2. Creator of handmade cosmetics
Founded by Mark Constantine and Liz Weir
Headquartered in Poole, Dorset United Kingdom
Originally named Cosmetics-To-Go In 1990s
Renamed as LUSH In 1995
“LUSH” defined as fresh & green
Brought to North America by Mark and Karen Wolverton in 1996
COMPANY
BACKGROUND
3. To determine the forecasting policies in place by the
company.
To gain in depth knowledge of the companies production
planning
To gain in depth knowledge of the company’s procurement
strategy
OBJECTIVES
4. Store manager made order based on
previous year sales data
Reviewed orders bi-weekly
Forecast could be not accurate which led
to:
Lost of sales
Lower margin
Low-quality customer service
DEMAND FORECASTING
Initially
Currently
Software solution for automation and
streamlining
Prophix software
Leverage purchasing patterns
Shift from “ Ordering Scared” to “Ordering
Smart”
Results:
Reduced on-hand inventory by 7 days
Revenues growth by 15%
5. Microsoft AX - all areas of business access the same data (retail, finance,
production)
PRODUCTION PLANNING
Lush utilize software for MRP (material requirement planning) for all aspects of
production:
Planning
Purchasing
Inventory management
Benefit – all departments across the country has access to the same
information
Lush is planning to change ERP (Enterprise Resource Planning) software:
6. PRODUCTION PLANNING
Still have “surprises”
Potential production bottlenecks:
Labor capacity
Per shift production capacity
Material capacity
330,000
660,000
December 30th January 3d
7. “Just in Time Mentality” - have the materials for production
at the right time, at the right place & in the right quantity.
Lush produces handmade cosmetic products which are
100% vegetarian, 65% of them are preservative free.
Buys fresh products from different vendors all around the
world. Things ranging from citric acid and bicarbonates.
Residual muds from Morocco, SexBomb flowers from Italy
PROCUREMENT
8. LUSH does not store excess of raw materials in hand at the
ware house:
Limited space that will reduce the efficiency and will take a
lot of time to go through it.
Strict freshness policy to provide fresh products to the
customers.
PROCUREMENT STRATEGY
9. Production Manager communicates with the “Buying Manager”
Allocation of raw materials to be used for production
Buying Manager places the order according to the requirements
produced by the Forecasting Manager
Lush calls its supply chain approach “Creative Buying“
where a business looks beyond lowest price and bottom line, and
instead buys the best, safest and most suitable products in
accordance with their ethics.
PROCUREMENT PROCESS – CREATIVE BUYING
10. Ecological Safety Measure: Less footprint on Roads, Rails &
Airways
Waterways: Slow method and usually takes 60-90 days.
Precaution:
Forecasting for a period of 3 months ahead of time. ( In case of
any change in demand or custom issues)
Safety lock of 100-150% in case of emergency
Alternative vendors to provide at a short notice complying with
their Animal Testing Regulations
RISK & SAFETY MEASURE
12. EDI Systems: Electronic data interchange (EDI) is an electronic communication
method that provides standards for exchanging data via any electronic means
between two different companies, even in two different countries. They can
electronically exchange documents (such as purchase orders, invoices, shipping
notices, and many others).
TMS: A Transportation Management System (TMS) is a subset of Supply Chain
Management (SCM) software focused on transport logistics. TMS systems
facilitate interactions between an Order Management System (OMS) and the
Warehouse or Distribution Center (DC).
A compounder is used to blend the raw flowers into powder form for the
production of soaps and shampoos.
Electronic Lift Truck: For transferring of materials and finished products from
their respected sites.
TECHNOLOGY
13. Levels maintained daily
No multiple locations
Ideally 100-150% safety stock on hand
QAD/MFG inventory management software
Performs monthly inventory counts
Strives for 75% min. accurate inventory count
Does not follow inventory management index
INVENTORY MANAGEMENT
14. Lush’s primary mode of transportation for receipt of raw materials is air and sea
Lush uses intermodal transportation services
Motor Carrier is used for delivery from factories/warehouses to retail stores
Lush uses a mixture of Truck Load (T.L) and Less than Truck Load (L.T.L)
Lush uses a Transportation Management Systems Software
Outsourcing to third party logistics is utilized for domestic and U.S deliveries
TRANSPORTATION
16. Two distribution centers
Bins and tanks
Trays and crates
Racks
Gloves and Nose guards
Safety precautions
STORAGE AND MATERIAL HANDLING
17. Serves customers through its stores and website
Customers can return the product by contacting the
customer service number
Communicate with the company through the publication of
Lush Times
CUSTOMER SERVICE
18. SUPPLY CHAIN SINCE PAST 10 YEARS
Collaboration with farmers in sourcing raw
materials such as flowers and coffee
More Distribution centers
Sustainability – reuse of recycled organic
materials and plastics
Leverage software
19. RECOMMENDATION
Mixture of large and small trucks in their fleet. This will ensure
that large trucks are not being used for delivery of only a few items which will
result in cost savings on fuel.
Invest more on thick plastic bins that can hold the powdery
materials during winter time and not dry up. Since dry powdered results to
more inventory waste and waste of time to produce.
Increase of stores for better reach of consumers. Lush has
one major store at Eaton center.
20. WHY IS SUPPLY CHAIN IMPORTANT TO
YOUR BUSINESS?
By Nick: Ballistic Production Manager for LUSH