BUILDING A SUSTAINABLE LOGISTICS NETWORK Gökhan Çakmak SCM Strategies Summit November 2017 Berlin
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ORIFLAME AT A GLANCE 3
ORIFLAME AT A GLANCE 1.2 billion sales in 2016 Geographic Footprint 65+ Countries, selling direct 3 million Oriflame Consultants 1,000 cosmetics products in portfolio Innovation 250 New or relaunched products per year Europe & Africa LATAM 14,0% 24,0% CIS 24,0% Turkey & ASIA 38,0% 95% of sales in developing countries Oriflame Cosmetics AG, 2017 4
Why Susainabilty is becoming a hot potatoe? Oriflame Cosmetics AG, 2016 5
ORIFLAME S EXISTING SUSTAINABILITY COMMITMENTS Oriflame Cosmetics AG, 2017 6
ORIFLAME S EXISTING SUSTAINABILITY COMMITMENTS Source 100% of catalogue paper from credibly certified origin by 2020. Reduce CO2 emissions from global Oriflame operations by 50% by 2020. Use only biodegradable cleansing ingredients in 100% of our Personal Care products Send no waste to land-fill from our factories by 2020 Oriflame Cosmetics AG, 2017 7
INTANGIBLE SUBJECT... RATE THE RATERS It attempts to better understand external sustainability ratings and to influence and improve the quality and transparency of such ratings Top 6 most credible ratings are: - CDP - Dow Jones Sustainabilty Index - Access to Medicines Index - FTSE4Good index - Oecom Corporate Ratings - Bloomberg ESG Data 8
AMPLE ROOM FOR IMPROVEMENT According to European Commission Study in 2015: 23% of freight vehichles in the EU run empty Average loading of the rest is only 60% payload utilization Overall efficiency is only 46%! 70 billion km/year empty haul in the world European Commission has committed to reduce GHG emission by 20%, to raise the share of energy consumption produced from renewable resources to 20% by 2020 comparing to 1990 levels. Oriflame Cosmetics AG, 2017 9
GREEN - WASHING The act of misleading consumers to present an environmentally responsible public image of a company or the environmental benefits of a product or service Oriflame Cosmetics AG, 2017 10
SUSTAINABILITY AT ORIFLAME A long term commitment to become a sustainable company by focusing on 3 key areas: Create Opportunities to Improve People s Lives Bring Beauty and Wellbeing through Responsible Products Drive Environmental Sustainability Oriflame Cosmetics AG, 2017 11
ORIFLAME S MANUFACTURING PLANTS ACHIEVED LEED CERTIFICATION Noginsk, Russia Roorkee, India LEED is a green building certification Leadership in Energy and Environmental Design 12
PAPER IS ORIFLAME S NUMBER ONE RAW MATERIAL Oriflame Cosmetics AG, 2017 13
We commit to sourcing 100% of our paper from credible certified sources or recycled origin by 2020 Oriflame Cosmetics AG, 2017 14
OUR PAPER BASED COMPONENTS; NOW 96% COMES FROM RESPONSIBLE FORESTS! 2011 2016 non compliant non controversial 2% 2% compliant 55% 43% non compliant 2% non controversial 96% compliant 55% 96% Oriflame Cosmetics AG, 2017 15
PURCHASING SUSTAINABLE PALM OIL Source: World Wildlife Found 16
SUSTAINABLE LOGISTICS NETWORK DESIGN 17
SUSTAINABLE LOGISTICS NETWORK DESIGN Logistical CO2 emission Tonne- KMs X % of Utilization X Emission Factor * COST Closer /shorter Supply Chain Compaction Fleet composition Co2 emission factors GHG protocol (gco2e/km) Achieving more while using less UK Government department Defra publish annual lists of factors to calculate carbon emissions based on transport tonne-kms for different classes of vehicle 18
CLOSER / SHORTER SUPPLY CHAIN 19
SHORTER SC - NEAR SOURCING 1000 km/shipment Less travelled Closer /shorter Supply Chain 8000 km/shipment Less travelled Oriflame Cosmetics AG, 2017 20
COMPACTION 21
FIRST CLASS BOARDING Oriflame Cosmetics AG, 2017 22
UTILISATION IMPROVEMENT +36% Utilisation 43 pallet per 40 cnt. +28% Utilisation 55 pallet per truck Improving packaging and loading routines for trucks and containers have achieved major carbon and cost reductions. Oriflame Cosmetics AG, 2017 23
HOW FAR HAVE WE COME? Per Pallet Emission (kg CO2) 35 23 9% 17% 74% 29 18 7% 20% 72% -26% 27 28 26 26 25 Absolute Emission (1000 Tonnes CO2) 14 9% 19% 72% 15 15% 20% 65% 13 17% 19% 64% 11 11 26% 31% 27% 27% 47% 43% Air Sea Ground -53% Per pallet shipped emissions decreased by 26% Total emissions (absolute) decreased by 53% 2010 2011 2012 2013 2014 2015 2016 Oriflame Cosmetics AG, 2017 24
Communicating changes to your customer Set yourself apart from the competition Oriflame Cosmetics AG, 2016 25
WHY TO COMMUNICATE THE SUSTAINABILITY TO CUSTOMERS? Transparency Raise staff engagement / motivation Governmental / Regulatory Create risk awareness Competitors pressure Customer demand WE NEED TO PERCEIVE SUSTAINABILITY AS A POSITIVE FORCE FOR GROWTH NOT SIMPLY A RISK TO BE MANAGED Enhance reputation Oriflame Cosmetics AG, 2017 26
Conclusion Oriflame Cosmetics AG, 2016 27
CONCLUSION Define the sustainability vision Ensure top management support Give right targets to medium management Measure together with relevant external partners The potential is there within every supply chain to deliver a strong and result oriented environmental sustainability program Oriflame Cosmetics AG, 2017 28
Oriflame Cosmetics AG, 2017