careers/whoyoucanbe/operations/operations-supplyc

https://prezi.com/dvuw4q9txout/loreal-supply-chain/

http://www.pymnts.com/in-depth/2014/loreals-supply-chain-make-over/

http://www.loreal.co.in/brands/active-cosmetics-division.htm

http://www.loreal.co.in/medias/financial-press-releases/first-half-2017-results-5900.htm

http://www.loreal.com/group/our-activities/organization

http://www.loreal.co.in/research-innovation/research-and-innovation-key-figures.htm

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