28 February 2008 | Paul Snell
L'Oreal is to overhaul its worldwide supply chain operations.
Announcing the group's 2007 annual results, Jean-Paul Agon, CEO at the cosmetics firm, said: "We are going to do a lot of streamlining of the supply chain."
The group will reduce its number of buying offices from seven to four, and examine specific supplier relationships. It said there would be no "significant" impact on buyers and the intention was to provide more co-ordination in buying and more focus on supply chain strategy. Agon said the company was not looking for a "big rupture".
Sales for the past year were ?17.1 billion (£12.9 billion), a rise of 8 per cent compared with 2006.
Agon rejected criticism that the business did not focus enough on controlling spend: "Sometimes people say L'Oreal is active on growth but not on cost - this is not true. As far as attacking cost, we are as determined as we are at looking for growth."
He acknowledged the group's effort in dealing with volatile prices over the past 12 months, adding: "It has been a very difficult time because of the high prices of raw materials and energy. The impact could have been negative but it was more than compensated for by the effort and actions undertaken by all areas of operations: specialisation of the plant's production technology, optimisation of procurement and the transformation of our production processes."
He also commended procurement's work in marketing, adding: "There has been better negotiation of our advertising space purchasing and procurement. This enables us to improve and increase the firing power of our advertising without increasing costs."