Demanding customers and the high-end nature of health, beauty, cosmetics and personal care products make a third-party logistics (3PL) partner who knows the industry a must.
Health and beauty 3PLs have experience distributing, packaging, managing volatile demand, and transporting fragile, expensive, and sometimes regulated products in this space. E-commerce customers and buyers on the retail side have sky-high expectations that make or break a brand’s chances for success.
Category experience is important—but it’s just one of the things to look for in a health and beauty logistics partner.
ODW Logistics operates warehousing, transportation, shipping and every task in between for some of the best-known brands in health and beauty. Here are 10 tips about what to look for in a logistics partner within the health & beauty industry.
1 – A Retail Consolidation Program Can be Key
The biggest savings opportunities for health and beauty brands operating in the wholesale space comes from retail consolidation. This is combining multiple brand orders going to the same retailers or to retailers in the same area in order to build full truck loads for cost savings and other benefits.
Retail consolidation is a prime reason to partner with a 3PL that handles transportation for other health and beauty brands because the 3PL can combine their clients’ freight seamlessly. Cosmetics shipments in particular can be small and are often moved via expensive less-than-truckload (LTL). Retail consolidation enables different brands to combine small loads that are going to the same destinations.
While it may seem counterintuitive to coordinate efforts with competitors, the benefits are significant. Shipping in consolidated truckloads to retailers brings lower rates than shipping LTL. Additionally there are fewer stops than LTL so transit times are faster. The risk of damages and theft with truckload is lower than with LTL because there is less handling from loading and unloading.
Buyers also favor consolidation. Retailers would prefer to have a single delivery to open up additional delivery appointments and reduce complexity during inbound processing.
Retail consolidation will continue to be a must as constraints with drivers continue to grow. When interviewing 3PLs, look for “like customers” and determine if a program like this exists within a provider’s services. A retail consolidation program will create advantages for you to participate in cost savings opportunities while elevating your quality of service.
2 – A 3PL beats a 4PL When It Comes to Relationship & Your Business
Fourth-party logistics (4PL) is a means of leveraging another party’s services based on limitations that your provider may have. Good examples of this are utilizing another distribution provider in a state that your provider may not operate in or leveraging a fulfillment partner’s facility to execute the work while your provider supports you with technology. The limiting factor is that in many cases you are interacting with your intermediary not directly with the group fulfilling or distributing your product.
Ensuring a positive customer experience is crucial in health and beauty. When you outsource fulfillment, your partners need to fully understand they are the face of your brand when it comes to the all-important delivery of their orders.
4PLs put you a further step away from the people filling your orders. That’s only the beginning of potential problems for health and beauty brands who are obsessed about customer service. Data exchange can get delayed or be incorrect. An example of this is that a simple deviation in the format of lot codes can sabotage inventory control.
It’s important that the leaders you are communicating and escalating with are your people. They need to be able to go out and identify solutions and be hands-on with your products.
Responsiveness in a fast-paced industry where customer loyalty can change overnight. That makes it essential to work with a provider who wants the best for your business and is held to the direct standards you’ve agreed to.
While there are some highly successful 4PLs out there today, 3PLs can put hands-on customer service within reach.
3 – IT Is the Foundation and Enabler of Success
IT problems are the number one complaint with prospective health and beauty clients. It’s not surprising because technology enables everything from optimized transportation modes and order visibility to real-time inventory management and invaluable reporting. When these functions fail, brands suffer. Customer expectations continue to grow. If you are unable to get data exchange correct, customers are going to get mixed messages or no communication at all.
Our advice to health and beauty brands who are looking for a strong logistics provider is to look for a 3PL that has resources available, shows a history of success, and can pivot with your brand’s evolution.
Visibility tools are a major component in today’s world. Ask what type of access, what type of visuals, what type of reporting and what type of inventory they handle currently. Find out about their tracking mechanisms and all the components that they can see within the four walls of their distribution center (DC) space without functionally or physically being there.
Look for the best technology solutions for your operation. Help the 3PL understand the residing issues in your business and ask specific questions regarding how a 3PL’s technology will help resolve them. Are they asking you questions about IT and your historical challenges, along with any future changes to be considered? These would be positive indicators of someone who is being thorough and considerate of your brand’s unique challenges.
Ask potential 3PL partners about similar clients that they have within their network already and how they effectively manage those clients’ business. If they are providing recommendations or suggestions, that’s a good sign. It shows they’re leveraging their prior experience to help optimize yours.
Lastly, address practical details. You need to know how a 3PL plans to implement their program. Disruptions are unforgivable offenses for health and beauty buyers in e-commerce and wholesale channels. The right logistics partner in this space will test extensively to ensure a smooth and interruption-free IT integration.
4 – Data Is the Ultimate Influencer in Health and Beauty Logistics
Data in and data out are what help a health and beauty business operate to the highest of magnitudes and remove distraction.
Smooth data integrations among e-commerce platforms, enterprise resource planning (ERP) systems and order management systems (OMS) enable visibility into available stock and order fulfillment as well as network-wide inventory management.
A 3PL’s successful use of and provision of data hinges on what they do with it—in other words their analytics and reporting. In e-commerce, the proof is in the results they can demonstrate in everything from effective forecasting to economical shipping strategies like zone skipping.
On the retail side, regular and reliable data enables optimized transportation decisions regarding order consolidation, route planning, route optimization, and parcel optimization. By accurately understanding wholesale buyers’ habits, health and beauty brands can incentivize them to change their buying behaviors in order to deliver faster and for less money.
Analyzing cost per pound metrics is one way. For example, if you determine that when you increase pallet weight of a certain personal care product by 1,000 pounds, the cost decreases 10%, you can use that data to incentivize retail buyers. You can offer them a program to buy more product which decreases retailers’ transportation costs, touch points and their cost per unit purchased. For brands, the incentive program increases the PO size while reducing overhead and the number of touchpoints.
Furthermore, data from on-time delivery performance claims can also be used by brands to great benefit. Scorecard data demonstrating strong compliance can be used to negotiate stronger relationships with retailers. It’s just one way data points from scorecards can be used as marketing collateral to get better contracts or even establish new relationships with retailers.
Effective use of data is a team effort and a two-way flow. For the fast-paced health and beauty category, brands need a 3PL with processes for collaborative data-based decision-making.
5 – Logistics Need to Be Able to Scale at the Speed of Viral
When your product blows up on TikTok and you get thousands of new orders overnight, you need to deliver. Otherwise you risk turning off a lot of first-time buyers. Your fulfillment needs to be able to pivot and seamlessly scale.
It’s not just viral volume surges you need to anticipate. The peaks in health and beauty can be considerably more concentrated than other industries.
A desirable provider is one that can create solutions to accommodate enormous increases in order volume. The warehouse staff or leadership across their operations needs experience managing large-scale e-commerce orders and flexing warehouse operations. 3PLs experienced in the health and beauty category know the traditional peaks and demands of products. That helps ensure availability of space and trained workers.
When considering 3PLs, ensure providers have industry experience or similar volume demands, can identify solutions to your current challenges, and have the capabilities to grow and scale with your business as a long-term partner.
Forecasting spikes in demand can be challenging; however an experienced 3PL knows the questions to ask and the importance of being on top of promotional calendars or social influencer campaigns. When interviewing prospective 3PLs ask about their planning process and communication standards with other clients they manage.
6 – Look for a Well-Connected Network
The right 3PL gives you warehouses with accessibility to large population centers. A well-connected 3PL has distribution centers in locations that support the best supply chain solution for your current needs and your growth objectives in all the channels.
That could be a single node solution. Take Columbus, our corporate headquarters, for example. The central Ohio region has become a major logistics hub that reaches 46% of the U.S. population within a 10-hour drive.
A multi-node network can place inventory closer to shipping destinations which typically reduces transportation costs and increases shipping speeds. However, there are other important considerations. Adding distribution nodes reduces your ability to leverage fixed assets within facilities. Moving inventory out of existing facilities to new ones affects utilization rates, too. Varying real estate costs across the U.S. also impacts your ROI. And inventory carrying costs can be higher.
A 3PL’s supply chain design process reveals the answers. Health and beauty brands benefit from a process of thorough analysis, design, solutioning and improvement that is data-driven and guided by industry expertise.
Aspects of Successful Network Design
- Identify strategic distribution center location(s)
- Determine the right transportation modes
- Optimize freight to drive speed and cost savings
- Design growth-ready distribution centers that flex to your operations
Look for a 3PL with a proven network design process and an understanding of the way health and beauty brands grow.
7 – Shared Labor Enables Agility
The industry-wide labor shortage affects every shipper, manufacturer and e-tailer. Even when you outsource fulfillment, your 3PL’s challenges are yours. It pays to understand a 3PL’s labor pool as well as their ability to recruit and retain talent—permanent and temporary.
Health and beauty peak season is unique. The labor pool needed to fill e-commerce orders is huge and unique as well. There's a lot of new product that comes and goes in a three-to-six-month timeframe. A two- or three-fold increase in headcount can be required to manage Black Fridays and Christmas launches.
Additionally, there's a unique need to adapt and flex in a very quick fashion in the personal care world because of social media.
3PLs need the ability to tap into a pool of permanent associates to meet the need and they need sources of temporary labor to fill the gaps. Their inside resources and outside connections are your lifeline to fill a surge in orders in a timely manner.
Acquiring bodies and the ability to flex within a pool is only part of the challenge. 3PLs need to demonstrate the ability to manage to processes so that labor can get up and trained in appropriately processing accurate orders. If their workforce predominantly speaks English as a second language, this can be an added challenge.
When interviewing health and beauty logistics providers, it pays to scrutinize their ability to scale labor—and how they do it.
8 – Automation Makes for a Super Supply Chain Model
Even if a 3PL demonstrates the readiness of labor from a shared labor model in a multi-client facility, the availability of workers to handle an unexpected spike in orders is not guaranteed. The order unpredictability of this category poses risk. With automation, a 3PL has a means of looking at historical sales and potentially cutting the tops off of peak spikes. This will depend largely on the size of your business and investment ROI.
Automated fulfillment solutions can scale your operation and improve labor productivity. Partner with your potential provider to understand solution opportunities like autonomous mobile robots, conveyors, automated storage and retrieval systems, and pick-to-light or voice-picking systems.
Costs for automation are typically shared by the client and the 3PL. Experience with automation investments determines both the success of the system and ROI. A 3PL that has “been there” can be a tremendous asset. A 3PL with shared automation can be an even bigger asset.
Make automation part of the discussion with prospective logistics partners. Find out what systems they have that can be shared, or if they feel it’s the right time for you. They may have recommendations for your health and beauty brand and—if applicable—how they structure investments with brands.
9 – Omnichannel in Health and Beauty Logistics Is Unique
These days most new health and beauty brands start out online and then branch out into physical stores and other channels afterwards.
The move brings unique challenges especially when it comes to shipping to big box stores where routing guides and compliance demands create a whole new world of risks and relationships.
A health and beauty 3PL with big box experience is an invaluable partner. As in e-commerce, on time arrival matters. But in the retail environment, you’re also coordinating shipments with massive retailers that give you one-hour windows in order to ship into the facility. Retailers’ requirements range from pallet configurations and specialty labeling to lot code and serial tracking on items and managing expiration dates on items.
The right 3PL knows what big box retailers need. They're looking for packing lists and BOLs, which are at a detail level that allows zero inaccuracies. Additionally, large retailers charge back for mistakes and late deliveries. Chargebacks are costly and can be time-consuming to dispute. Failing to comply with routing guide rules has a relationship cost as well. Retailers favor brands that make their lives easy. It’s important to make a good first impression and maintain a good scorecard.
Not every logistics provider has experience dealing with large retailers. Look for a 3PL who can help you make the step to omnichannel seamlessly and provide the guidance and expertise you need to succeed.
10 – Value-Added Services Make for an Invaluable Logistics Partner
The availability of associates who can perform assembly, kitting, labeling, display construction and more can save the day in so many ways for health and beauty brands.
In e-commerce fulfillment, health and beauty brands often compete for the best unboxing experience on TikTok. Kits, special promos, and new SKUs need to be packed and wrapped to brand standards. That requires experienced and available hands. Shared labor in multi-client warehouses facilitate these tasks.
On the wholesale side, displays, kits and a multitude of labeling-related value-added services are often required to get health and beauty products in stores.
Brands expanding from e-commerce into physical stores often encounter retailers who require SKUs to be changed. That means the item numbers on the products stored within your warehouse need to be converted over to the retailer’s unique item numbers for their network in their UPC labels.
It’s also fairly common for products sold online to lack any UPC code at all. Applying them can be a big undertaking. A 3PL that can rise to the occasion and recommend supplier improvements can make all the difference.
Value-added services fall into a gap between manufacturers and retailers. 3PLs fill the need with available labor and health and beauty expertise. A 3PL’s agility and accuracy satisfy demanding customers who value the delivery experience and retailers who value time savings and dependability.
The agility to perform value-added services fast and well is a key attribute to look for in a potential 3PL partner. With a 3PL’s sizable workforce of shared labor, scalable warehouse space and automation your brand can meet a wide range of unexpected needs.
ODW Logistics Delivers Attractive Results for Health and Beauty Brands
In a category characterized by stunning growth, ODW Logistics’ clients experience spectacular results on their way to the top. The opportunities for supply chain gains are out there—with a 3PL that knows where to look. Read this case study to see what’s possible and talk to the ODW Logistics team about your supply chain makeover.
ODW LogisticsSince 1971, we’ve been providing warehousing, distribution, and transportation solutions for hundreds of brands. We operate as an extension of your business to control costs throughout your supply chain that deliver you a competitive advantage over your competition.
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