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Conditioning the Supply Chain in a Fast Moving Consumer Goods Business: Using value stream mapping to visualise, condition, manage information and product flow in Oriflame
KTH, School of Industrial Engineering and Management (ITM), Production Engineering.
2010 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

Oriflame, since it was founded in Sweden in 1967 has become a major player in the cosmetics industry. The impressive annual growth of 17% that Oriflame has had in the last 17 years requires evidently a lot from the supply processes. It has been shown that the current set‐up and the countermeasures at hand do not provide a sustainable business model i.e. having a balance between service level and inventory level. The purpose of this thesis is to propose to Oriflame actions that need to be taken to manage their supply issues. This is to be achieved by recommending a process and appropriate tools for reviewing and conditioning the supply chain. As Oriflame is striving to become the number one direct selling beauty company, is there anything that can be learned from the Toyota Production System (TPS) philosophy to become a leaner enterprise? During recent years more and more companies have seen the benefits of Lean Thinking mostly through the success of Toyota. The concept of a lean enterprise has become a journey to ensure reduction of waste, cost, lead‐time and at the same time increasing efficiency and value added activities.The path to lean can be divided in five different steps: define value, the value stream, create flow, pull and perfection. The value for Oriflame is motivation of its sales consultants but little is known about constraints in the value stream which is the second step towards lean. To be able to propose and develop a process and appropriate tools for reviewing and conditioning the Supply chain three case studies have been completed and evaluated. These cases show that Oriflame, apart from poor forecasting, slow information and product flow also have to deal with a range of constraints in the value stream. Demand fluctuations combined with limited capacity, long lead‐times and high minimum order quantities cause shortages, excess and result in the bullwhip effect. Inherited supply chain processes have been proven redundant due to current business growth and complexity. In order to ensure that the right product is at the right place at the right time it is crucial that knowledge exists of how the value stream looks for the products offered in each catalogue. By creating value stream maps to visualise the value stream Oriflame will be able to be proactive interms of eliminating waste and foresee potential issues. By improving the information flow and reducing batch sizes and thereby reducing cycle time Oriflamewill take a major step towards achieving its targets of reduced inventory and increased service levels. Improved information flow could be a more frequent planning cycle or establishment of partnerships with suppliers. Oriflame has to start understanding, conditioning and controlling the supply chain. To understand the complexity of the supply chain for a specific product or range, value stream maps have to be created to visualise the actions, steps, processes that in the end result in finish goods delivered to end customer. Although Oriflame have a long way to go before being considered lean and flexible, it has to its advantage exceptional people that work according to the company philosophy. There are also clear company values and operating principles. All these factors are in line with the Toyota operating principles and the most important operating principle is to create a learning organisation that reflects and improves continuously. In this sense Oriflame has already come a long way.

Place, publisher, year, edition, pages
2010. , 62 p.
, Master's Project in Production Engineering, 419
National Category
Engineering and Technology
URN: urn:nbn:se:kth:diva-50390OAI: diva2:461729
Subject / course
Production Engineering
Educational program
Master of Science in Engineering - Industrial Engineering and Management
Available from: 2011-12-05 Created: 2011-12-05 Last updated: 2011-12-05Bibliographically approved

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