3 Supply Chain Issues Within The Cosmetics Industry

Cosmetics is a half-trillion dollar industry that is continuing to expand. The cosmetics industry is growing among young people, especially due to increased marketing promotions and paid influencer campaigns on social media, and the recent trend towards focusing on self-care. As with any industry, an efficient and transparent supply chain is necessary in order to maintain a competitive advantage and tackle common supply chain related issues. Now more than ever, the demand for sustainable and eco-friendly cosmetic products is higher than ever, which adds a whole new dimension into the complexity of its supply chain. Consumers not only want to have their products delivered quickly and transparently, but also want the peace of mind that it was done sustainably.

Although sustainability, transparency, efficiency and other things all must be considered in a supply chain of any industry, there are certain issues that are unique to the cosmetics industry in particular. Below are some of the major issues facing supply chain operations in the cosmetics industry.

Change In Trends

Trends are constantly changing within the cosmetics industry. What was popular a year ago may not be popular now. A beauty research analyst from the NPD spoke about the nature of the cosmetics industry today, claiming: “We used to deal in trends that lasted five to 10 years… Now, we think it’s a long trend if it lasts 24 months.” With how quickly trends are changing, your supply chain needs to be able to adapt just as quickly for your business to succeed.

This is why the use of demand planning analytics is necessary because trends and KPIs can be leveraged to accurately predict the frequent change in demand. Focusing on demand planning will allow you to minimize excess inventory during times where cosmetic trends slow. It will also allow you to make sure you have the right amount of inventory in moments where certain cosmetic trends are lively in order to capitalize on them.

Compliance With Temperature and Other Conditions

Another supply chain issue in the cosmetics industry is ensuring that your company’s products are compliant with the right temperature needed to store and maintain these products. This is not only important when storing inventory, but especially important when it comes to transporting these products through long distances. Aside from temperature, cosmetics can spoil/damage if they are exposed to the incorrect amount of moisture, humidity or even a bump on the road when being transported. The sensitivity of cosmetic products means that you must be very careful during the logistics process.

Failure to comply with the conditions needed for many cosmetics can lead to product spoilage. Having detailed logistics data and condition monitoring that helps you keep track of things like temperature is essential if you want to prevent inventory write-offs.

Disruptions Caused By Sourcing

The cosmetics industry relies on ingredients such as cocoa, vanilla, zinc and more from countries that have unstable economic and political situations. As a result, there can be a lot of supply chain disruptions caused by tensions within these countries. In order to minimize supply chain disruptions, it’s necessary for companies to monitor their supply chain using cloud software with real-time metrics. This will allow you to predict disruptions and take proactive measures to try to manage risk before it occurs. You will also be able to prevent volatility and instability from occurring within each facet of your supply chain. It will also make it easier for you to communicate with every part of your supply chain network since you will all have access to the same performance information. Manufacturers will have visibility along with the retailers, suppliers, distributors (etc). When every part of your supply chain has equal visibility of real-time metrics during a disruption it makes the communication process easier and it becomes easier to minimize disruptions when they occur.

Further, you can also minimize the risk of disruptions by optimizing each and every part of your supply chain process by keeping track of performance. For example, real-time metrics can help to optimize your procurement process so that you can select the right suppliers. If you are in fact able to select the best suppliers as a result of performance tracking then you can minimize the risk of disruptions occurring.

How You Can Reduce Supply Chain Issues

The cosmetics industry has been growing quickly the past few years and will continue to do so in the coming years. However, there are major risks due to volatile trends, the sensitivity of these products as well as possible disruptions caused by instability in a lot of the countries that are relied on for sourcing.

To mitigate these risks by taking proactive actions, an adequate supply chain solution is needed that uses cloud-based software and real-time metrics/KPIs. The solution also needs to be able to keep track of every part of your supply chain including demand planning, procurement, inventory management, logistics, customer service, production (etc). By having real-time visibility of each part with detailed metrics/KPIs, you will be able to minimize the risks caused by the nature of the cosmetics industry.

Ready to start improving your demand forecasting? The Owl does all of the heavy lifting, as our team is solely responsible for data implementation. We provide the tools and guidance you need to increase visibility within your supply chain.