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The State of the Cosmetics Industry Supply Chain

4 min read
Jul 29, 2022 9:00:00 AM

The global cosmetics supply chain is in a state of crisis. Although cosmetics are still a $500 billion global industry, the makeup biz has taken a hit in terms of materials, shipping, and talent retention. Pandemic lockdowns in China have led to a lack of packaging materials. Russian occupation of the Ukraine, on the other hand, has led to a shortage of key crops used to make cosmetics, like alcohol, beets, and sunflower oil.

Staffing shortages have also led to significant delays at shipping ports. So, even when a company has addressed their cosmetic supply chain vulnerabilities, there can still be significant holdups at ports and customs. The result? Missing products, empty shelves, price hikes, and dissatisfied customers.

A storied history cannot protect brands. Case in point: cosmetics legend Revlon filed for Chapter 11 bankruptcy protection this year. But your cosmetics company doesn’t have to go down like that. Let’s take a look at the supply chains of three of the most popular cosmetics companies in the U.S., the challenges they faced, how they resolved them and what you can learn from their mistakes.

LUSH cosmetics supply chain issues

You may think that LUSH cosmetics would be immune to the supply chain crisis due to the extreme transparency of their operations. A vegetarian, minimalist company with packaging that boasts stickers with a cartoon drawing of the person that made your products can’t possibly fall prey to cosmetics supply chain issues, right? Wrong.

In actuality, LUSH made headlines in 2021 for empty shelves and a sparse online catalog. A shortage of production materials –– essential oils, to be specific –– had LUSH cosmetics’ supply chain experiencing delays for the greater part of last year. LUSH cosmetics keeps inventory small to prevent turnover of organic products. The issue that this caused for LUSH is that the company didn’t have enough backstock to fill in the gaps when production delays arose.

LUSH’s North American branch diligently responded to customer complaints about understocks on Twitter. They managed to navigate the global supply chain crisis through transparency and quickly responding to every customer complaint. Flash forward to 2022… the company’s website and store shelves are once again fully stocked and ready to rock.

Kylie Cosmetics supply chain issues

Society has reached an impetus where we can no longer discuss the cosmetics industry supply chain without also talking about one of the Kardashians. However, despite initial skepticism, the vegan cosmetic brand quickly gained a foothold with next gen consumers. Consumer demand for Kylie’s lip kits regularly exceeds the brand’s production capabilities, leading to the social media buzz that makes limited edition product drops the sensation they are today. 

It’s hard to find information about the Kylie Cosmetics supply chain, since the brand’s famous founder dominates headlines. So, we had to do some sleuthing. Unlike LUSH, a fellow vegan cosmetics powerhouse, Kylie Cosmetics Supply Chain issues weren’t due to imported ingredient shortages. They were due to internal error. The main issue was in the packaging. Packaging problems plagued Kylie Cosmetics since long before the word “coronavirus” was on anyone’s radar. Customers were receiving empty lip kit boxes in the mail all the way back in 2016. And YouTube sensation Jeffree Star called out Kylie publicly for sending customers lip products with bent wands that were unusable.

However,  Kylie Jenner’s social media team quickly responded to customer complaints. The celebrity spearhead also released a video apologizing for the issues, which quickly appeased the company’s core customer demographic. It’s easy to be hard on a brand with a founder that’s constantly in the public eye. But the brand pivoted so well after their initial mistakes that even coronavirus didn’t cause additional supply chain issues for Kylie Cosmetics.

MAC cosmetics supply chain issues

MAC cosmetics is known for its forward thinking collaborations. MAC recently made headlines for a savvy collab with the tv show Stranger Things on a unique color palette. But you can’t really talk about MAC nowadays without also talking about its parent company, Estee Lauder. And it’s in looking at Estee Lauder, not MAC’s, supply chain issues that you can get a glimpse into how the pandemic impacted the brand. 

MAC has a huge advantage when it comes to supply chain management: Estee Lauder has been MAC’s parent company since 1994. The Lauder cosmetics conglomerate recently reduced its sales forecast for 2022, citing Covid restrictions in “Eastern markets and Europe” as the cause. What’s notable here, however, is that MAC sales specifically were negatively impacted, whereas Clinique and La Mer are still doing just fine. 

The reason, then, isn’t just the fact that many consumers are on lockdown. It could also be that the demand for color cosmetics that aren’t cruelty-free is taking a backseat now that Gen Z is coming into buying power. On the upside, MAC cosmetics was one of the first companies to offer online appointments during coronavirus lockdowns, and 70% of the customers that completed a virtual appointment then went on to buy at a physical store. Ultimately, being a part of the Estee Lauder conglomerate meant that MAC didn’t face the same supply chain vulnerabilities as many of its competitors. But that still didn’t stop MAC from raising prices to stay ahead of the curve. 

Prevention and troubleshooting in the cosmetics supply chain

Most cosmetic companies launch products seasonally, which means time to market is still a relevant consideration. But it’s not just imported materials, packaging, and pricing that is being impacted by cosmetics supply chain challenges. Supply chain issues are also prevalent among cosmetics companies that source locally. Whether it’s due to worker callouts or hold ups at shipping ports, the cosmetics industry is still facing a bevy of supply chain issues. 

Cosmetics supply chains need to have strong supplier relationships and total visibility to remain competitive. There’s only one product lifecycle management solution that gives cosmetics companies visibility along every single touchpoint in a product’s journey. While most cosmetics PLMs only manage communications among internal associates, Surefront’s PLM lets companies interface with external suppliers on a singular visual interface. Retailers can select the data they want to share with various vendors and they can update the solution in seconds.With Surefront, fewer errors occur and it takes a fraction of the time to address supply chain management issues when they arise. 

It’s time we got better acquainted. Book a custom demo with one of our Product Lifecycle Management experts today!

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