Organizational Strategy - Sustainable Development - L'Oréal

5 L’oréaL - GrI DaTa SHEETS 2011
COMPaNY CONTRIbUTIONs
In L’oréal Sa, the annual amount of company contributions in 2011 was €175,775,565.
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one of the components in L’oréal’s sourcing policy is to ensure the development of suppliers in locations where the group is increasing
its production and sales. The localisation of its purchasing in production zones is therefore a monitored indicator. In 2011, an average
of 80% of purchases linked to production (packaging, raw materials, sub-contracting) were made with suppliers situated within the
geographical production zone (Europe, USa, asia, Latin america, africa/Middle East). For example, american factories purchase 69% of
their requirements in North america and European factories do 84% of their procurement in Europe.
L’oréal’s objective is to increase the localisation of its purchases, mainly in the emerging zones, so as to meet local needs. To do this,
Purchasing works with research and Innovation to reference local suppliers of raw materials (diversification programme or dual sourcing
of raw materials) and with Packaging approval to reference local suppliers of packaging items and sub-contracting.
For packaging items, a large “In-house production programme” is being run, for example, in several factories. It consists of installing a
supplier’s machines and personnel in a L’oréal facility, even a production factory. This concept, which requires achieving a significant
manufacturing volume to make the investment worthwhile, is perfectly suited to mass distribution cosmetics and to the technological
specialisation in L’oréal factories. The approach is restricted to simple packages with a short production line, easy to set up on an existing
site. In L’oréal, the “In-house” version was introduced for the first time in 2010 for the production of plastic bottles for Elsève and Fructis hair
care products for the European market, at rambouillet and Settimo respectively. Today, there are five production sites involved: in France
at rambouillet, in Belgium at Libramont, in Italy at Settimo, in the USa at Florence and in Brazil at São Paulo. In 2012, more than one billion
finished products will be manufactured using this principle. L’oréal plans to introduce new installations between now and the end of 2012
in Poland and Mexico and to conduct studies on other sites, everywhere where the model could be applied. The benefits of this “ultra”
localisation are many: flexibility, environment, savings.
Local suppliers are assessed on the same bases as other suppliers, i.e. on 5 KPI: quality, logistics, competitiveness, innovation, sustainable
development.
THe GLObaL “sOLIDaRITY sOURCING” PROGRaMMe
Because the first economic and social contribution of a group is its purchasing power, L’oréal has also decided to make its sourcing an
original way of fighting exclusion. So, in mid-2010 the group created a global solidarity purchasing programme: “Solidarity Sourcing”. Its
purpose is to assist people from economically vulnerable communities to find long-term access to work and income. This initiative gives
them the opportunity to re-integrate socially.
Several initiatives had already been developed by the group, in particular the Body Shop’s “Community Fair Trade” programmes. With
“Solidarity Sourcing”, L’oréal fundamentally transforms its purchasing process by opening it up to new categories of supplier to build
sustainable, fair-trade commercial partnerships with them, creating economic and societal value. Involved in this programme are:
companies working for the inclusion of disabled people, social insertion enterprises, micro-companies which find it difficult to access to
large-scale specifiers, companies owned by minorities and producers operating a fair trade policy.
It is intended to develop the programme in all countries where the group has locations. Collaborative tools have been put in place, so
that projects which give birth to local initiatives (South africa, Brazil, China, France, Morocco, etc.) then influence all group employees that
have the ability to make solidarity purchases.
a year after starting “Solidarity Sourcing”, purchasing teams have launched 120 initiatives in 47 countries. Solidarity purchases by group
brands, including The Body Shop, today have a global value of fifty million euros. Thanks to such projects, 29,000 people now have access
to paid employment.
> For more details, see the “Solidarity Sourcing” programme on:
- the Company file (indicator So1).
- “Solidarity Sourcing” pages 40 and 41 of the 2011 Sustainable Development report.
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The group plans to grow very strongly in countries where it is already located. To achieve this objective and recruit real talent, the group
selects candidates who demonstrate the potential to rise to different levels over a two to five year time span. It is also L’oréal’s aim to ensure
the recruitment and internal mobility of senior managers, trustees of L’oréal culture. This strategic task falls to the Talent Management
Directors who work closely with local Hr departments. Based within the countries, they have a close understanding of local needs, carry
out recruiting and meet candidates, in order to select the most suitable profiles. There are currently five Talent Management Directors
in the group: one for the USa, one for the Latin american Zone, one for the africa/Middle East Zone, one for the aSEaN (association of
Southeast asian Nations) zone and one for China. The appointment of the first Talent Management Director dates from 2010.
> For more details, see the Talents section on pages 30 and 31 of the 2011 Sustainable Development report.
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