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Speed to Market: Becoming Lean Through Outsourcing

By: Dave Becker
Posted: June 3, 2010, from the June 2010 issue of GCI Magazine.

Operating in the beauty industry is more challenging than ever. Increasing product obsolescence, tighter launch deadlines and shrinking profit margins are forcing brands to look for many ways to reduce the cost and time involved in manufacturing. Add the pressures of sustainability demands and a struggling global economy, and a lean supply chain becomes imperative to success.

Lean manufacturing was forged by the auto industry. When Henry Ford developed the assembly line at the beginning of the 20th century to produce his cars in a continuous flow, he set off a revolution that would change the manufacturing world forever. For decades, it was believed there was no more efficient way to mass produce than with the assembly line. Then Toyota introduced “Just in Time.” Hidden from the world for decades in a recovering, post-war Japan, Toyota disassembled Ford’s assembly line and created new principles such as reduced setup and changeover times, “turn and talk” work cells, quality circles and integrated flexibility. In the 1980s, Toyota’s lean production system caught the attention of manufacturers throughout the world. By the time “lean manufacturing” had become the new industry buzzword, Toyota had become the largest auto maker in the world. It’s worth noting that Toyota’s recent quality issues represent flaws in both design and management, but in no way undermine the value of lean manufacturing principles. Despite recent recalls, the Toyota Production System is still recognized as the most efficient manufacturing model in the world.

Today, lean manufacturing principles are being applied to every industry, including beauty. While most companies tend to focus on reducing inventory, lean manufacturing, in its truest sense, involves streamlining the entire supply chain, eliminating all unnecessary “touches” to become as efficient as possible. The goal is to create a continuous, responsive manufacturing flow that can produce to demand in the shortest time for the least cost. Beauty brand owners that have effectively implemented lean supply chain programs are not only more profitable, they become more successful overall. Product launches are smoother, quality is increased, and waste is nearly eliminated.

Incorporating Outsourcing

Most companies incorporate some level of outsourcing, which is typically employed to save costs. Very few companies are in a position to produce everything in-house, and the financial investment to do so would be unfeasible. But outsourcing can provide much more than mere cost savings. If executed correctly, it can also save time, foster creativity, improve quality and make a company more flexible. In short, outsourcing has the potential to make a company more lean.