Lush Gets a Store-Level Inventory Control Makeover
Lush, the cosmetics company known for its fresh and handmade products, has experienced tremendous growth. Across the globe, it boasts more than 850 store locations, including more than 250 in North America.
THE CUSTOMER
Established in 1995, Lush creates pioneering beauty products, including the bath bomb. The company operates in 50 countries with 850+ shops, 38 websites shipping worldwide, and a global network of native apps, broadcasting channels, and digital communities in more than 30 languages.
THE PROVIDER
Arkieva is a supply chain planning software company that delivers AI-powered, modular solutions for demand, inventory, and supply planning. Headquartered in Wilmington, Delaware, with offices in Belgium and India, Arkieva works with global enterprises to create resilient, future-ready supply chains.
“Spreadsheets were no longer a viable solution for demand and supply planning and forecasting,” says James Gregory, demand planning manager with Lush North America. After implementing several solutions from Arkieva, a provider of supply chain planning solutions, forecasts now are well within the range of accuracy that Gregory and his team expect.
Since its launch in 1995, Lush has grown to encompass operations in more than 50 countries. Along with its physical stores, it operates 38 websites that ship worldwide, as well as a global network of native apps, broadcasting channels, and digital communities that span more than 30 languages.
In 2024, Lush sold more than 21 million of its famous bath bombs, as well as a range of lotions, hair care, makeup, and other beauty products. The company follows sustainable business practices, such as circular packaging. Its ultimate goal is to leave the world “lusher than we found it.”
Forecasting Falls Down
Cosmetics company Lush operates more than 850 stores in 50 countries. As the brand continues to grow, it relies on flexible, collaborative planning tools to quickly analyze data and support smarter supply chain decisions.
Achieving both business and sustainability goals requires solid information, efficient processes, and visibility. Lush’s growth, while positive, also meant that some forecasting and planning processes that had previously worked no longer were as effective as they needed to be to continue driving the company forward.
Gregory’s responsibilities include planning for the 250 stores in North America, its digital fulfillment business, and two manufacturing sites—in Vancouver and Toronto. When it comes to demand and inventory planning, each store manager has a great deal of autonomy, Gregory says.
Other than for product launches, Lush doesn’t use a traditional “push model” in which the corporate management team decides what inventory each store will receive. “Shop managers treat their store as if it’s their own business,” Gregory says, adding that inventory ordering is within shop managers’ direct control.
Along with the roughly 600 core products that are available year-round, Lush introduces limited edition and seasonal product multiple times throughout the year.
For example, its latest Christmas product range includes about 150 SKUs, Gregory says. The holiday peak in December is critical to Lush’s business. Lush also offers new product ranges for Halloween, Valentine’s Day, and Easter.
As a result, Lush stores and its website can feature about 1,000 SKUs at any time. “One main challenge we faced was enabling the store managers to have control of their inventory, but also making sure that the products are at the right place at the right time,” Gregory says.
What’s more, Lush North America distributes all products from its two distribution centers in Canada. Stores located in the southern United States can be thousands of miles away, resulting in long lead times.
Ditch the Spreadsheets
Given these challenges, as well as the growth Lush was experiencing, the company needed a flexible, efficient, and collaborative demand planning tool. The manual spreadsheets that Lush had been using often made it difficult to maintain data integrity throughout the planning process, and to streamline the process itself. In addition, the job of updating increasingly large files had grown cumbersome and complex.
As many businesses grow, continuing to rely on spreadsheets can make it difficult to accurately capture demand and generate a reliable, useful forecast, says John Kmetz, customer success manager with Arkieva. Less-than-accurate demand forecasts can lead to both lost sales and higher expenses. Stores may lack the products customers want, while companies may find it necessary to expedite some product shipments to meet demand in different locations. “It is a lot harder to be efficient when you don’t understand exactly what you’re going to sell in the next month,” Kmetz adds.
Arkieva provides supply chain planning solutions, including end-to-end supply chain software, as well as solutions for demand forecasting and inventory and supply planning. Its solutions are meant to work with companies’ ERP systems to help drive forecasting and supply chain practices; most ERP systems would have difficulty doing this at scale, Kmetz says. The company’s solutions work across most verticals.
Currently, Lush uses several Arkieva solutions, including its Demand Planner, Inventory Planner, Executive Reporting, and Financial Planner solutions. “We needed software that could handle a detailed level of forecasting,” Gregory says. The Arkieva solution calculates a safety stock quantity for each product in each store, he adds.
Each week, Arkieva generates demand forecasts for all Lush products at each of its stores—an enormous number of potential product and location pairings. Lush then exports the forecasts and plans to its ERP system to provide each store with inventory suggestions that account for the store’s lead time and the amount of inventory it has on hand, among other factors.
Store managers can log in to the system to review their forecasts. When they place their orders, they can modify the suggested recommendations, based on their insight and experience.
Gregory and his team assemble the information from each store manager and then use it to inform manufacturing plans. This approach helps to both maximize sales and limit stockouts, particularly for the limited product ranges introduced throughout the year. It’s more difficult to “chase demand” for these items, because if the demand forecasts aren’t accurate from the start, there’s only a limited amount of time to make up for any inaccuracies.
Accurate forecasts and manufacturing plans are also important, given that many Lush products have a specific shelf life, making it harder to hold inventory for a longer time.
Lush also sells a limited range of products through Ulta Beauty’s website. This required some modifications to the Arkieva solutions, which initially had been set up with only Lush stores as locations. Gregory and his team worked with Arkieva to create a module in the software to define Ulta’s distribution centers as locations. This allows Lush to plug in its demand forecast at the Ulta distribution center level, along with forecasted demand at Lush stores and its digital fulfillment businesses, into Lush’s manufacturing plans. “Arkieva built that functionality for us specifically,” Gregory says.
To get up and running with Arkieva, several consultants from the company remained onsite at Lush, providing information on the solutions while also learning about the capabilities Lush needed. “The implementation went smoothly,” Gregory says.
Arkieva’s intuitive interface can ease implementations. “You don’t have to be a statistician, or have a PhD or degree in supply chain planning to use it,” Kmetz says. Because it’s easy for most employees to get up to speed on Arkieva’s solutions, many organizations that implement them can quickly capture value, he adds.
Streamlined, Reliable Forecasting
Lush’s implementation of Arkieva has provided several benefits. Before implementing the solutions, Lush North America’s spreadsheet-based process didn’t allow for a reliable way to measure forecast accuracy. With the introduction of Arkieva, Lush now can track the accuracy of its forecasts. Gregory says Lush is meeting its target for forecast accuracy at the category level.
The Arkieva solution has also streamlined forecasting, while providing greater inventory visibility and improved demand planning insight for materials planning. In addition, Lush management can quickly determine how changes in demand will impact revenue.
With better forecasting, companies often can both boost sales and reduce expenses, improving both sides of their income statement. They’re less likely to lose sales as a result of inventory not being where it needs to be, and less likely to have to expedite shipments to meet customer demand. They can allocate money that otherwise would have gone to holding inventory to other areas of their business, Kmetz says.
Greater forecast accuracy also helps demand planners identify opportunities to improve at the SKU level. “We are now able to direct where we need the inventory to be,” Gregory says. For example, the forecasts now can more precisely account for the impact seasonal products are likely to have on sales of year-round products.
One main reason Lush chose Arkieva was its willingness to work together as true partners, Gregory says. This has remained the case as Lush continually introduces new products and initiatives, such as a recently launched business-to-business partnership.
“Arkieva was able to design features for us and make them work for our business,” Gregory says. “It wasn’t just cookie-cutter software.”
Casebook Study: Lusher Forecasting
The Challenge
Lush’s largely manual demand and inventory planning processes were cumbersome and inefficient, and they often failed to provide the information Lush management needed to ensure it had the right inventory in the right place.
The Solution
Implement several planning solutions from Arkieva.
The Results
A forecasting process that is both more streamlined and able to provide more accurate information for demand planning.
Next Steps
While no firm plans are in place yet, Lush is potentially interested in exploring Arkieva’s supply planning functionality, as well as expanding the use of Arkieva to Lush operations outside North America.