For the cosmetics industry, an efficient supply chain is vital for having a competitive advantage and for managing the requirements of retailers correctly and help face the challenges inherent to the supply and demand.
Because of the nature of this industry, clients look for trendy products today even if they fall out of fashion tomorrow; therefore, companies must make sure their products are always available and that their marketing strategies and forecast of the demand ensure the right mix of products is in the right distribution channels at the right time.
The cosmetics industry needs a wide assortment of logistics services to manage its supply chain, ranging from the reception of raw materials to the distribution of finished products. These logistics services include road, sea, air and railroad freight; customs management; tax representatives; management of logistics platforms; packaging management; picking; and reverse logistics.
Logistics services for the cosmetics industry
To optimize the supply chain of a cosmetics company ranging from supply to final distribution, we suggest embracing the following tactics:
Regarding production
- Analyzing the products’ flow and seasonal nature as well as the location of suppliers and their supply capacity.
- Hiring a logistics company to support the fiscal and customs handling of export and import products.
- Using the value-added services offered by some logistics companies, such as quality control packaging, and picking.
Regarding distribution
- Managing the inventory and picking efficiently through warehouse management systems.
- Dividing and organizing local and international shipments with the proper transportation and customs management.
- Controlling the inventory at the different distribution channels: supermarkets, drugstores, beauty shops, direct sales, etc.
- Using the special and urgent transportation services, such as temperature-controlled freight, offered by some logistics companies.
The challenges
As one of the most peculiar, the cosmetics industry poses specific challenges for logistics.
Global supply challenges
Unstable weather, political climate, and lack of infrastructure are obstacles for supply, which is becoming increasingly more complex as the use of natural ingredients faces geographical restrictions. Specifically, the manufacturers of luxury cosmetics lines often depend on specific suppliers, thus, the risks deriving from disruptions in the transportation are quite high.
Warehousing and order
One of the greatest challenges for many companies in this sector is to keep the production lines and facilities in order. This becomes even more difficult when the same building houses both the raw materials warehouses, the manufacturing areas, and the picking, packing, inventory, and domestic and international distribution processes.
Using separate SKUs in the warehouses of materials and finished products helps. Dividing the logistics process in space, systems, and staff is also useful for keeping order.
Special warehousing requirements
Different ingredients demand different temperatures and weather conditions. Humidity, for example, may turn cream moldy. Therefore, knowing how to sensibly handle these products is necessary and suppliers must meet these requirements.
Low durability
Expiration dates make managing inventories a complex task and necessary to embrace flexible and agile acquisition processes. In the cosmetics industry, preservers ensure cosmetics do not spoil. Nevertheless, using this type of products is temporary and highly influenced by the limited shelf life. In the event of an inadequate inventory management, this may lead to high waste rates.
Trends create demand
The trends of cosmetics influence the demand; therefore, companies must be aware of what their clients wish to buy. What is trendy today may be unfashionable tomorrow. Meeting the demand promptly may pose a challenge; thus, a supply chain that is quick to respond may become a differentiator. This means, in large part, being able to control transportation and the flow of merchandise throughout the supply chain, which can be managed by using a transportation management system that provides visibility all the way, from the manufacturing plant to the final destination.
The Answer: Increasingly more digital processes
All these conditions lead to the need of having a warehouse flexibly managed in terms of stock levels. Innovative methods are needed to schedule the production to avoid employing excessive manual effort to meet the volatile demand created by the clients. Using a tool backed by IT to optimize the planning of production is a step towards a digitalized process, necessary for success in the current and complex operational environment.
The demand in the cosmetics industry is on the rise, and manufacturers continuously need to adapt their supply chains to keep costs down and remain competitive. It is important to have an idea of how the market is evolving. A database with reliable information and digitalized methods can help the supply and manufacturing chains in their efforts to grow business and face challenges.
*This blog was originally published on December 20 2018 and modified on April 14 2022.
