How to improve the process of sales’ prevision for the pharmaceutical division of L’Oréal? Development of a new model to analyze the gap betweensell-In and sell-out

Abstract

Until the present date, the Pharmaceutical Division of L’Oréal in Portugal did not have any tool to analyze the gap between Sell-In - the products sold by L’Oréal to its customers (Pharmacies and Parapharmacies) -, and Sell-Out - the quantity sold by L’Oréal customers to consumers. The main objective of this Work Project was to develop a model to analyze such gap. Subsequently, we conducted an investigation of the insights inferred from the analysis of the gap between Sell-In and Sell-Out. This investigation contributed to help the Pharmaceutical Division of L’Oréal - Active Cosmetics Division -, to better predict the level of stock they should establish with their customers (Pharmacies and Parapharmacies). Additionally, the methodology used for the model involves using data from January 2015 until September 2017. Analyzing the model, we conclude that only 20% of the Sell-In needs to be adjusted in the next sales prevision. With this rearrangement of units, we were able to predict that 7% of the Sell-In has a high risk of not being sold and 4.3% still has an improvement margin.