The US cosmetics industry is massive – estimated to amount to about $49 billion U.S. dollars in 2022 – but has been impacted dramatically by recent supply chain challenges. Many products are out of stock or cost more money than they did before the pandemic, and consumers are starting to notice in ways they didn’t before. The cosmetics supply chain issues don’t stem from just one thing—factory closures, employment, importing, ingredient sourcing—but all of the things at the same time.
The beauty industry is extremely competitive and comes with its own unique logistics challenges. What’s more, brands are often dealing with a higher-than-average number of individual products and related SKUs – think 20 shades of foundation, in multiple formulations, for example. That’s why it’s so important that beauty brands take advantage of technology to efficiently track and manage inventory to make learning how to overcome supply chain disruptions that much simpler.
Common Challenges of the Beauty Supply Chain
We’re breaking down some of the most common challenges the beauty supply chain faces today and how brands in the cosmetic industry can overcome them to ensure their beauty products can thrive in 2023 and beyond.
1. Temperature Control Compliance
Cosmetics often have very specific and intentional formulations, and many of the ingredients can be sensitive to temperature fluctuations. This requires that all methods of transportation—road, air, sea, and railway—follow strict temperature control. Not having temperature control can mean raw materials or finished products lose some of their properties.
One way of ensuring temperature control is through detailed data on when shipments are being transported. Flowspace’s omnichannel order fulfillment solutions allow brands to track inbound and outbound shipments, provides real-time insights and recommendations, optimizes their fulfillment network, and accesses customer insights.
2. Traceability and Shipment Conditions
Traceability provides transparency throughout the entire beauty supply chain—from sourcing raw materials to delivering the products to a customer’s door. A third-party logistics provider can help brands access item-level details at every step of the supply chain.
Being able to track shipment conditions down to the finest detail is becoming just as important as tracking products in the supply chain. This allows brands to track individual batches of products and determine at which stage of the supply chain something went wrong. Brands can then take action to address any problems in the supply chain and prevent future issues.
Some brands might even go as far as monitoring specific conditions along the shipping journey, including moisture, humidity, temperature, light exposure, bumps, or shocks.
3. Unconnected Communications
Whether a brand is selling direct to consumers, into retail stores, or both, fast and accurate communication and product information is critical. To remove human error, many retailers require the use of Electronic Data Interchange (EDI). EDI ensures standardized, specifically-formatted communication regarding product information for retail fulfillment.
Many retailers require the use of EDI, and many brands find an industry partner to help coordinate fulfillment logistics. Flowspace offers EDI connectivity within its fulfillment platform, ensuring businesses are able to share accurate data instantly. EDI integration also helps businesses get more done faster by speeding up logistics timelines and eliminating manual errors through B2B communication automation.
4. Demand Driven by Trends
Social media and influencers play a huge role in beauty and personal care products trends, so if a celebrity is seen wearing a specific nail polish, that product can start flying off the shelves. On the other hand, if an influencer shares a less-than-positive review of a new lipstick, that product can stop selling.
What’s hot today might be old news tomorrow, making both standard and meltable inventory forecasting and real-time visibility crucial for beauty supply chain efficiency. Using a third-party solution to help track and forecast inventory can help brands weather the ups and downs of the fickle cosmetics industry.
Gaining accurate insights and leveraging inventory demand forecasting allows brands to identify trends in customer purchasing behavior. This knowledge makes it possible to maintain the ideal inventory level for a variety of different products. Flowspace’s fulfillment technology gives brands real-time insights so they can discover and get ahead of any trends and demand changes coming their way.
5. Need for Quality Packaging
It’s not just the product itself that beauty brands need to worry about. How the product looks when it lands at a customer’s address is also incredibly important, especially for luxury brands. Ensuring the packaging extends and upholds the brand experience is critical to a consistent experience for customers.
More consumers are interested in sustainable products, and that interest is extending to sustainable packaging. More than two-thirds of consumers consider it essential that the products they buy are in recyclable or eco-friendly packaging—so customers are actively considering sustainability as a factor when buying from brands. Flowspace partners with no issue for sustainable packaging and shipping materials.
6. Addressing Consumer’s Desire for Sustainability
It’s not just in packaging that consumers are looking for green practices but throughout the entire beauty supply chain—from using cleaner raw materials in products to transportation methods.
One way brands can embrace the trend toward greener practices is by moving products closer to the end consumers. Flowspace’s Network Optimization model does just this. By identifying the optimal fulfillment centers closest to a brand’s consumers, the company can reduce transit times and the emissions created by long-distance single shipments. Warehouses can also receive freight shipments, which further reduces the impact of transportation. Flowspace’s Network Optimization was even named Sustainability Service of the Year in the 2021 Sustainability Awards program.
7. Dealing with Product Outages
The current supply chain crisis means it’s been harder than ever for beauty brands to keep items in stock and on shelves—both in–store and digitally. In order to deal with the supply chain crisis, many cosmetics brands started ordering more products further in advance. While this can ensure brands have enough product, it’s also important not to order too much and end up with slow-moving or obsolete inventory.
That’s where accurate and efficient inventory tracking comes in. Being able to forecast months in advance using historical inventory data allows brands to order months in advance with the confidence that they’re not over- or under-ordering. Flowspace’s solutions ensure brands get real-time recommendations on inventory levels and insights on customer activity. These insights allow a brand to accurately forecast and order ahead, allowing brands to deal with long lead times and weather the current supply chain crisis.
8. Tracking All the SKUs
In the beauty world, consumers expect products that are available in a wide variety of shades and fragrances and products that address specific conditions and types of skin. This all means that beauty brands need to carry an incredible number of unique products with their own individual SKUs. After all, a customer who usually wears a specific foundation in “ebony” is not going to accept that same foundation in “caramel” as an alternative.
Having access to real-time insights and inventory tracking can help brands ensure that products—and all their variations—have enough stock and help the brand determine when to procure more products. Flowspace offers industry-leading ecommerce software that powers insights and efficiencies for merchants selling online and ensures effective inventory tracking. The Flowspace platform offers real-time visibility into orders, inventory, and more, and offers easy-to-implement control over supply chain systems.
9. Challenges Procuring Raw Materials
As the global supply chain crisis impacts every step of the beauty supply chain, many brands are getting creative when it comes to working around challenges. Brands have been having a hard time procuring their usual raw materials. For example, Ukraine produces half of the world’s exports of sunflower oil. Since Russia’s invasion, sunflower oil has increased in price and become harder to get.
One option brands have is to reformulate products to replace raw materials that are in short supply. Sourcing and procuring trusted sources of raw materials can take time, which makes inventory forecasting critical if brands decide to go this route. Flowspace’s Inventory Planning & Forecasting Software ensures brands get real-time recommendations on inventory levels and insights on customer activity. Whether it be a beauty supply chain or a food and beverage supply chain, these insights allow a brand to accurately forecast with confidence.
Sources:
- https://www.statista.com/statistics/243742/revenue-of-the-cosmetic-industry-in-the-us/
Written By:
Allison Champion
Allison Champion leads marketing communication at Flowspace, where she works to develop content that addresses the unique challenges facing modern brands in omnichannel eCommerce. She has more than a decade of experience in content development and marketing.
