Procurement and Innovation

Organizing procurement and managing new products introduction
Case study
08/26/2014

Context and challenges

This case study concerns an international cosmetics group with a wide range of products (personal care, makeup and fragrances), in addition to a portfolio of ownbrands
and trademarks.
To rationalize the procurement function and institutionalize the main tasks related to introduction management, the group hoped to create a group procurement team by developing categoryspecific expertise, reviewing the responsibilities of the packaging design department and creating the role of Introduction Project Manager.

Approach and methodology

A situational analysis was performed to define the existing organizations in terms of skills and related workloads.
This was used to create the target organization chart.

The procurement function was divided into four areas, ensuring separation from supplies at plant level:
• Lead Buyer for each packaging category (glass, injection, cardboard, etc.)
• Commodities procurement
• POS procurement
• Indirect procurement

Introduction Project Managers were organized according to brand and product category (personal care, makeup and fragrances) to interact more effectively with Marketing and Operations, etc.
The packaging design function was organized according to technology: injection, blowing, tools, etc.

In a second phase, the new Introduction Project Manager team collaborated with the various functions involved in the introduction process, including R&D, Industrialization, Procurement, Packaging, Marketing, Supply Chain and Regulatory. A typical process was developed, and key milestones were defined to enable the operational management of new projects. This included the following milestones:
• Approval of the project concept, mainly based on the potential expressed by Central Marketing and Area Managers
• Approval of packaging development and formula introduction, based on estimated target manufacturing cost price
• Approval of production launch for the first placement quantities

The management of the project portfolio was also structured to ensure it was based on a financial profitability analysis of each introduction and an estimate of the workload for internal teams
(R&D, Packaging Development, Operations, etc.). This approach meant that project developments could be approved, by decisionmaking bodies including brand managers and operations, in line with the criteria set out, so that any development failing to meet those criteria could be stopped sufficiently early.

Results

The structuring of the procurement function allowed the group to focus its effort and skills on identifying Categoryspecific procurement savings and implementing the related action plans.
Introducing the role of Introduction Project Manager and process structuring helped the group to rationalize its project portfolio and significantly reduce the number of projects stopped at an advanced stage of development, thanks to more effective identification of financial issues at an earlier stage. It also ensured much bettercontrolled and bettercoordinated management of projects’ timetomarket.