Oriflame ups supply chain capabilities

- Last updated on GMT

Swedish direct sales cosmetics company Oriflame has increased its
expenditure on software for its supply chain. The investment
centres on its new business in China, which is due to be
inaugurated at the end of the year, reports Simon Pitman.

Oriflame has opted to extend its investment with SoftBrands' Fourth Shift Solution for its new manufacturing plant just outside China. Oriflame has recently installed the system at its new factory in Poland and it has also been up and running at its manufacturing facility in India for some time now.

Oriflame said that it decided to further invest in the Fourth Shift product because the installation and use of it has proved successful in its manufacturing operations in Poland and India, where it has positively impacted operational efficiency. It is aiming to have the software fully operational for the start of production at the Shanghai factory in the fall of 2005.

Christian Jonsson, global IT director, for Oriflame said that the software had once again been chosen because it can be installed rapidly and that Softbrands is a global organisation, allowing its systems to be installed in any part of the world with relative ease.

A global support presence was important to Oriflame, not only to work with the company's existing manufacturing plants in Poland and India and the new plant in China, but also because a factory is being constructed in Russia to serve dramatically rising regional demand.

The Fourth Shift system at the manufacturing centre in Poland and at remote plants around the world will be harmonized and interfaced to a global supply chain management system being implemented to run Oriflame's worldwide business based in Brussels, Belgium.

A recent report from http://www.amrresearch.com/AMR research suggested that up to $3 trillion is locked up in US and European supply chains at any one time, underlining the importance of maintaining optimum efficiency to reduce stock inventories to a minimum.

Cosmetics and personal care manufacturers need to balance costs with the ability to shape and respond to demand to ensure that their business operations are optimised. For direct sales companies such as Oriflame this is even more crucial as maintaining stock at optimum level plays a much bigger role in the overall business operations.

However, keeping a check on the supply chain has become increasingly difficult as operations expand to include more functionality as well as branching out on an international basis. Because of this the need for increasingly accurate and sophisticated supply chain solutions has become make-or-break for many such businesses.

According to AMR Research's quarterly Tech Trends Survey, US manufacturers expect IT spending to grow over 9 per cent in 2005, the strongest in over three years. Software applications and software infrastructure are the top priorities for 57 per cent of manufacturers surveyed.

Much of this software investment will be focused on integrating supply network operations with existing investments in ERP applications from SAP, Oracle, SSA Global and others.

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