SIMON BARBEAU

How does logistics contribute to the client satisfaction process?

Logistics issues and the availability of our products in the shops are a major preoccupation for our clients that the development of Internet has even intensified. We have to keep our commitments and provide retailers with the best possible service.

But given the nature of the products manufactured by the Group, we are faced with a fairly complex situation. Our products are equipped with circuit boards, motors, cords – all parts that are subcontracted to external suppliers. This scenario imposes significant transport delays in addition to the manufacturing time. Downwards, the transport time between our factories and the sales outlets can sometimes be long. Many products are sold on a different continent from where they were produced, with transit times of more than 30 days. At Group level, the average transit time between our factories and the warehouses of our commercial subsidiaries is about 25 days.

On top of this, our retail clients have their own constraints in terms of both inventory and store organisation. With traditional retail our visibility is about two weeks, and even less with e-commerce outlets.

The role of supply chain management is thus to take all these constraints into account and to build a long-term, efficient process in response.

What solutions has the Group implemented?

While increased inventory levels may appear to increase responsiveness, they generate significant costs and do not guarantee that the right product will be in stock to meet client demand. We prefer thus to align our production with commercial needs, reduce the total lead time to improve our responsiveness and maintain the right balance between the needs of our subsidiaries worldwide, clients’ expectations and rigorous inventory control.

In practice, this is reflected in a major effort to forecast sales, the only way to plan production efficiently. Today all the Group’s markets are working on a sales forecast in order to construct this medium-term vision. To achieve this, the marketing and sales teams work closely together upstream to anticipate local needs and plan product launches.

Is this the only lever?

Industrial capacity is managed globally, which makes it possible to allocate the available resources to the highest-priority production quickly. Our factories generally serve a large number of markets: variations in demand sometimes follow different paces, and this centralised decision-making process allows us to adjust production in favour of fast-growing markets.

What’s more, the efficiency of the supply chain supposes an in-depth work to standardise components and optimise the technical fundamentals of the products in order to cut costs and increase responsiveness. Products are finalised late in the production chain, as close as possible to client demand.

How does the logistics network contribute to this approach?

The Group regularly reviews its network of warehouses to react effectively to volatility in demand. The goal is to pool inventory for neighbouring markets at shared regional platforms as soon as possible. This centralisation allows us to manage one single large inventory – rather than several small, scattered inventories – and increase the availability of our products while gaining flexibility for clients and reducing our operating costs. In some cases, this organisation also facilitates the delayed differentiation of product ranges by adding accessories, instructions in the destination language, recipe books, samples etc. at the last minute in the warehouse.

Environmental aspects are more and more important in logistics, and even in clients’ buying decisions. What is the Group doing in this area?

Sustainable development is a key strategic priority for the Supply Chain Division. Transport now represents nearly 80% of the Group’s carbon footprint, which is why we pay particular attention to its environmental impact. We are working on several areas of continuous improvement. For example, we are promoting low-impact transport – including barges and rail – wherever market solutions allow. In addition, for several years, we have been conducting a policy of optimising truck and container loading by adapting our packaging. The EffyPACK indicator (“PACKaging system for supply chain EFFiciencY”) allows us to calculate the logistics cost of a product at a very early stage and to optimise how pallets are used and containers filled by adjusting the packaging dimensions. In 2012, this became an obligatory stage in the development of new products, being incorporated into the design phase.