In Paris, Smart Manufacturing Editor in Chief Brett Brune interviews Stéphane Lannuzel, chief digital officer for Operations at L’Oréal.
Stéphane, what is happening with the standard production cycle for a product? How does it impact manufacturing at L’Oréal, and how is your team dealing with it?
The digital transformation of L’Oréal Operations is really led by our consumer needs. Our consumers have changed more in the last three years than in the past 30 years. That’s what our CEO, Jean-Paul Agon, is saying. They want a larger portfolio. So we have a much more complex product portfolio to deal with. We also have to increase the speed of our innovations, to bring products much quicker to the market, moving from 18 months’ development time to almost six months—like in the fast fashion industry. The challenge of this digital transformation is, how can we use the technology? How can we tweak it? How can we combine technologies so we can bring the innovation quicker to the market?
Does “fast fashion” apply to cosmetics these days? Have you co-opted that phrase?
Yeah, especially in makeup: We tend to do limited editions or new launches every six months that are really tailored to the mood or the lifestyle of our customers. Working also with some textile brands to be able to have (timely) collections. So we are really reducing the time to develop our products.
So speed is a big stressor. What other major stressors are causing upheaval for your industry, and how do they differ around the world?
One of the other big stressors is the development of e-commerce. In 2017, we did more than 8% of our turnover in e-commerce. In some areas, it’s growing more rapidly than that. And what you see when e-commerce is really developing is that the consumer demand is much more volatile, and you have huge peaks and huge surges in demand. That’s really leaning to the DNA of digital. Because the e-retailers operate platforms, they will work around festivals like Alibaba’s 11/11 in China (like Black Friday or Cyber Monday)—where you will see a surge in demand within a few days. And it’s very difficult to predict that demand. One of the big objectives of the digital transformation is to be able to develop agility to work on understanding consumer demand and sending that signal throughout the value chain from the consumers to the suppliers with the necessary agility to cope with the versatility and the demands.
I understand L’Oréal conducted 4.0 pilot projects here in France, and in Belgium and the U.S. Can you point to discoveries or advances in those countries?
We are working a lot in developing the agility of our manufacturing lines. For example, we’ve developed in the North of France a line that is filling perfume where we have combined different technologies. We combined sensors, magnetic conveyors, vision, laser, laser measuring. We have a layer of artificial intelligence so that we can, on the very same line, deal with 30 different formats of perfume bottles. And we can switch from one format to the other in less than 15 minutes. (It took longer than four hours before.) On this line, we didn’t develop it looking at our existing lines, we didn’t develop it with our current suppliers of machinery. We started from a blank sheet, working with startup, focusing on the objective of agility and seeing how we could combine different technologies to address the objective. It’s a totally different approach. It requires a totally different mindset from the teams. A lot of creativity, a lot of daring, a lot of testament.
What about Belgium and the U.S.?
Let me give you the example of Belgium: When you develop such lines where you will move from one production to the other very quickly, you will end up in a shift for a line operator dealing with several different products. The complexity for the operator to run the line is increasing. We work with some AI solution from IBM Watson to be able to help the operator move from one product to the other. We have developed some apps that are providing the operator the real-time information at the right time. It’s a little bit like the pilot. When you fly a plane, you don’t need the same information when you take off than when you are at cruise altitude. We are doing exactly the same thing for our operators, providing them with the right information at the right time, when they do the changeover, when they run the line, or when they move to other products.
In the U.S., we’ve equipped a line with a lot of sensors gathering data from the line. Then we have developed a real-time dashboard that is doing the analytics, and understanding any deviations from the normal parameters, so that they can be corrected almost instantaneously. With the measurable, we gather from the line, we can go to the next level of optimization. We are using some analytics with Watson to identify the most influential parameters and the ones we should fix to improve performance.
Where in the world would you say smart manufacturing technology has brought the most innovation so far, and what was it?
The concept of Industry 4.0 was born in Germany at Hannover Messe. It has spread all over the world. We are partnering locally—in the U.S., in Europe, in China. We work with local partners to develop these solutions. It’s a very bottom-up approach. I’m not sitting here in Paris telling everybody, “You should do that. This is the best supplier, and this is how it will work.” Giving the freedom and the creativity to one plant locally to find the right ecosystem is key. That’s how we make the digital transformation go quickly—and make sure we benefit from the best partners from that part of the world. The ecosystem in China is very different from the ecosystem in the U.S. and very different from the ecosystem in Europe. And there are benefits we can draw from each of these regions.
Who are you partnering with in the U.S.?
In the U.S., we work a lot with IBM Watson. We also have some smaller suppliers of automation, like Clear Automation.
Overall, what would you say you’ve accomplished so far with L’Oréal’s operations 4.0 digital transformation program?
It’s an ongoing transformation. So far, we have improved our agility. We have developed some personalized products available at points of sale. We have developed some new tools for our operators to make their life easier. And we have developed some tools to be able to cope with more and more products and to reduce the lead time needed to develop products.
In the next four years, what are your directives to accomplish?
We are working a lot on the subjects of data analytics and AI. We are still at the pilot stage, but we have tested two proofs of concept in the forecasting field, understanding the key parameters influencing complex processes. I think that’s where we will see more and more progress in terms of the use and the democratization of AI in manufacturing.
What other important tech partnerships can you tell us about?
We are working with some big tech players, the GAFAs (Google, Amazon, Facebook and Apple) of the world and their equivalents in China. We are also working with startups, such as Station F here in France and Plug and Play in the U.S.
In digital manufacturing, it’s important to source the technologies where they are starting. That’s what I’m telling the team: When you see this new technology, make sure you open your eyes and are resilient. Try to understand them before you just say, “No, it’s not for us.”
For example, in 3D printing, five to seven years ago, when people internally started on 3D printing, people said, “No, it’s not for L’Oréal because we produce seven billion products, and with 3D printing it takes an hour, an hour and a half to do one.” But nowadays, we have 3D printers in most of our plants that are doing some format parts, some spare parts. We have 3D printers in our development offices here in Paris where, for every single launch, we make some prototypes. We exchange with marketing to see very quickly whether the volume and the shape of the product is good. So 3D printing is now a technology that we use daily.
With regard to connected products, what do you expect to gain from blockchain technology in the next few years?
Connected products is a pillar of our digital transformation. It starts from a simple QR code that will be able to interact with your smartphone. It goes through RFID or NFC technology. And now even using blockchain. These technologies are there to make the link between the physical world, which is the product, and the digital world, which is the data and your smartphone. That’s all the reflection around the connected products.
What does it enable? It enables a better consumer experience at the points of sale because you can, for example, automate the cash-out part of your retail environment. It also enables interaction with consumers’ smartphones—so you can give customers information about how the product was made and what type of ingredients were used to make the product.
With regard to blockchain, we are testing two use cases around transparency (concerning) the products, from raw materials to the consumers, and all of the logistics information. When you ship products from one country to another, you need to provide a lot of certificates, and putting the certificates in the blockchain is very promising.
L’Oréal has four factories in the U.S. and one in Canada. Why so many in that region?
First, the U.S. and North America is our largest market by far. Second, we work in different categories, consumer products, luxury products, products for pharmacies or for hairdressers. We have a broad range of products, and we want to be really close to the markets and the consumers. Because in this world, the ability to be able to quickly cope with new trends, to be able to really deliver our consumers in a very short-lived time is absolutely critical. So more and more we will develop our plants in the markets where our consumers are.
What specific new products have come about because of smart manufacturing?
We are now developing some personalized products. In the U.S., for instance, we have Le Teint Particulier, under the brand Lancôme. It started at the beginning of 2016 and is now available in more than 50 points of sale. We measure your skin tone at the department store and manufacture, directly in the store, the foundation that matches your skin tone.
This has been enabled by smart manufacturing and all of the new technologies because it combines AI, to be able to develop an algorithm that goes from one skin color measurement to a formula that we have to chose between 22,000 combinations. It’s also a challenge in terms of operations because you need to be able to produce a cosmetic product in a point of sale where the environment is not quite the same as a factory—and your “line operator” is a beauty assistant. That’s what I call extreme agility where you do one product, the “batch of one,” that is personalized to one consumer. That’s part of smart manufacturing.