The State of the Cosmetics Industry Supply Chain

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The global cosmetics supply chain is in a state of crisis. Although cosmetics are still a $500 billion global industry, the beauty supply chain has taken a hit in terms of raw materials, shipping, and talent retention. Pandemic lockdowns in China have led to a lack of packaging materials. Russia's invasion 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. Despite having more advanced technology to manage supply chains than ever before, modern cosmetics logistics bring bevy of unprecedented challenges.

Supply chain management alone isn't the answer to the supply chain crisis plaguing the beauty industry -- beauty companies are also facing a global talent crisis. Staffing shortages have 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 consumers.

A storied history cannot protect brands' supply chains. Case in point: beauty industry 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 beauty brands 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 vegetarian beauty brands like LUSH cosmetics would be immune to the supply chain crisis due to the extreme transparency of their operations. A minimalist company with unique products and sustainable packaging that boasts cartoon drawings of the person that made your products can't possibly fall prey to cosmetics supply chain issues, right? Wrong. A lack of both raw materials and stored inventory led to Lush facing a surge of dissatisfied end consumers at the advent of the pandemic.

Customers demand for LUSH products never wavered, but Lush couldn't produce and ship orders fast enough to meet it. LUSH made headlines in 2021 for logistics challenges including empty shelves and a sparse online catalog. A shortage of raw materials –– essential oils, to be specific –– had LUSH cosmetics' supply chain experiencing delays for the greater part of last year. LUSH brands had to consider whether to reformulate products, or deal with a bevy of dissatisfied consumers that couldn't access the individual products they need for their beauty and skin care routines. LUSH cosmetics keeps inventory small to prevent turnover of organic products. This caused a logistics issue for LUSH: the company didn't have enough backstock to fill in the gaps when unique challenges 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. Like other major cosmetics brands in this day and age, however, Kylie Cosmetics has faced its own supply chain issues.

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. Consumers desire more information than ever about celebrity founders in the cosmetic industry. So, when faced with two major issues in their beauty supply chain, Kylie's team knew exactly how to utilize her fame as a competitive advantage. The celebrity spearhead swiftly 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 and for being a first responder to cosmetic trends. 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. Lauder is not alone in facing challenges sourcing materials from trading partners and suppliers in different regions. What's notable here, however, is that MAC sales specifically were negatively impacted, whereas Clinique and La Mer are still doing just fine. Since other Lauder brands are still excelling, it wasn't just long distances and transit times impacting customers demand for MAC's finished products.

The reason, then, isn't just the fact that many consumers are on lockdown. It could also be that the demand for product lines that aren't cruelty-free is taking a backseat now that Gen Z is coming into buying power. Customers expectations are increasingly focused on skin care and cosmetics inventory with cruelty free and vegan options. On the upside, MAC cosmetics was one of the first cosmetic 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 monitoring shipment conditions, then raising prices to stay ahead of the curve. 

Prevention and troubleshooting in the cosmetics supply chain

Most cosmetic brands launch products seasonally, which means time to market is still a relevant consideration for beauty products. But it's not just imported materials, product spoilage, packaging, and pricing that is being impacted by cosmetics supply chain challenges. Issues in supply chains 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 real time visibility to remain competitive. There's only one unified product collaboration platform 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 functionality 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 their information in seconds. With Surefront, fewer errors occur and it takes a fraction of the time to address supply chain management issues when they arise. 

You don’t want your data to be siloed. Your company’s CRM, PIM and PLM solutions shouldn’t operate in a vacuum, either. Surefront is a Unified Product Collaboration Platform to power growth and ROI. Our patented PIM, CRM, and PLM solutions streamline the omni channel sales, merchandising and product development processes. By combining these essential functionalities, Surefront creates a single source of truth throughout your product lifecycle, sales and listing processes. 

The results? Up to 150% more revenue per employee and a 40% shorter product development cycle is just the beginning. Try our 10x ROI calculator to see your company’s potential profits. Or, skip the noise and book a custom demo with one of our unified product collaboration management experts today. The retail industry evolves quickly and has a lot of moving parts. We do all of the research, so you don’t have to. Stay ahead of market fluctuations, trends and new features by subscribing to our Unified Product Collaboration Management Blog.