7-2 Module: Data-based recommendations and Outcomes

Description of Company Background Rougir Cosmetics International (or “RCI”), a company which creates cosmetics, announced via the CEO in 2016 that the firm was facing challenges in meeting the demand in the next quarter. The firm, founded in the United States (in California, specifically), in 2010, had enjoyed steady growth during the first four years of its existence. However, the rate of demand from clientele eventually surpassed the company’s own growth. Ergo, due to asset limitations, as well as capacity issues in-house. The firm simply did not have adequate resources, nor production scope necessary to meet the forecasted demand rate in the next quarter. Therefore, different strategies would have to be explored, in order to meet client expectations forthcoming. Issues Surrounding Manufacturing In-house vs outsourcing The primary obstacle with RCI proceeding 100% in-house with production expansion is they lack the means and facilities currently to deploy this effort in an effectual manner. That being said, they do have the option to partner with an outside vendor to give them the ability to produce a portion of the cosmetic line, which would enable RCI to meet client expectations in the coming quarter. This reality is why the CEO, S. Anderson, put forth the suggestion to the company’s board. Constraints in Production Process However, when any company ‘releases’ a part of their production line to the handing of an outside party, there are risks which must be assessed and an appropriate and logical risk appetite must be determined by the project team overseeing this strategy to present the research and summarized findings to key stakeholders, such as the board. In this instance, RCI does face risks in allowing another party to create any of their products. There are variables outside of RCI’s control, such as the facilities in which vendors operate. This would include safety measures, regulatory compliance analysis, supply chain factors (if the partner has an autonomous supply chain already established) as well as other factors. These may include the vendor’s reputation for sustainability, ethical practices, adherence to pertinent local laws and regional-specific state/federal guidelines and so on. There’s also the question of how in-house personnel will react to news of outsourcing. The firm must be mindful of how this will impact company morale, team dynamics and other facets. Considerations Regarding Competition Competition elements may strike RCI from a spectrum of areas. For example, if RCI partners with a company which does not source their raw materials ethically or is revealed to have production practices which harm the environment in some terrible way or use illegal employment practices (like not paying overtime, locking employees in the building overnight, etc.), competitors may capitalize on this news to paint themselves to the public as a more “ethical” alternative.

Another potential outcome RCI must weigh in regard to risk is whether or not a partner can be trusted with any proprietary ingredients used in their cosmetics line. It may prove a wiser option to “pre-prep” ingredients for a vendor without divulging the full “recipe,” per se. This will allow RCI to maintain some security insofar as “leaking” by vendors of what ingredients are used in RCI’s products, especially if that secrecy helps RCI maintain a “foothold” in the market.

References

Hall Jr., O. (2017). Rougir Cosmetics International: Production Optimization. Retrieved from:

ROUGIR COSMETICS INTERNATIONAL: PRODUCTION (harvard.edu)