Question

What types of outsourcing does the L'oreal company use? Justify your answer by giving at least one specific example. (1 point) What factors should the L’Oréal company consider when deciding whether or not to further outsource a particular part of their information systems? (1 points)

Answer 1

Outsourcing is when a company arranges for another organization to carry out certain operations instead of doing so on its own. A company may outsource its administration, IT work, legal service, marketing, and accounting.

The Culture Outsourcing strategy is not really strong particularly because of the local power culture of L'Oréal. Even though, L'Oréal has a co-sourcing agreement on the direct material acquisition of products and packaging and has established some indirect category sourcing; human resources, IT, and telecommunications. L'Oréal combines consulting and outsourcing elements, with a strong emphasis on risk and benefit-sharing.

The Provider will take responsibility for the management of the track. But there would be no transfer of personnel; instead, the provider team would work alongside existing procurement staff at L'Oréal. The provider would also considerably take risks associating a reward with actual, tangible savings in the bottom line and committing to a skill transfer program. The provider will eventually be engaged on a relatively long-term basis but measures are in place to ensure a pre-competition of the contract at that point.

ex-L'Oréal already has an arrangement with IBM essentially for the use of expert procurement services advanced cloud analytics to achieve new procurement contracts and cut costs delivered at fiscal year-end.

One main factor is the percentage of spending under administration. The more unmanaged spending there is in a firm, the less procurement performance the procurement department will deliver. The methods used and the manner in which the different departments communicate are also a maturity predictor.