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BUILDING A SUSTAINABLE LOGISTICS

NETWORKGökhan Çakmak

SCM Strategies Summit– November 2017 Berlin

This document contains confidential information which is legally

privileged. The information is intended only for the internal use of

Oriflame Cosmetics employees and respectively approved third

parties, as authorized by Oriflame Cosmetics. Any other

disclosure, copying, distribution, or taking of any action in

reliance on the contents of this document is strictly prohibited

without prior written consent of Oriflame Cosmetics AG.

CONFIDENTIALITY NOTICE

©Oriflame Cosmetics AG, 2017 2

3

ORIFLAME AT A GLANCE

ORIFLAME AT A GLANCE

€1.2billion sales in 2016

65+Countries, selling direct

3 million Oriflame Consultants

1,000 cosmetics products in portfolio

250New or relaunched products per year

95%of sales in developing

countries

Geographic Footprint

Innovation

24,0%

38,0%

14,0%

24,0%

CIS

Europe

& Africa

Turkey

& ASIA

LATAM


Why Susainabilty is

becoming a „hot potatoe”?


ORIFLAME’S EXISTING SUSTAINABILITY COMMITMENTS


ORIFLAME’S EXISTING SUSTAINABILITY COMMITMENTS


• 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

• Source 100% of catalogue paper from credibly

certified origin by 2020.

INTANGIBLE SUBJECT...

8

Top 6 most credible ratings are:

- CDP

- Dow Jones Sustainabilty

Index

- Access to Medicines Index

- FTSE4Good index

- Oecom Corporate Ratings

- Bloomberg ESG Data

RATE THE RATERS

It attempts to better understand

external sustainability ratings and to

influence and improve the quality and

transparency of such ratings

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.

GREEN - WASHING


The act of misleading consumers to present anenvironmentally responsible public image of acompany or the environmental benefits of aproduct or service

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’S MANUFACTURING PLANTS ACHIEVED LEED

CERTIFICATION

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Noginsk, Russia Roorkee, India

LEED is a “green” building certification

Leadership in Energy and Environmental Design

PAPER IS ORIFLAME’S NUMBER ONE RAW MATERIAL



We commit to sourcing 100%

of our paper from credible

certified sources or recycled

origin by 2020

OUR PAPER BASED COMPONENTS; NOW 96% COMES FROM

RESPONSIBLE FORESTS!

15

2011 2016

55% 96%

compliant

43% non compliant

2%

non controversial

55%

compliant

2%

non compliant

2%

non controversial

96%

©Oriflame Cosmetics AG, 2017

PURCHASING SUSTAINABLE PALM OIL

16Source: World Wildlife Found

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SUSTAINABLE LOGISTICS NETWORK DESIGN

SUSTAINABLE LOGISTICS NETWORK DESIGN

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Logistical CO2

emissionCOST

Tonne-

KMs XX% of

Utilization

Emission

Factor *

Closer /shorter

Supply ChainCompaction

Fleet

composition

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

Co2 emission factors –GHG protocol (gCO2e/km)

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CLOSER / SHORTER SUPPLY CHAIN

SHORTER SC - NEAR SOURCING


1000

km/shipment Less

travelled

8000

km/shipment Less

travelled

Closer /shorter

Supply Chain

21

COMPACTION

FIRST CLASS BOARDING


UTILISATION IMPROVEMENT


• Improving packaging and loading routines for trucks and containers have

achieved major carbon and cost reductions.

+28% Utilisation

+36% Utilisation

43 pallet

per 40’ cnt.

55 pallet

per truck

HOW FAR HAVE WE COME?


201320112010

Per pallet shipped

emissions

decreased by 26%

2012

-53%

Total emissions

(absolute) decreased

by 53%

262526

282729

35

47%

27%

26%

13

19%

-26%

27%

20%15

65%

20%1117%

43%

9%

18

72%

7%

23

74%

17%

31%

11

64%

15%14

72%

19%

9%

Air

Ground

Sea

Per Pallet Emission (kg CO2)

Absolute Emission (1000 Tonnes CO2)

2014 2015 2016

Communicating changes to

your customer

Set yourself apart from the

competition


WHY TO COMMUNICATE THE SUSTAINABILITY TO

CUSTOMERS?


Transparency

Raise staff engagement / motivation

Governmental / Regulatory

Create risk awareness

Competitors’ pressure

Customer demand

Enhance reputation

WE NEED TO

PERCEIVE

SUSTAINABILITY AS A POSITIVE

FORCE FOR GROWTH NOT

SIMPLY A RISK TO BE MANAGED

Conclusion


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

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