Call for change

Customers were already making ever-greater demands on the consumer-packaged goods (CPG) supply chain, then the pandemic struck, placing CPG companies under unprecedented pressure. In the wake of this disruption, many companies sought to make supply chains more agile to better serve retailers based on business priorities.

Similarly, the cosmetics company, L’Oréal Italy, wanted to reimagine and digitally enable its supply chain to be more customer focused. Smooth, streamlined processes that deliver the right product to the right customer at the right time would differentiate L’Oréal Italy in the market and contribute to growth.

In particular, the order-to-cash cycle is an important area of the supply chain to get right since it influences the quality of the customer relationship. Order-to-cash encompasses all customer interface processes, from retailer orders to financial reconciliation. Small hiccups with orders, for instance, can have an outsized effect on customer satisfaction. For this reason, L’Oréal Italy targeted order-to-cash for transformation.

Four product divisions carried out order-to-cash according to different methods. Each division used its own criteria to segment retail customers, meaning that several divisions might prioritize the same retailer differently, leading to multiple service levels and experiences, with different points of contact. In addition, different processes across divisions meant the company couldn’t exploit order processing and automation synergies or approve customer orders efficiently.

L’Oréal Italy sought assistance in cutting through the complexity. It needed new processes to transform the order-to-cash cycle and help employees make decisions in a systematic fashion rather than rely on specific employee experiences.

"The customer segmentation and process harmonization work Accenture performed is critical to our broader order-to-cash program at L’Oréal."

— PIERO GAMBINO, Country Operations Director – L’Oréal

When tech meets human ingenuity

L’Oréal Italy teamed with Accenture to transform order-to-cash processes across its Consumer Products, Luxury, Active Cosmetics and Professional Products divisions. To kick off the strategic program, we helped the team develop clearer strategic guidelines across divisions and support customer collaboration. At the same time, we assessed order-to-cash processes across divisions, identifying pain points such as uncoordinated cross-functional communication workflows and disconnected processes for approving customer orders. To enrich our insights, we also used a process mining tool.

We created a new customer segmentation framework that aligned divisions across key retailer interaction areas, such as commercial, demand generation, supply chain collaboration, and customer administration and communications. We combined information like credit disputes, shipping points and payments, for instance, to create a holistic view of the retail customer. This enables L’Oréal Italy to better understand and coherently categorize its loyal and priority retail customers.

The new customer framework provides a view into each division, as well as across divisions, and serves as the foundation for process harmonization. The framework was helpful to identify areas of process improvement and interventions across divisions. The team also identified opportunities where innovative new technologies like robotic process automation (RPA), descriptive and predictive analytics, AI, and machine learning could enhance efficiency and mitigate risk.

A valuable difference

The new customer framework helps L’Oréal Italy serve retailers at mutually agreed levels to enhance the customer experience. It also provides a stronger base to build a service catalog for each segment and customer-specific service plans.

Better customer understanding and more precise retailer segmentation means L’Oréal Italy can take a proactive approach with customers to foster greater collaboration on projects and services like customized retailer promotions. In addition, employees can work more strategically by offering higher levels of service to high-priority customers by providing different service catalogues.

The program also helped identify other areas where each division could improve process harmonization and simplification. As a result, L’Oréal Italy now has 20 potential initiatives it can work on to improve operational efficiencies.

Thanks to the program, employees can better align and coordinate activities across functions—like supply chain or administration—and divisions to provide consistent service. For instance, improved alignment means that employees in different departments won’t waste time duplicating activities for the same customer.

With a more customer-centric approach, the company can align people and resources to bring the right products and services to the right retail customers at the right time. The harmonized order-to-cash processes are also helping to drive strategic investments in new, targeted services.

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