The 6 Challenges of the Cosmetics & Beauty Supply Chain

Drived by innovative promotional strategies, an increased presence on social media, and a growing quest for personal well-being, the industry in question is experiencing growth that resonates particularly with younger generations.

After the end-of-year holidays, events like Valentine’s Day mark the beginning of a cycle where each festivity is an opportunity to be seized. At the same time, Europe, with a flourishing cosmetics market valued at 131.80 billion USD in retail sales in 2023, bears witness to the rapid expansion of this industry.

Merchants, meanwhile, are faced with a unique set of logistical challenges, from managing expiration dates to handling delicate inventories, requiring specific and rigorous handling methods. Given these constraints, it becomes crucial to adopt logistical guidelines for the storage and preparation of orders.

In this article, we delve into the heart of these issues, exploring the major challenges that the cosmetic supply chain is facing. Our goal: to ensure the success and prosperity of beauty product lines in 2024 and beyond, by anticipating trends and adapting strategies to stay at the forefront of this dynamic industry.

Traceability and shipping conditions

Traceability and the management of shipping conditions in the beauty product supply chain ensure complete transparency,rom the origin of raw materials to the final delivery of products to customers. Implementing an effective traceability system allows brands to track each product through every phase of the supply chain. This is often achieved with the help of third-party logistics providers, specialized in precise item tracking, thus offering brands a clear and detailed view of the route and status of their products.

Beyond simple product traceability, monitoring shipping conditions is becoming an increasingly fundamental aspect. This monitoring not only allows for the tracking of the products’ journey but also the control of specific conditions that could affect their quality and integrity. For instance, factors such as humidity, temperature, exposure to light, and physical impacts like jolts or shocks are continually monitored. This approach enables beauty brands to follow specific batches of products and to precisely detect when and where a problem may arise within the cosmetic supply chain.

Thanks to this rigorous surveillance, brands are capable of intervening quickly in case of detected anomalies, thus efficiently resolving any identified issues. Moreover, this practice contributes to the establishment of preventive measures, thereby reducing the likelihood of similar incidents recurring in the future.

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Responsiveness to temperature variations

The ingredients contained in cosmetic and beauty products are highly reactive to temperature changes. Exposure to excessive heat can cause their rapid degradation and impair their quality. For this reason, the storage and management of these products require an environment where the temperature is controlled, to avoid any exposure to extreme temperatures.

Choosing a distribution partner that has a facility with thermal regulation guarantees the preservation of the quality of cosmetics and beauty products. These centers are designed to maintain a stable temperature, protecting the products from extreme temperature fluctuations. This ensures that the products remain at an appropriate temperature, from their storage to their distribution and delivery.

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Change in trends

In the cosmetics sector, trends fluctuate with disconcerting speed. What captivated attention yesterday may become obsolete today. Faced with this volatility, supply chains must demonstrate remarkable agility to propel business success. The constant transformation of consumer preferences demands that players in the field stay on top of the desires, expectations, and requests of their clientele.

In this context, demand planning analysis becomes paramount. It allows for the astute exploitation of current trends and key performance indicators to accurately anticipate the frequent oscillations of demand. A focus on demand planning helps to significantly reduce excess stock during periods when cosmetic trends slow down. Concurrently, it ensures optimal stock management during periods of high popularity of certain trends, thus maximizing the opportunities for success.

Strong Seasonality

The cosmetic industry is particularly subject to strong seasonalitya characteristic that can prove to be a real challenge for the supply chain. Special occasions like Valentine’s Day or Mother’s Day amplify this trend, leading to periods of intense demand. These key moments impose a need for rapid and efficient adaptation of logistic operations, often requiring a reinforcement of teams, rigorous and strategic stock management, as well as efficient and reliable shipping to meet the increasingly demanding expectations of customers.

It is therefore imperative to implement meticulous planning and accurate forecasts. These strategic tools are essential for successfully navigating through these periods of high traffic, thus ensuring an adequate response to market solicitations while preserving the quality of service and customer satisfaction.

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Counterfeiting in cosmetics

Combating counterfeiting represents a major and recurrent challenge within the Cosmetic Supply Chain. This issue primarily revolves around two axes.

On one hand, counterfeit products pose a considerable risk to public health. Indeed, these imitations are often manufactured without adherence to safety standards and may contain harmful or lower quality substances. This situation puts consumers at risk, as the use of these products can lead to serious health consequences.

On the other hand, the presence of counterfeits in the market represents a direct threat to the integrity and reputation of authentic brands. Companies invest heavily in developing their image and the quality of their products. Counterfeits, by flooding the market with lower quality items, erode consumer trust and thus harm the brand image of legitimate businesses.

In the face of these challenges, establishing a secure and transparent digital supply chain proves to be the most effective defense strategy. Solutions such as product serialization and real-time environmental monitoring not only allow for precise tracing of each product but also ensure the integrity of the supply chain.

Management of unsold beauty products

According to a study conducted by Avery Dennison, an international company specializing in labeling material manufacturing, the beauty sector exhibits the highest rate of unsold products, amounting to 10.2%.Meticulous management of expiration dates, batches, and the capacity to conduct product recalls is crucial for optimizing the supply chain in the cosmetics universe.

To minimize the volume of expired products and optimize inventory management, it’s imperative that the cosmetics supply chain integrates a product lifecycle management system. This system must not only monitor imminent expiration dates but also adopt a methodical distribution approach based on the First Expired, First Out (FEFO) or First In, First Out (FIFO) principle.This ensures the freshness and stability of stock until its final distribution.

Moreover, an efficient product lifecycle management system is beneficial for beauty brands as it enables them to meet the specific requirements of retailers. Retailers often request that products be delivered well before their expiration date. By systematically structuring this information, such a system ensures compliance with the standards and regulations defined by distribution partners.

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Conclusion

In conclusion, it’s undeniable that the cosmetics industry faces significant challenges within its supply chain, especially in the context of a year that promises to be yet another challenging one for global logistics.

The cosmetics industry, constantly evolving and subject to major challenges, requires a proactive approach to supply chain management. The volatility of trends, the sensitivity of products, and geopolitical instability call for a robust and adaptable solution…

Consider these questions:

  • Do you identify any gaps or blind spots in your supply chain process?
  • Does counterfeiting represent a challenge in your sector, and if so, how do you manage it?
  • Do you actively maintain interactions with your customers to strengthen their connection with your brand?
  • Are you certain about the optimal efficiency of your current supply chain solutions?

Only by identifying these challenges, embracing innovative approaches, and strengthening collaboration within the supply chain can companies overcome these obstacles. Resilience and flexibility emerge as key elements for thriving in this complex landscape. By investing in sustainable solutions, staying attuned to emerging trends, and adopting a proactive approach, players in the cosmetics industry can not only successfully navigate current challenges but also lay solid foundations for a more robust and agile supply chain in the future.

Integrating supply chain solutions, such as Optimix XFR,allows for the automation and optimization of processes, thereby increasing the efficiency and competitiveness of logistics teams. This system, with its modular design and functionalities specific to the cosmetics industry, offers a tailored response to the unique challenges of the sector.

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