The Supply Chain in the Beauty Industry

My interest in skincare has always acted as a trigger in my life, it has always pushed me to discover what is behind this world and what are these companies selling.

The main problem in this field is the constant change of demand which means that what today is the most sold item tomorrow might be at the bottom of the shelf unsold. Often celebrities are used and abused for this purpose because just their presence might increase a lot the demand of a certain good.

The main purpose of these brands is to be able to satisfy the demand when is high, it requires punctual and reliable transportation as well as good storage and fast distribution. Paul Cali, director of North American logistics of the skincare company Avon, in New York, underlines how logistic play a major role in driving the customer satisfaction, it is a competitive advantage and the company need to make the most out of it.

Beiersdorf is one of the most important companies in the beauty industry with multiple brands such as Nivea, Labello Eucherin and Hansaplast sell all over the world. The headquarters are in Hamburg, Deutschland, but it works pretty much all over the world since almost 130 years. The company has circa 17.600 employees and more than 170 affiliates in the world. One of their key point is that they develop skincare products specifically tailored to regional needs in order to make the customer feel that they are local.

Mary Margaret York is the manager Procurement of raw materials in Beiersdorf and in the video she explains how and why the company divides the supply chain into 4 categories:

  1. Plan = which is the idea generation
  2. Source = the rough materials used in products
  3. Make = where are they producing, how they are going to do it and to what market are they going to sell it
  4. Delivering = plan the transportation and delivery across the world

Efficient supply chain management in such context is difficult. Warehouse management is another important aspect of this industry that requires particular attention since most of the product are perishable or need refrigeration.

These goods are also often sold into a variety of retail streams, which means that larger companies, like Beiersdorf, often target 4 different markets:

  1. Consumer products to mass retailers
  2. Beauty suppliers to salons and professional product groups
  3. Luxury brands to department stores
  4. Dermatological products to dermatologist

This is just a very amount of what is behind this huge market and all the work the companies need to face.

Sources:

  1. http://www.inboundlogistics.com/cms/article/cosmetics-logistics-the-beauty-of-an-optimized-supply-chain/
  2. https://www.youtube.com/watch?v=XEWsgIUiHyo
  3. http://www.beiersdorf.com/about-us/our-profile/strategy
  4. http://www.annualreport2015.beiersdorf.com
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