The cosmetic industry’s supply chain is arguably not any different from many other industries. However, theirs might be a little more convoluted and crucial to get right. Let us consider the cosmetic industry’s supply chain and how to enhance its efficiency and minimise waste.
The supply chain: three logistical variables to consider
The basics of the cosmetic industry supply chain is that product is formulated by a developer or the cosmetic company themselves. It must then be QA-tested, packaged and on its way to the customer in a short amount of time and under ideal shipping conditions.
There are three reasons for the short but critical timeframe from manufacture to sale. The first is that the cosmetic industry is seasonal and reliant on trends and endorsement. As such, as soon as a product is endorsed, the company must respond by ramping up manufacture and getting product on shelves to optimise the current interest.
The second reason is that cosmetics have a finite shelf-life; this short shelf-life might further decrease if the ingredients are organic and lack preservatives. Again, wastage can occur if the shelf-life is not optimised by selling product as soon after it is manufactured as possible.
The third reason for the short manufacture-to-sale timeframe is the nature of the product itself. Cosmetics are notoriously sensitive to temperature and therefore climate-controlled shipping is essential. One variable that affects the temperature is the time before proper storage conditions are reimposed, therefore shipping times must be kept to a minimum.
Serving the customer
The cosmetic industry is driven by seasons, trends and endorsements. This means that it must consistently and continuously produce new and innovative products. Often, the novelty of these products may just be in the uniqueness of its hue, however this still represents a change in the production line with a whole myriad of logistics that must be seen to for this to happen. This process can also be extremely fast moving and so the whole production process must be extremely efficient.
Not only is the customer voice changing with the season and what is in vogue, but on a deeper level, it is developing in its authenticity by becoming increasingly aware and concerned with environmental protection and social justice. Therefore, it is imperative that the cosmetic manufacturer sources raw materials that are obtained or produced fairly with all parties being rewarded appropriately for their contribution to the chain. The cosmetic manufacturer must also ensure all of these processes are transparent and true as customers are very quick to see through dishonesty and even more hasty to abandon a supplier based on ill-will and the compromise of justice.
There are tools that are widely considered to facilitate control of the cosmetic supply chain and minimise the time between manufacture and sale while maintaining quality.
Technology is now incorporated into the general buying experience and with cosmetics, this allows a customer to virtually try on different shades of a product to get a feel for what suits them. This technology, aside from enhancing the customer experience, can also be used by the company as it provides market data which help shape consumer-drive production. This ensures that not only is production more specific to the customer’s desires, it is also far more efficient which further enhances the buying experience.
Expedited shipping is essential to the cosmetic industry and this is aided by a transportation management system (TMS), which is becoming more and more popular. The TMS allows for transparency over the transport modes and routes, providing information about congestion or possible delays that will affect the customer as well as possibly jeopardising the stock. Strategic decisions around delivery can then be made to ensure the product’s quality is maintained.
Another important tool that applies to all industries is inventory management software. This is especially important for industries where the manufacture-to-sale time needs to be as short as possible with many other contending factors to consider. A good inventory system takes the guesswork out of planning and procurement and ensures the whole receipt, manufacture, storage, shipping and sale process is as ‘lean’ as possible.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.