Inside Coty’s Supply Chain Makeover: A People-First Approach to Digital Transformation

In the fast-paced and highly competitive world of beauty, where consumer preferences shift as quickly as trends on social media, staying ahead of the curve requires a deep understanding of what customers want and how to deliver it. Coty, the global beauty giant known for brands like Burberry, Chloé, and Covergirl, realized that operational inefficiencies, rising costs, and stagnant revenues were hampering its ability to keep up with the rapidly evolving market. In 2019, the company embarked on an ambitious journey to transform its supply chain. And now, four years later, Coty’s makeover offers valuable insights into how AI, digital tools, and a people-first approach can help companies in any industry meet the demands of the modern consumer while maintaining operational efficiency.

Coty's transformation wasn't just about cutting costs or automating processes. At its heart, the company's shift was about empowering teams, embracing data, and using artificial intelligence (AI) to turn insights into action. As Graeme Carter, Coty’s Chief Global Supply Chain Officer, explained in a recent interview, this transformation was part of a larger effort to align with CEO Sue Nabi's vision of reconnecting with consumers while also streamlining internal operations.

Carter, who joined Coty in 2022, brought experience from companies like Amazon, Unilever, and Procter & Gamble. He quickly realized that Coty’s supply chain needed more agility to respond to market changes and more efficiency to keep costs down. While the company had already begun its recovery in terms of revenue, Coty’s supply chain was still plagued by high inventory levels and inefficient service processes. This was where the real work began—transitioning from legacy processes rooted in "tribal knowledge" to a fully digitized, data-driven operation.

Tackling the Challenges: Agile Teams and AI-Driven Solutions

One of the first steps Coty took was restructuring its teams to be more agile. Cross-functional teams were created to address key areas like long-term forecasting and short-term inventory allocation, ensuring the company could respond to market demands more effectively. By implementing "scrum" methodologies, these teams were able to make quick, tactical decisions that improved service levels and reduced inventory costs. This structure allowed Coty to respond to shifts in demand much faster than before, particularly during the unpredictable post-pandemic recovery period.

But agility wasn’t enough. Coty knew that to fully optimize its supply chain, it needed to leverage the power of AI and digital tools. AI-driven demand forecasting models became central to Coty’s ability to predict consumer behavior and manage inventory. The company adopted tools that allowed it to forecast demand for its wide range of beauty products—ranging from prestige fragrances to mass-market cosmetics—based on real-time data. These digital tools provided Coty with the ability to spot trends early, identify potential disruptions in the supply chain, and mitigate risks before they impacted the bottom line.

This digital transformation was not just limited to technology. It extended to how Coty engaged its workforce. By empowering employees with digital tools and the training to use them effectively, Coty was able to shift from relying on instinct and experience to making data-backed decisions. This transition from "tribal knowledge" to digital knowledge was a critical aspect of Coty’s turnaround. Employees were trained to use AI tools for everything from managing inventory to forecasting demand, allowing them to be more proactive and less reactive in their daily tasks.

Financial Recovery and Long-Term Growth

Coty’s transformation efforts paid off. Despite the global disruptions caused by the COVID-19 pandemic, the company posted net revenues of $5.6 billion for the fiscal year 2023, marking a 5% increase from the previous year. While the beauty boom during the pandemic may have provided a short-term boost in sales, Coty’s leadership was focused on building long-term resilience and growth. The AI-driven supply chain and people-first approach were key components in this strategy.

Coty’s story highlights how digital transformation, when combined with a strong organizational culture and employee empowerment, can lead to significant improvements in both operational efficiency and customer satisfaction. As Carter notes, "We're building revenue and starting to grow as a business. At the same time, we’re being smart about how we spend money, cutting costs where it makes sense and taking out waste." By focusing on cost-cutting in non-essential areas while improving customer service, Coty has managed to maintain its position as a leader in the beauty industry.

Lessons for the Supply Chain of the Future

Coty’s success offers several lessons for supply chain leaders across industries. First, digital transformation must be holistic. It’s not enough to implement AI tools without addressing the underlying organizational structure. Agile teams that can act quickly on insights generated by AI are critical for ensuring that digital transformations translate into real-world results.

Second, a people-first approach is key. Technology alone doesn’t drive transformation—people do. By training employees to use AI tools and empowering them to make decisions based on data, Coty was able to unlock the full potential of its workforce. This approach is a model for any company looking to implement digital tools in a way that enhances, rather than replaces, human intelligence.

Finally, the importance of resilience cannot be overstated. The COVID-19 pandemic exposed vulnerabilities in global supply chains, but companies like Coty that invested in digital tools and agile processes were able to adapt quickly and minimize disruption. This resilience will be critical as supply chains continue to face challenges such as climate change, geopolitical instability, and shifting consumer expectations.

Conclusion: A Blueprint for Modern Supply Chain Management

As Coty continues its journey of growth, its supply chain transformation stands as a testament to the power of combining AI with a people-centric approach. The beauty giant’s ability to navigate market volatility, streamline operations, and reconnect with its customer base is a lesson for companies across industries. In an era where supply chain disruptions are the norm rather than the exception, Coty’s transformation offers a blueprint for how companies can future-proof their operations while staying connected to their customers.

By embracing agile methodologies, digital tools, and a culture of empowerment, Coty has not only regained operational efficiency but has also positioned itself for long-term growth. For any company looking to modernize its supply chain, Coty’s makeover is proof that transformation is not just about technology—it’s about people.

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