Lush operates a supply chain system with members responsible for forecasting, production planning, procurement, and inventory management. Objectives include understanding forecasting policies, production planning, and procurement strategy. Initially, demand forecasting relied on previous year sales data by store managers. Currently, Lush uses software to automate forecasting and shift from reactive to proactive ordering. Production planning utilizes an ERP system for material planning. Procurement follows a "just in time" and "creative buying" approach, sourcing fresh ingredients globally while managing risks. Transportation is primarily air and sea, using intermodal services and a TMS for domestic deliveries.

1. LUSH SUPPLY CHAIN SYSTEM
MEMBERS: RASHEED
NATALIA
KIMONE
DIWAKER
ANKITA

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

11. PROCUREMENT
https://www.youtube.com/watch?v=D93eqr0yF1o

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

15. Backorders
Perfect Order Measurement
Inventory measurement
PERFORMANCE MEASUREMENT

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

21. THANK YOU