January 18, 2018
5 Things to Consider as You Outsource Your Cosmetics Supply Chain
Since the 1990s, the cosmetics industry has evolved dramatically, as the demand for newer and faster products has increased exponentially.
This evolution can be tied to a variety of factors, including, but not limited to, the increasing speed to market of fashion products, companies’ improved targeted branding, renowned online influencers and social media networks, which seamlessly connect celebrities, product gurus and consumers in a matter of seconds.
To stay ahead of the constant changes and deliver products to consumers faster, manufacturers can leverage third party logistics (3PL) providers to build a competitive advantage in their cosmetics supply chain. If you’re considering a potential partnership with a 3PL, keep these 5 key factors in mind for long-term success.
There are few industries that tend to fluctuate as much as the cosmetics industry, particularly with regards to product releases. After all, the business is seasonal, as new, innovative collections are introduced nearly every quarter. And consumers are not only accepting of these changes—they prefer them as they’re motivated by the ever-changing recommendations of television, YouTube and social media beauty stars.
Therefore, 3PLs must be flexible about product distribution via brick-and-mortar stores, online merchants and other outlets, as the proper amount of products should be available at the right time and according to the outlet in which they’re going to be distributed through.
Such distribution is difficult to predict though, as consumer preferences are flexible and heavily influenced by external factors. 3PLs must be able to scale with the consumer demand and have the right labor deployment strategy and technology to manage the cosmetics supply chain efficiently and effectively.
In addition, 3PLs must also consider the commonalities of SKU proliferation, a trend that will likely only continue to rise as consumer demand for product variations and delivery speeds increase. Oftentimes, an expansion in SKUs is directly tied to inventory that’s slower moving than originally predicted (usually due to fluctuating trends in consumer demands). This can lead distribution centers to purchase or lease space for the inventory, use more equipment to move products and hire additional employees (or expand current employees’ hours) to help transfer the goods.
To reduce the likelihood of SKU proliferation, 3PLs should help manufacturers forecast demand more accurately, eliminate less-popular units sooner and become more engaged with consumers’ preferences, potentially identifying them months in advance. In doing so, manufacturers will ship the right products more accurately (on a more frequent basis) since there will likely be less variations in product groupings.
With regards to adaptability, the importance of compliance can’t be understated. Not only do requirements concerning labeling, ingredients, temperature control and shipment volume vary from country to country, but they also often change regularly.
3PLs must respond to these variations in regulations accordingly—through continuous monitoring and regular contact with retail partners to ensure the correct products are delivered quickly and efficiently.
“Just as often as consumers’ tastes seem to change, so do regulations,” adds ODW Logistics’ Carl W. Neverman (ODW Logistics' Region VP – Client Solutions). “It’s critical to stay on top of regulations and retail compliance to ensure flawless execution with our clients.”
3. Reverse Logistics
The significance of helping consumers ship products back to you shouldn’t be overlooked. In fact, it can be just as important as shipping the products to them in the first place. After all, consumers want the process to be easy and you want a partner that can help you manage it more effectively.
By making returns a simple process for consumers, you can boost loyalty and impact your bottom line. Not to mention, a comprehensive inspection process can speed up the restocking process. If you repair the products, you can lower the cost of returns and maintain your consumers’ satisfaction.
Should repairing the products not be an option, your 3PL partner can implement a recycling or disposal process to help offset the cost of returns or donate products to worthy causes.
As a means of increasing transparency into your cosmetics supply chain, while also improving the overall flow of the goods from Point A to Point B, a 3PL partner should share how they will deliver real-time visibility.
At the front-end of the supply chain, it’s helpful to have clarity around inbound ocean product and drayage to mitigate any potential issues downstream.
Furthermore, a Tier-1 warehouse management system (HighJump, Manhattan, JDA) can provide a broader and more-customizable assortment of inventory application needs.
At the same time, a transportation management system (3GTMS, MercuryGate, TMW) can leverage optimization tools to ensure you’re shipping your products as efficiently possible, while also meeting Must Arrive by Dates (MABD) and driving cost savings.
As you receive full visibility, you want to also ensure these tools seamlessly integrate with a customer portal that delivers you up-to-the-minute KPIs, reporting, tracking and shipment notifications.
5. Talent Depth
To overcome the challenges of adaptability, compliance, reverse logistics and visibility, the depth of the 3PLs’ staff and experience levels remains a critical factor to a successful partnership. Ensure that the right people, with the right experience, are in the right positions.
Furthermore, clear communication, forecasting and planning must always be in the forefront to ensure objectives are aligned and key milestones achieved. “Patience, persistence and perseverance are also necessary,” explains Neverman.“ 3PLs must be able to find ways to succeed in spite of all obstacles, be flexible and meet the client’s demands.”
Above all, you want your 3PL partner to be a true extension of your business with matching cultures, similar values and corporate objectives to ensure a solid business fit.