Dealing with about 1,300 product launches every year to cater to ever-changing consumer demands, L’Oréal has embraced digital technologies not only to discover what the consumer wants but also to react to those needs on the factory floor.
Mass customization is a phrase that we’re becoming increasingly familiar with in manufacturing, particularly within consumer goods. Connected consumers—with ever-increasing and rapidly changing demands—are dictating a whole new level of flexibility and connectedness from manufacturers. This trend is arguably no more apparent than it is in the beauty industry.
In a presentation at the North American Manufacturing Excellence Summit (NAMES), going on this week outside Chicago, Carlos Ruiz, vice president of operations and head of North American manufacturing for L’Oréal, painted a picture of the flexible production needed for changing demands and individualized products.
“We work in an environment that is very, very fast-paced,” Ruiz said. “Everybody’s asking for something different, something specific for them.”
It’s a work in progress. The same connectedness that consumers are using to see the latest products available is providing L’Oréal with the data the company needs to react more quickly to consumer demand and to get the end-to-end information it needs in its supply chain.
“We really need to be reactive and we really need to make sure we provide what consumers need,” Ruiz said. “But the forecast sometimes doesn’t work, and that’s our challenge.”
An example: When the Duchess of Cambridge revealed the name of the pale pink nail polish she wore for her 2011 wedding to Prince William (and which subsequently became the shade that everyone wanted), sales of the Ballet Slippers color from Essie skyrocketed. The L’Oréal brand needed to be flexible enough to throttle up production quickly in order to respond to that customer demand.
“Today, the environment is different, consumers are different,” Ruiz said. “We need to be very flexible; we need to be very agile.”
He described a world in which the popularity of Pokémon Go was crashing servers one weekend, and yet the app has largely disappeared from people’s phones already today. There’s some frustration on the part of plant managers about how quickly they need to react to the market, Ruiz said. “But if we don’t jump immediately and respond to that change, we’re out.”
As the No. 1 beauty company in the world, L’Oréal makes 7 billion products globally. The 100-year-old company used to have three brands, but now has about 34. In addition to Essie, there are well-known names like Lancôme, Yves Saint Laurent, Kiehl’s, Maybelline, Diesel, Redken and more. In North America alone, L’Oréal has 13 manufacturing plants making 2.3 billion products.
Ruiz, who worked for Kraft Foods for six years before joining L’Oréal in 2015, pointed to a key difference between the food industry and the beauty industry: the number of new product launches. L’Oréal has about 1,300 product launches every year—about 40 percent of its catalog is new at any given time. “Lipstick used to have 15 to 20 shades. That was enough,” he said. “Today, it has 100 different shades. As a consumer, that’s the right thing to do.”
The impact on manufacturing is enormous. “Consider that, when you think about your production lines, what is the amount of capital you need to invest to change parts?” Ruiz posited. “That’s how we’re reacting to Industry 4.0.”
Digital transformation is having a large impact on L’Oréal’s processes, Ruiz said—what the company calls Operations 4.0 because of its end-to-end vision of the technology. It’s a vision not only of increased digital gadgetry on the manufacturing floor, such as iPads or HoloLens, but also more digital options for consumers, and how that in turn affects manufacturing operations.
Lancôme has taken mass customization to a whole new level with in-store devices that consumers can use to scan their skin and get makeup that matches their skin tone perfectly. “You can order a batch made just for you,” Ruiz said. There are about 50 of these machines now, he added, with plans to expand. “Customers will eventually be able to scan their skin with their phones and send that over to L’Oréal. We’ll manufacture the product and send it to your home, directly from our plant. The same with hair color.”
L’Oréal has also been experimenting with a service that delivers products to homes within two hours of ordering. “We’re trying that; it’s working,” Ruiz said. “If you’re going to a party and you don’t have the right lipstick, you need it.”
All of this means considerable change in the manufacturing environment. “We need to be agile, we need to be flexible and we need to be consumer-centric,” Ruiz said, describing the ability to launch a product in three weeks instead of 30.
To achieve this, L’Oréal has focused its digitalization efforts in three areas: operator autonomy, agile lines and accelerated development. Operator autonomy includes augmented lines; collaborative robots, which add considerable flexibility to the end-of-line operations in particular; connected devices; and augmented and virtual reality used for training, but also to create digital twins of equipment before going into production.
L’Oréal has been investing a lot of time in developing more flexible lines. The company has now achieved the ability for changeovers of less than five minutes for 20 different formats. They are also working more with their vendors to co-develop new lines, explaining what they’ll need for the future. “In the past, we had economies of scale,” Ruiz said. “Today, we have economies of repetition.”
L’Oréal’s 4.0 Lab helps to reduce costs and lead times. The lab is also involved in the advanced use of 3D printing technology—not only for prototypes, but also to produce spare parts as needed. Just a couple months ago, the manufacturer needed to introduce a new seal to one of its shampoos because there were some leaks at Amazon, Ruiz described. L’Oréal’s supplier said it would take 24 weeks to solve the problem. With 3D printing, L’Oréal was able to solve the problem itself in two weeks instead.
One step that L’Oréal has taken to encourage its employees to become better acquainted with what the 3D printers can do is to offer free use of the printers for personal projects at specified times of the day. “It’s motivating them to use it, and they’re not afraid to use it,” Ruiz said. “Then they start thinking more about how the technology can be used.” L’Oréal has even started thinking about printing mascara brushes.
“In the end, it’s all about operational excellence,” Ruiz emphasized, talking about finding the technologies that will help understand and deliver what consumers need. “It’s about making sure you have the right technology—not more.”