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Supply Chain Management Case Study

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Case Title:

Avon Product Inc. – Redesigning its Supply Chain

Publication Year : 2005

Authors: D.Gayatri, T. Phani Madhav

Industry: Home Appliances and Personal Care Products

Region:USA

Case Code: SCM0001

Teaching Note: Available

Structured Assignment: Available

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Abstract:
Avon Products Inc., the world's largest direct seller of cosmetics and beauty-related products, began reviving its supply chain by the end of 1990s. Over the previous decade, the company had expanded into several markets launching more brands. It had also opened retail stores and on-line shopping portals. As it expanded into different markets, Avon had a tough time meeting the spurt in demand and the inefficiencies in its supply chain came to light. To counter the situation, Andrew Jung launched a Business Transformation Initiative in 1999, and later Lou Mignone was made in charge of the supply chain-specific initiatives. A major supply chain overhaul was undertaken, resulting in savings from each stage of the value chain. Inventory was centralised, supplier relations were strengthened and demand forecasting was automated. Supply chain overheads were cut down and the operating margins of the company improved.

Pedagogical Objectives:

  • To understand the supply chain transformation initiatives of Avon Products Inc., in the light of increasing demand
  • To discuss how supply chain strategies, pertaining to subtle elements of the supply chain, can significantly help in improving a company’s bottom line

Keywords : Avon Cosmetics; Supply chain; Demand forecasting; Centralised inventory; Value chain; Operating Strategies Case Study; Order fulfillment; Supplier relations; Business transformation initiatives; Warehousing; Logistics; Sales representatives; Direct selling; Back end operations; Packaging; Cost cutting initiatives

Contents:

  • Introduction
  • Avon products inc. – the 'Avon lady' phenomenon
  • Generating 'Value' from the value chain…
  • Demand forecasting

  • Supplier relations
  • Freight processing and logistics
  • Inventory control
  • The results…

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