Integrated Supply Chains is something which as a large business, could save millions of pounds in costs and therefore make your business more profitable and improve the efficacy and connections within your company. However, the process is costly and takes time for relationships to be built and once they are built, the risk of becoming too dependent is also high. If you’re a business looking to integrate your supply chain, it would be sensible to consider the benefits as well as the costs as to whether you would benefit from it in the long term. For smaller retails and independent stores, it wouldn’t be as successful whereas for multi-national and chain retailers, an integrated supply chain would be an essential part in ensuring efficiency and maximising profit of the business.
In 2015, L’Oreal Paris made it onto the Top 25 Supply Chains in business for there well organised and well integrated chain process’. L’Oreal have partnered with SAP to transform its supply chain.
To establish a long term relationship as a supplier of L’Oreal the company ensures their supplier is committed and carriers out regular evaluations on their five key performance indicators- social and environmental responsibility, innovation, quality, logistics and competitiveness.
As a company, L’Oreal integration follows an organised process that checks all conditions are fulfilled to build together a sustainable partnership towards shared growth. They check financial position, technical skills and geographical location to ensure they are choosing the best suppliers for their products. To ensure they maintain the best suppliers with best integrated chain, L’Oreal checks and evaluates the performance of them to establish a long term relationship built on trust and a mutual goal. This is an example of their external integration.