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