oriflame sdm
DESCRIPTION
This ppt gives the sales and distribution management strategy of Oriflame company for its productsTRANSCRIPT
SALES AND DISTRIBUTION MANAGEMENT
Made By:Aditya Narayanan(13397002)Department of Management Studies , Pondicherry University
• Oriflame Cosmetics S.A was founded in 1967 by brothers Jonas afJochnick and Robert af Jochnick
• It is a cosmetic company selling personal care, accessories and nutritional products
• The company is headquartered in Luxembourg and Sweden
• It ranks among the top cosmetic brands with a well established base
• The company boasts of a presence in 60 countries world wide
• Oriflamme or golden flame was once the royal banner of medieval France
• It has an annual sales of 1.5 billion euros
• Listed on the Nasdaq OMX Exchange since March 2004
COSMETICALLY UNIQUE
• Its has a Swedish tinge to it’s nature inspired products
• They believe in high quality and innovation
• They urge on “ Make money today and Fulfill your dream TomorrowTM”
• It offers opportunities to people to make money from day 1
• A huge sales force of 3 million independent consultants
• Employs approximately 7500 employees
• Has a pool of more than 100 scientists in it’s R and D center
PRODUCT RANGE
• Skin care
• Colour cosmetics
• Fragrances
• Personal and Hair Care
• Accessories
• Wellness- nutritional products
The Selling Strategy
• The product selling is based on the concept of Network Marketing or Multilevel Marketing
• It skips the various stages of conventional distribution system and retail outlets
• It exercises direct selling formula wherein face to face marketing of products and services in non permanent retail locations
• It seeks to make money with its consultants by building their business which is intern selling of it’s consumer products
• It facilitates it’s sales force to work from their home as well
• A consultant earns his commission not only on his personal sales but also on the entire sales of down line group
• This avoids territory and sales quota
• Extra income generator
• Have a career
• Be your own boss
• Meet new people and build relationships
• No financial risk
• Learn beauty and fashion trends
• Additional benefits including holiday packages
The Multilevel marketing steps
Step 1• Pay registration fees and sign up
• Show the catalogue and take orders- Collect 100 Business Points (100BP)
Step 2
• Invite 5 other friends to do the same
• You can also take customer orders
• Get about 5% differential on group sales
• Senior sales consultant
Step 3
• Your 5 friends invite five more of their friends
• This increases your earnings to 10 % differential
• Become a group manager
Step 4
• Support your 5 friends and lead them
• You become a district manger and be rewarded by consistent performance of the group
• You get same incentives through your cash order
An Example of the process:
ORIFLAME not a Pyramid Scheme
• A pyramid scheme is a fraudulent investment scheme based on hierarchical setup
• The initial recruiter recruits not with an intention to sell the product but to source more people down his line thus making a commission
• Oriflame is legitimate multi level marketing company which focuses on product sales through direct and relationship based selling
Distribution Management
• The company uses direct selling as their distribution channel
• It distributes it’s products through independent sales force
• It has six own manufacturing producing 60 percent of its cosmetic product volumes in its internal facilities
• Oriflame buys 40 percent of the annual sales of cosmetics products from external suppliers, mostly products that require specific techno-logy, such as some Colour Cosmetics (eye pencils), Skin Care (capsules), Wellness products, Personal & Hair Care (bar soaps) as well as some specific fragrance products.
• The outsourced partners mainly exist in Europe
Warsaw, Poland• Skin Care• Body care/toiletries• Colour Cosmetics (colour
emulsions)
Ekerö, Sweden• Toiletries• Fragrance
Moscow, Russia• Lipsticks• Lipglosses
Noida, India• Skin Care• Body care/toiletries• Colour Cosmetics
Kunshan and Beijing, China• Skin Care• Body care/toiletries• Colour Cosmetics• Wellness
Noginsk , Russia• Skin Care• Body care
MANUFACTURING FACILITIES
GEOGRAPHIC SEGMENTATION
• Commonwealth Independent States & Baltics –Oreflame’s largest region with 57 % Sales
• Asia – This region accounts 10 % of it’s sales
• Latin America – This is the smallest of it’s regions
• Europe and Middle East and Africa- This region accounts for 27% of the sales
ORIFLAME Global Network
Oriflame Group Distribution Center (G.D.C.)
• They are logistic hubs
• These are the main order processing centers
• These include pick and pack
• They also serve individual customers
• These centers are mainly located in Europe in the cities of Warsaw, Kiev and Budapest
• The company intends to develop more such centers to improve supply chain
• In addition the company also has several regional distribution hubs
Forecasting and Resource Planning
• The annual revenue of the company has increased exponentially
• The company has a very complex supply network
• The company replaces or re- launches approximately 450 of it’s 1000 products annually
• It tries to keep up agile transportation to minimize on the SKU’s
• The new demand numbers need to be predicted more accurately
• The company uses econometric predictive modeling to understand influence of the factors on demand
• Oriflame partners with JDA software to automate it’s inventory processing
• It has a daily distribution resource planning process that runs on a weekly cycle with suppliers
• There is an increased visibility into actual demand and supply thus enhancing optimum SKU’s
• The partnership has benefited Oriflame into becoming a smarter and planned organization
• It also helps track it’s consignment and predict availability of the product
E- Oriflame
• Online sign up
• Online ordering
• Online Training
• Online reports
• Online product guide
• Software integration and ERP processing has initiated tremendous growth
Training and Development
• The company is committed to fulfilling it’s employee dreams
• The company regularly conducts training and employee motivational sessions
• A more experienced senior consultant guides and coaches the inducted consultant
• Every third week a consultant receives a new catalogue with great offers to support sales process
• Cash bonuses are also offered apart from earnings on reaching specific sales targets