For a company that activates internationally, supply chain management represents a major aspects, enrooted in its business nature. Not only operations supply chain management influences the type of business performed and the implicit commercial and marketing activities, but it also impacts the overall performance within an organization. For Natura, an international brand activating in the cosmetics industry, the supply chain management implies additional concerns, as the company solely utilizes natural and organic ingredients for its beautification and hygiene products that it commercializes.Its activity includes producing beauty and personal care products such as skin and hair care, fragrance, lipsticks, creams, hair dyes, lotions, antiperspirants, shampoos (Hoovers, n.d., Euromonitor International, 2012).Natura is a Brazilian brand, promoting safety for its customers, naturalness, health and animal care, as it does not encompass animal testing among its procedures.
In addition to Brazil, the home country of the company, Natura also operates in other South American countries (Argentina, Chile, Peru, Mexico, Venezuela, Colombia) Japan, India, United States and France (Global Reporting Initiative, n.d.). Therefore, the company targets developed (United States and Japan) and emerging economies (Brazil and India). These markets have a high consumption potential for cosmetic products, recovering after the financial crisis that affected the entire world. The company’s business strategy, translated into its business objective is to achieve a higher global presence and increased sales, while not compromising the quality and purity of its products, maintaining its business values of protecting the nature and animals (Natura official website).
Yuan and Ashery (2009, in Peng, 2013) indicate that the supply chain includes three main components that the company should consider closely for developing their supply management strategy: goods, information and finances. For the Asian market the communication is different than the one used for United States or Brazil, and so is the supply chain. As such, the supply chain differently mixes the three components (goods, information and finances) in each market in which it operates. While in United States and France and Asia it emphasizes the idea of beauty and of an ideal life, by utilizing famous women for promoting the brand, in South America the company uses the family and love concept for communicating with the clients. Therefore, in terms of information, the company uses differently the communications and promotions strategy, adjusting to the market’s specificities. However, regarding the goods, Natura is preserving the purity and the quality of its products similarly in the same country. Nevertheless, while for Brazil it produces and emphasizes specific cosmetics, such as specific shampoo products for the type of hair of the Brazilian consumers, in the other regions in which it activates, other products are marketed (Natura official website). Therefore, the company is developing strategic supply chain, by using information gathered from each market in order to effectively place its goods.
The financial component of the supply chain management keeps the company in the top cosmetics brands, situating on the 20th best sold cosmetic brands, with more than $2.300 million annual sales (“Top 50 Cosmetic Brand 2013”, Brandirectory, n.d.). With its capital and the ongoing financial resources, Natura allows investing in more research and development for continuing to innovate and to enrich its brand with new products.
Focused on delivering excellent quality and customizing Natura experience in each market in which it operates, the company utilizes customer service supply change management. Its customer service focus determines an adjustment to local suppliers, in each country in which it operates. This implies dealing with different transportation, which generates different pricing needs from country to country. As every market has its specificities, the pricing is influenced by the suppliers, who have a significant bargaining power due to the fact that Natura only works with natural organic ingredients, only available in specific regions. Therefore, for bringing the required resources in the production centers and delivering them into the operating stores, the transportation cost might alternate depending on various factors such as distance, suppliers’ flexibility or market monopolization, etc.
The company should integrate suppliers in its operations, developing a vertical integration of its suppliers, in order to assure that the best quality for the best prices is assured. Such a strategy would allow Natura to better manage its financial resources and to focus on the maximizing the information gathered through research and development for enriching its products for satisfying an increased customer area. While focusing on expanding to new territories, the vertical integration of the suppliers into its operations would assure that the suppliers would also expand their business wherever Natura intends to open new markets. With local facilities in the new markets, Natura could assure a permanent resource flow, while the transportation costs would go down. With decreased suppliers cost, the general cost of Natura product could also go down, attracting more new customers into trying its products.
Natura’s supply management strategy is customer service focused, which is important for its specific activity. However, while pursuing a global expansion, the company should consider developing a vertical integration supply management.
References
Brandirectory, n,d. Top 50 cosmetics brands 2013. Available at brandirectory.com/league_tables/table/top-50-cosmetics-brands-2012-2012.
Global Reporting Initiative.N.d.Natura engages with suppliers in search of a strong and sustainable behavior. Available athttps://www.globalreporting.org/resourcelibrary/natura-interview-silvana-soriano.pdf
Natura official website.N.d.NaturaCosmeticos.Available at http://www.natura.net/br/consultor.html.
Peng, M., 2013.Global Strategy. Mason: Cengage Learning.
