Presentation by L'Oreal on the future of Supply Chain at the Supply Chain Insights Global Summit 2018. L'Oreal is a Supply Chains to Admire award winner for the period of 2016-2019.

1. 2018
THE L’OREAL SUPPLY CHAIN

2. L’ORéAL VISION
2
OUR MISSION
BEAUTY FOR ALL
OUR STRATEGY
UNIVERSALIZATION
MAKING LIFE MORE BEAUTIFUL
OUR PURPOSE

3. L’Oréal, A GLOBAL LEADER
3
26.02
BILLION
SALES
7Bn
PRODUCTS
150
COUNTRIES
#1
BEAUTY COMPANY
WORLDWIDE
PURE PLAYER IN BEAUTY
€2.1
BILLION
E-COMMERCE SALES
(+34%)
5TH
WORLDWIDE
ADVERTISER**
8TH
PREFERRED COMPANY
FOR BUSINESS STUDENTS***
60TH
WORLDWIDE MARKET CAP*
WITH A SOLID SHAREHOLDER
STRUCTURE
82,600
EMPLOYEES
2017 key figures – L’Oréal Annual report
*12/31/2017. MSCI ACWI INDEX- **Adage 2016 - ***Universum Ranking 2017

4. LEADERSHIP IN CSR AND ETHICS
4
SUSTAINABILITY
1 out of 2 worldwide
company with 3 “A”
ETHICS
1st company worldwide for
personal & household goods
category
2nd company worldwide for all
industries combined
8th year
One of the most ethical
companies in the world »
DIVERSITY
& INCLUSION
1st company worldwide
for Gender Equality,
out of 3,000 companies
#1
Newsweek Green
Ranking 2017

5. L’Oréal STRATEGIC PILLARS
5
MORE…
UNIVERSAL
GLOBAL coherence
LOCAL relevance
#1 BEAUTY COMPANY worldwide
150 COUNTRIES
7 R&I LOCAL HUBS
MORE…
DIGITAL
MORE…
SUSTAINABLE
DISSOCIATE GROWTH
FROM ENVIRONMENTAL
IMPACT
+33% production increase
- 73% reduction in CO2
emissions from plants and
distribution centers since 2005
ECOMMERCE SALES*
€2.1Bn (+34%)
> 38% OF OUR MEDIA
dedicated to digital
* Source: L’Oréal 2017 Progress Report

6. Anything, ANYWHERE, ANYTIME
6
ALL
BEAUTY
PRODUCTS
Haircare
Fragrance
Skincare
Make-up
Hair color

7. Anything, ANYWHERE, ANYTIME
7
ALL
DISTRIBUTION
CHANNELS
Mass market
Department Stores - Perfumeries
Pharmacies - Drugstores - Medispas
Branded retail
Hair and beauty salons
E-Commerce
Travel Retail
Deep Trade

8. Anything, ANYWHERE, ANYTIME
8
ALL
PURCHASING
BEHAVIORS
Direct to consumer
Mobile-Commerce
E-Commerce
Points of sale
Click & collect

9. ALLY OF ALL BRANDS
9

10. 10
2017 operations’ KEY FIGURES
14,000
3D-Printed
product mock-ups
91
Packaging
& Processes
Patents
> 70,000
Suppliers
41
Manufacturing
plants
> 500,000
Delivery points
24 Carbon-neutral sites
8
Types of distribution
channels
> 20%
Additional
production capacity*
7 BILLION PRODUCTS
* Stable industrial footprint
> 48,600
People benefited
from Solidarity
Sourcing Program
~ 19,000
E M P L O Y E E S
130
NATIONALITIES
47%
F E M A L E
53%
M A L E
> 90%
S I T E S W I T H
DISABLED
ACCESSW O R L D W I D E

11. 41 MANUFACTURING PLANTS
• A worldwide footprint and high-performance industrial
• equipment specialized by technology and close to markets
NORTH
AMERICA
5
LATIN
AMERICA
6
ASIA
PACIFIC
7
AFRICA
MIDDLE
EAST
3
EASTERN
EUROPE
4
WESTERN
EUROPE
16
Incl.
FRANCE
11
Consumer Products
& Multi-Divisions
Professional Products
L’Oréal Luxe
Active Cosmetics
Raw Materials

12. INDUSTRIAL AGILITY & FLEXIBILITY
12
FROM LUXURY KNOW-HOW…
Lassigny Plant – France
combining luxury crafts and agility
…TO HIGH-SPEED AUTOMATION
Karlsruhe Plant – Germany
connected and automated

13. SERving consumers worldwide
13
8 types of distribution channels
HAIR & BEAUTY
SALONS
DEEP TRADE
E-COMMERCE
TRAVEL RETAIL
MASS
MARKET
DEPARTMENT
STORES
PERFUMERIES
PHARMACIES
DRUGSTORES
MEDISPAS
BRANDED
RETAIL
1
ORDER
SHIPPED EVERY
2 SECONDS
to > 500,000
DELIVERY POINTS

14. A business driver SUPPLY CHAIN
14
• Deliver the best experience and service to retailers and consumers
CUSTOMER CARE
Tailored service
24/7 retailer interaction
DATA
Real time analysis
Information management
Social networks & Points of sale
OMNICHANNEL
Product availability
Consumer experience

15. KEY SUPPLY CHAIN EXPERTISE
15
• To satisfy consumers' expectations worldwide, speed to market and deliver
on time
PHYSICAL
DISTRIBUTION
& TRANSPORTATION
CUSTOMER CARE
RETAIL
& E-COMMERCE
SALES
& OPERATIONS
PLANNING
DATA
MANAGEMENT

16. 150 DISTRIBUTION CENTERS
16
NORTH
AMERICA
21
LATIN
AMERICA
11
APACIFIC
SIA
50AFRICA
MIDDLE
EAST
15
EUROPE
47
60 Internal DC’s
90 Contracted
Brazil
6

18. NEW
OPPORTUNITIES
DATA
CONSUMER
EXPERIENCE
NEW
TECHNOLOGIES
COBOTS
IOT-
BLOCKCHAIN
AUGMENTED-
VIRTUAL REALITY
3D PRINTINGDATA - SIMULATION
MACHINE LEARNING

19. connected devices GROWING EXPONENTIALLY
Smartphones Wearables
35 Mds
Number of connected devices
Source: BI Intelligence Estimates
Internet of Things

20. 0
NOW
BEFORE
SCARCE
EXPENSIVE
WHICH DATA ?
DEDUCTION LOGIC
EVERYWHERE
ACCESSIBLE
WHICH USAGE ?
CORRELATION LOGIC
Big
Data
Data 2016
∑ Data
DATA IS EVERYWHERE
2015
0
>

21. 3D PRINTING SPREADING EXPONENTIALLY
➢ FUEL NOZZLE
20 PARTS
TO 1 PIECE
DURABILITY: X5
➢ 2 700 PIECES➢ IN 24H

22. AUGMENTED/ VIRTUAL REALITY DEVELOPMENT
➢ CONCEPTION ➢ PRODUCTION ➢ MAINTENANCE

23. ROBOTS : new members in the family
➢ COLLABORATIVE ROBOT
(COBOT)
➢ MUTIPLE TASKS ➢ ARTIFICIAL
INTELLIGENCE
➢ NATURAL LANGUAGES
➢ EMOTIONS

24. 5 KEY prioritIES identifiED
ACCELERATED
DEVELOPMENT
CONNECTED
PRODUCTS
AGILE
FACTORIES/LINES
PERSONNALISATION SUPPLY CHAIN
BUSINESS DRIVER
IMPATIENT CONNECTED ANYTHING
VERSATILE
IMPATIENT
INDIVIDUAL
SOLUTIONS
ANYWHERE
ANYTIME
NEW CONSUMERS

25. DIGITAL SIMULATION
27
Shampoo bottle squeezeMold injection Transport impact Plastic spray
Resistance to pressure
Digital to accelerate development….

26. DATA FROM MoLDS 4.0
28
• In-mold sensors, datas in the cloud
New Customer ServiceAccelerated developement Optimal performance
QUICKER HOMOLOGATION
QUICKER MOLD TRANSFER
ACCURACY & REPETABILITY FLEET MANAGEMENT

27. BIG DATA for COMPATIBILITY TESTS
29
History
Packaging Formula
DATABASE
WINNERS
Digital to accelerate testing….

28. 3D PRINTING - PROTOTYPING
30
3D printed mold for simple pack
S/T 3D printing :
15 days - 4 000 €
100 pieces
S/T traditional machining :
60 days - 20 000 €
1000 pieces
Mold proto standard
simple & complex pack
CCZ – 3D Lab

29. 3D PRINTING - PRODUCTION
31
New design opportunities for our brands

30. ACCELERATED
DEVELOPMENT
FROM 18 TO 6 MONTHS
IMPATIENT
▪ Test in VIRTUAL before moving to REAL
▪ Leverage AI to use past DATA, EXPERIMENTS
▪ Explore 3D Printing

31. CONNECTED PRODUCTS to MEET NEW
CUSTOMERS EXPECTATIONS
BAs productivity
Automated cash-out
Anti-theft
A unique product identified
Traceable
Connection with its environment
Automation enabler
EXPERIENCE
TRANSPARENCY
CUSTOMERS
COMMITMENT
- stock outs
Stock accuracy
Automatized
replenishment
Traceability
Product information
Authentification
RFID/NFC technologies

32. PROMISING FIRST RESULTS
Technology Productivity
➢ >3000 laboratory tests
➢ > 4000 live use cases
Reading rate : 100%
Current with RFID
70’’ 8’’
35’ 5’
-85%
Warehouse
Stock take
POS
incoming
controls
- Examples -

33. PROMISING FIRST RESULTS
New use cases
Product
Information
Dialogue with
smartphonesAutomated cash-out
- Examples -

34. NEW PARADIGME
AGILE
MULTI MODELS
MULTI PRODUCTS
« BATCH OF 1 » TO LARGE BATCHES
MAKE TO NEEDS
SMART FACTORIES
NEXT
BIG
MONO PRODUCT
LARGE BATCHES
MAKE TO STOCK
MEGA PLANT
BEFORE

35. Agile LINE - LASSIGNY
• DESIGNER BRANDS PERFUME LINE
TANGIBLES
RESULTS
UNITS4.4M
FORMATS
30 FORMAT CHGE
FR. 4H TO 15’
OEE
65%
ELECTRICAL
CONSUMPTION
3,5 KW
DIVIDED BY 23
CAPACITY
LOSSES
-20%
CAPEX
FR. 1,5 M€
TO 0,75 M€

36. AGILE
FACTORIES/LINES
AGILITY : THE ONLY
OPTION IN A VUCA WORLD
ANYTHING
VERSATILE
IMPATIENT
▪ Consumer benefits at the centre
▪ New approach : new mindset, new partners, think out of
the box
▪ It’s not one technology, it’s a combination
▪ Human-Machine interface is key
▪ ‘Dare’ and ‘test and learn’ are key

37. PERSONNALISATION
LIGNE AGILE
AT FACTORY LEVEL AT POS LEVEL
AT DISTRIBUTION CENTER LEVEL AT POS LEVEL
LE TEINT PARTICULIER
MY FABLAB COLORIGHT - SKINBLENDER

38. AT POS LEVEL
LE TEINT PARTICULIER
CUSTOM MADE FOUNDATION
Dispenser
• Skin-tone measurement
• Mini-factory at POS
• Control engineering
• Peristaltic pumps
• Miniature Load Cell
• mg range precision
• Training / maintainability
Mixer
• Embedded solution
• Mix in pack
Viral Buzz
35M views in 24h
53M after 1 week
307K likes

39. A Supply CHAIN, AS A Business DRIVER
Limited
complexity
Slow trends
evolution
Manual
management of
exceptions
SKUS
3500
FROM MANUAL FORECASTING
MONO MODEL
TO MACHINE
LEARNING
Multiple
factors
Constant
evolution of
models (IA)
Forecasting by
correlation
Complexity
Acceleration

40. CONCLUSION
Suppliers
Develop Source Produce Distribute
Consumerss
Distributors
5 KEY PRIORITIES
IDENTIFIED
A DISRUPTIVE TRANSVERSAL
PROJECT
AGILE LINES
PERSONNALISATION SUPPLY CHAIN
BUSINESS DRIVER
ACCELERATED
DEVELOPMENT
CONNECTED
PRODUCTS