While the global beauty and personal care industry is projected to reach over 600 billion U.S. dollars in value by 2026, and the negative impacts of a global pandemic are farther behind us— supply chain management issues and challenges are still visible in our rearview (compact) mirror.
Results of our recent survey on The Current State of Supply Chain, which surveyed more than 600 consumer brands with revenues between $15 million and $750 million about the top supply chain challenges they plan to face in 2024, show that brands anticipate that they will continue to face enduring supply chain challenges like material shortages and labor shortages, rising fulfillment and shipping costs, and more.
Beauty and personal brands must adapt their processes, tools, and overall supply chain management if they want to meet increasing demand and drive business success despite these challenges.
So, what are the top supply chain challenges for beauty and personal care brands, and how can they overcome them?
What Are the 6 Biggest Supply Chain Challenges for Beauty and Personal Brands?
1. Raw Material and Packaging Shortages
Let’s dive in with the first challenge: shortages.
Cosmetic raw materials like oils and alcohols, citric acid, and glycerin, as well as colors, fragrances, and emollients, are vital in product formulations for beauty and personal care products. Beauty and personal care brands often face shortages in packaging materials and components like bottles, jars, pumps, and caps.
When global conflicts or environmental changes lead to higher costs and shortages of raw ingredients, for example, many brands are forced to completely reformulate products to maintain positive cash flow.
Reformulating products is not only costly. It also means brands often have to adjust launch calendars with retailers. As a result, many brands take a hit to their bottom line and are forced to raise prices for their products to adapt.
Couple this with the rising cost of living, which means many consumers will stop purchasing even their most used beauty and personal care products as soon as prices increase. This means maintaining profitability becomes even more challenging.
How To Overcome Raw Material and Packaging Shortages
While environmental impacts and geopolitical conflicts remain largely out of anyone’s personal control, beauty and personal care supply chain teams can prevent disruptions by diversifying their manufacturers. Other strategies include:
- Diversifying your supplier source.
- Improving supplier collaboration.
- Focusing on inventory management to identify potential shortages in advance.
- Monitoring trends and integrating supply chain automation to track POs.
2. Demand Volatility and Seasonality
The beauty and personal care industry experiences significant fluctuations in consumer demand due to seasonal trends, promotional activities, and changing consumer preferences.
Of course, social media also enormously influences the demand for beauty and personal care items.
A glowing recommendation or, conversely, a bad review from just one famous influencer that goes viral can send products flying off the shelves in seconds— or leave them gathering dust in a warehouse for weeks.
This makes it more difficult for brands to accurately forecast demand and ensure that products remain in stock and ready to ship across multiple channels.
How to Overcome Demand Volatility and Seasonality:
To address this challenge, beauty brands should leverage advanced analytics and consumer insights to forecast demand accurately. They must also collaborate closely with retailers and distributors to align production with demand signals and implement agile manufacturing and inventory management processes to respond quickly to changing market conditions.
They also need to consider other factors that can complicate the accuracy of demand forecasts, including:
- Seasonal swings in supply and demand
- Adaptation to competitor activities
- Changes in consumer expectations
- Changes in supply channel and vendor requirements
To simplify and drive more accurate demand forecasting, beauty and personal care brands also need:
- Clean, reliable data
- Actionable input from affected stakeholders
- Robust analytics
- Flexibility to find and correct potential errors and change course as needed
- Strong collaboration with supply chain partners
A supply chain management solution like Anvyl helps beauty and personal care brands track historical data all in one place, which provides the most accurate information and data for future demand forecasting. Supply chain management solutions also help beauty and personal care brands make better-informed decisions across other areas of their supply chain operations, from procurement to fulfillment.
3. Omnichannel Fulfillment
Many beauty and personal brands sell across eCommerce, direct-to-consumer (DTC), and brick-and-mortar channels.
This presents unique opportunities and challenges for omnichannel fulfillment.
Beauty and personal care brands need to fulfill orders quickly and cost-effectively, regardless of whether they originate from traditional retailers, e-commerce platforms, or DTC channels.
However, this can be difficult when multiple fulfillment partners or third-party logistics (3PL) providers exist.
How to Overcome Omnichannel Fulfillment Challenges:
Supply chain teams should prioritize investments in fulfillment infrastructure, inventory visibility, and purchase order management systems to ensure seamless order processing and delivery.
This is likely why more and more beauty and personal care brands are beginning to recognize the value of investing in technology that streamlines and automates their fulfillment processes.
Our recent State of Supply Chain survey found that more than a third of brands surveyed plan to implement more cost-effective routing, carrier selection, and freight consolidation strategies to drive more efficient logistics and transportation.
How? 40% of brands surveyed say they plan to invest in new technologies that streamline communication and drive better collaboration with suppliers and fulfillment teams.
Additionally, brands can leverage data analytics and machine learning algorithms to optimize inventory allocation and order routing, minimizing shipping costs and transit times.
4. Regulatory Compliance and Product Safety
The beauty and personal care industry is subject to stringent regulatory requirements and product safety standards, which can vary significantly across different markets. Many beauty and personal care products also have particular transportation requirements to maintain consistent temperatures or consistency, for example.
How to Overcome Compliance and Product Safety Challenges:
To address this challenge, beauty brands should conduct regular supplier audits and audits of manufacturing facilities to ensure they consistently meet changing regulations and follow best manufacturing practices.
Supplier audits also help brands identify potential risk areas, improve supplier relationships, and increase customer satisfaction.
5. Sustainability and Ethical Sourcing
Consumers increasingly demand greater transparency and accountability from beauty brands regarding their sustainability practices and ethical sourcing initiatives.
As a result, more brands are focusing more on sustainability in their supply chain.
Brands must ensure that their supply chains are environmentally responsible, ethically sourced, and socially sustainable now more than ever.
Increasing demand for products marketed as clean beauty also means that beauty and personal brands must ensure that they are sourcing ingredients from certified suppliers, implementing sustainable packaging solutions, and reducing carbon emissions throughout their supply chain.
How to Overcome Sustainability and Ethical Sourcing Challenges:
Beauty and personal care brands can adopt sustainable sourcing practices to address this challenge and collaborate with suppliers and industry partners to reduce their carbon footprint. This also includes evaluating new and existing providers and looking at sustainable third-party logistic partners and suppliers.
Another way brands can increase sustainability and ethical sourcing? By bringing on supply chain management tools that increase overall supply chain visibility.
6. Lack of Supply Chain Visibility
Supply chain visibility is crucial for beauty and personal care brands to know when goods will reach their destination and when they will be available to move on to the next step.
Complete visibility into the supply chain is also the only way brands can properly manage costs and other resources within their supply chain and ensure that each step of the PO process runs efficiently and effectively.
Where is visibility most important? Brands included in our recent report identified inventory management, purchase order management, and supplier communication as some of the top areas in which they need more visibility in their supply chain.
How to Overcome Lack of Supply Chain Visibility
To improve supply chain visibility, beauty and personal brands should first analyze their current supply chain and identify the pain points where bottlenecks occur. This helps to prioritize remedies for these areas based on what is most important to meeting the company’s goals and objectives.
More importantly, brands need to eliminate siloed technology systems that don’t work well together and instead implement full-featured supply chain management technology that provides real-time access to critical information for quicker, more informed decision-making.
Overcome Supply Chain Challenges With Anvyl
Anvyl connects global supply chain teams, systems, and suppliers to improve collaboration and decision-making from pre-PO issuance through to warehouse delivery— within a single system.
Our flexible tool facilitates real-time collaboration, automates key tasks and processes, and empowers teams with deeper insights that allow brandsthem to make smarter decisions faster.
Schedule a demo to learn more about how Anvyl can help your beauty or personal brand overcome today’s supply chain challenges — and ensure your products reach consumers on time, on budget, every time.
