L'Oreal's Reverse Supply Chain Management

Introduction 

With the increasing pressure for organizations to comply with various corporate social responsibility initiatives, L'Oreal needs to implement appropriate supply management practices to ensure that its products have minimum impact on the environment. In addition, the increasing level of competition in the global business environment requires firms to maintain a strong relationship with the customers and ensure the efficient flow of products along the supply chain ( Zikopoulos and Tagaras 2015) . One strategy that the company can use to control and manage the flow of its products and gain a competitive edge in the market is the reverse supply chain management. Traditionally, a majority of firms have concentrated on improving forward supply chain management that includes the movement of products from the producer to the end users ( Govindan and Soleimani 2017) . However, as the level of competition in the business environment increases, it has become necessary for organizations to engage in on activities that can lead to the optimization of the backward loop ( Kumar and Chatterjee 2011) . Reverse supply chain practices can prove an important strategic tool for L'Oreal in its attempts to build a robust relationship with its major stakeholders especially the customers and the community. The implementation of an effective reverse supply chain management can enable L'Oreal to gain a competitive edge in the market and ensure sustainable profitability and growth.

Overview of the Company 

L'Oreal is a French personal care and cosmetics company headquartered in Clichy, Hauts-de-Seine in Paris, France (L’Oreal 2018). Currently, it is the global leading cosmetics company and involves in manufacturing and selling a variety of products that include hair color, sun protection, skin care, perfume, make-up, men's skin care, and hair care. The company was founded by Eugene Paul Louis Schueller who was a young French chemist of German origin. Ever since its establishment, the company has experienced a rapid growth in the global market with operation in more than 150 countries (L’Oreal 2018). The rapid growth of the company in the global business environment can be demonstrated by its ability to generate sustainable profits over the years. An overview of the financial performance of the company is shown in the table below.

From the overview of the financial performance, it is evident that the company has been experiencing rapid growth in the market owing to its effective strategies. It has experienced growth in its revenues, net income, and assets from 2013 to 2017. This shows that it is a competitive and profitable company.

The Responsible Management Challenge 

The changes in the landscape of the business environment require firms to develop effective strategies to adhere to such changes and ensure that they survive. Currently, the stakeholders of the organization especially the customers play an integral role in the decision-making process and in deciding the strategic objectives pursued by the management ( Epstein 2018) . One notable, responsible management challenge that L’Oreal is facing is concerned with the recycling of its products. The recycling of products has been a major challenge for L'Oreal given that it deals with a variety of products that are packaged and labeled differently. Some of its packaging materials prove difficult and costly to recycle while others such as glass packaging are easy and cost-effective to recycle.

Sustainable development has become a major goal for many companies that need to survive in the market as well as develop a strong relationship with the stakeholders ( Spence et al. 2018) . Consumers are becoming increasingly attuned to some of the environmental issues thereby they incorporate this concern into their purchasing behaviors ( Hamschmidt 2017) . In essence, consumers are interested in safe, innovative, and qualitative products that are environmentally friendly. One of the major concerns with the consumers is the packaging that companies for their products. The packaging which is the most important maker of products or brand identity for the consumers can play a critical role in determining the purchasing decisions of products.

L'Oreal major challenge has been associated with the recycling of its cosmetics products. Although the majority of the cosmetics manufactured by L’Oreal looks pretty, smell good and serves to improve the natural beauty, their used products can be harmful to the environment and individuals if not properly disposed of (Naughton 2016). Ideally, many of the cosmetics of the company once used ends up in the landfill. This is because the majority of the cosmetics products that are produced by L'Oreal are not recycled at all due to their complex nature. The inability to recycle some of the products of L'Oreal makes it necessary for it to come up with some of the innovative ways that can be used to improve its recycling process. The company should come up with an appropriate strategy to ensure that the consumers or the end users of its products have the option to recycle their personal care and beauty brands by offering free recycling and collection services.

L’Oreal can be seen to have inadequate steps that can enable it to effectively recycle and reuse its packaging materials. The company still uses some of the materials that are not disposable to package its products and this is major health hazard to consumers (L’Oreal 2017). Once the consumers have used the personal products and cosmetics manufactured by the company, they are finally left in the landfills. Many health experts and environmentalist are concerned about some of the negative impacts that these products can expose to the lives of plants and animals. These consequences can lead to damage to the reputation and image of the company thereby affects its competitive edge in the market.

The Reverse Supply Chain 

The responsible management challenge experienced by L'Oreal can be addressed through the implementation of an appropriate reverse supply chain management. The reverse supply chain management is a corporate function that is increasingly becoming the core of the competitiveness of firms. By definition, the reverse supply chain is the movement of products from customers to the manufacturer or vendor ( Shaharudin et al. 2017) . It is simply the opposite of the traditional supply chain management where the products move from the vendors to the end users. The reverse supply chain is concerned with the planning, implementation and controlling the effective and efficient storage and inbounds flow of the secondary products and other related information for the primary purpose of proper disposal or recovery of the value. The recycling challenge experienced by L'Oreal can be addressed through the implementation of an appropriate reverse supply chain management strategy. The strategy can allow the company to collects its used packages for the purpose of disposal and reusing to package other brands.

Typically, many companies have implemented the use of reverse supply chain management and have become successful in the market. One notable example of reverse supply chain management is evident in the Coca-Cola distribution channel. Coca-Cola which is a multinational beverage company has an effective reverse supply chain management. The company recognizes that its bottles can expose various healthcare hazards to the environment and affects and compromise the health of individuals and plants. As a result, it has a comprehensive plan that ensures that the bottles it used to package its products are recycled and reuse. The strategies have enabled Coca-Cola to effectively manage its waster products, improve its image and reputation in the market as well as reduce the cost of operation.

L’Oreal can apply the same model developed by Coca-Cola Company to recycle its products. It should coordinate with all its distributors and other vendors to collect its used bottles and shipped back to the company for either proper disposal or reuse ( Williams and Henthorne 2017) . Although some of its packaging materials cannot be used they should be recycled and properly disposed to reduce their negative environmental impact.

There are many types of the reverse supply chain the L'Oreal can use to achieve its major objectives. One strategy is to help in the product returns and management of the deposition. It can also be used as a means of remanufacturing and refurbishing new products. The company can also use it as a tool to manage surplus supplies and ensure the shipped stock is adequate to meet the current demand in the market.

One of the benefits of the reverse supply chain is that it can enable the company to acquire its used products from the consumers ( Gu and Tagaras 2014) . This can enable the company implements one of its corporate social responsibility which is concerned with sustainability. The process can help the company to engage in sustainable business practices thereby gain loyalty and trust from its customers and other stakeholders. In addition, the company can be able to create a positive impact on the environment and thus meets its objective of reducing the pollution that is caused by improper disposal of its products.

Another major benefit of the reverse supply chain management is the reduction of cost associated with the purchase or production of new packaging materials ( Sheu and Gao 2014) . The strategy can ensure that L'Oreal refurbishes its used packaging materials and avoid acquiring or producing new ones. In essence, the packaging materials should contain the company's brand names, logos, and labeling to enable it to reuse them in the future. The sustainable business practices can not only help the company keep the environment clean but also ensure that it is socially responsible.

The reverse supply chain management can also ensure that consumers are connected to the company. In the current business environment, it is critical for firms to adopt strategies that make the regularly in touch of the consumers. The traditional supply chain management often fails to recognize the contribution of the consumer in enhancing the performance of the company ( Jayaram and Avittathur 2015) . L'Oreal can make sure that it engages all its customers in the supply chain management and make them feel part of the company. The customers and other resellers will use such connections to provide certain feedbacks to the company that can help improve their product. It has been noted that the feedbacks that companies receive from the consumers can facilitate innovation and invention of new ideas and products thereby create a competitive edge over the rival firms in the market.

The convenience to the consumers is another reason that can motivate L’Oreal to implement reverse supply chain. Under the current state, the consumers of L'Oreal are not aware of how they can properly dispose of some of the used products. Many of them are made using some chemicals which can be hazardous if not properly disposed of. Besides, the end users might lack adequate resources, knowledge, and time to enable them to effectively dispose of the used cosmetics and personal care products. The introduction of an appropriate reverse supply chain management can be a reprieve for the consumers as it will give them an opportunity to empty their used containers at specific locations without incurring any costs ( Inzel and Csonka 2017) . Such an approach is seen as convenient to the consumers since it makes their work easy after using the L'Oreal's products. In addition, it helps the consumers to avoid any cost associated with recycling and disposal of the products thus motivate them to continually use the products offered by the company.

The company can also benefit from the reverse supply chain by the development of the personalized product. In the developing personalized products, the company should have unique packages for its products to make them highly differentiated from those of other products. In marketing, differentiation has proved to be an important strategy that help creates a positive experience and perception in the minds of the customers ( Woods 2017) . The personalized products can make it easy for the consumers to collect the used products and take them to designated location or vendors who in turn will bring them back to the premises of L’Oreal. It should ensure that most of its containers and all the packing materials are having unique color and initials to help for quick and easy identification. The strategy has proved effective to many bottling companies which recycles their used products for reuse or disposal.

Although reverse supply chain management can be difficult to implement, the company can form a strategic alliance with other companies to ensure its success. Since L'Oreal deals with different products across various market segments, it should partner with other companies in its attempts to ensure effective recycling process. The partnership can include other recycling companies, the vendors, retail stores and other distributors.

It is also advisable that L’Oreal use technological advances to achieve the objectives of its reverse supply chain management. Currently, technology plays an important role in various business processes such as production, marketing, and supply chain management. Having an appropriate form of technology can prove pivotal in enhancing the performance and competitiveness of firms in the business environment ( Gruber et al. 2017) . Information technology can be used in various ways to enhance the effectiveness of reverse supply chain management. One important use of information technology in the reverse supply chain is to help track the history of the products along the supply chain network. This can allow the vendors to view the travel history of the products and well assess whether they are good products or should be put into the forward supply chain. In addition, the tracing ability can facilitate easy forecasting of the product sales and returns. The reverse management should also apply information technology to ensure testing and refurbishing facilities at the multiple distribution locations and scheduling all operations and activities.

Conclusion 

The cosmetics and personal beauty market are rapidly changing as many companies come with innovative products and production processes. The urge for firms to produce eco-friendly products as well as to reduce their negative impact on the environment has also made companies rethink of their business processes and models. L'Oreal is evidently facing major responsible challenges associated with the proper disposal of its products. Currently, the company lacks adequate mechanism and strategies for disposal of its used products and this exposes certain risks to the environment. Besides, many of the products and packaging materials of the company end up in landfills once used. As a result, the company needs to recognize the safety and wellbeing of all its stakeholders by engaging in an appropriate corporate function to address the challenge. Based on this, it is important that L'Oreal implement an appropriate reverse supply chain to help address the environmental degradation concern that it’s used products possess the environment due to improper disposal and recycling system. The reverse supply chain should involve customers where they are required to collect and forward the used products at designated places or to the resellers or distributors. The strategy can help the company maintain a clean environment and become responsible to all its stakeholders. It can also enable the company to implement its sustainable business practices thereby gain customer loyalty.

Lists of References

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