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Supply Chain: Rapid Logistics Ramp Up to Maximize Profits

By: Sum-Sum Chan
Posted: February 27, 2009, from the March 2009 issue of GCI Magazine.

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As the beauty industry adapts to the continued consumer shift toward online sales, “to-consumer” delivery methods, especially in direct selling, have had to adapt as well. This changes supply chain requirements to include discount rates on high volume parcel and the ability to integrate directly to an e-commerce ordering system. Even if you currently only ship to the retailer, inquire on your provider’s parcel buying power to anticipate future changes. A high-level provider will have no problem integrating a direct ordering system of fulfillment.

Perfumes can also be a unique situation in beauty logistics, and a unique set of considerations must be accounted for. Strong smelling fragrance essences must retain, not leak, their scents. There is the possibility of cross-contamination when disparate scents are warehoused in close proximity. On documented rare occasions, strong scents clustered in high concentration have been known to negatively impact a warehouse staff’s performance. So, it is best to work with a provider with a proven track record in handling fragranced goods.

Combat Fuel Costs Through Consolidation Programs

As you know, fuel costs adversely affect beauty buys. Add that to a bad economy and the industry is witnessing a spending freeze on luxury and beauty items. This is the time to snag those extra pennies through such measures as holding a leaner inventory and depending on a reactive system of replenishment. Eliminating excess consumption of fuel would also enhance the bottom line as well as integrate sustainability practices.

Retailer-driven consolidation programs, offered by a number of logistics providers, are the best ways for mid-size to large businesses to hold a lean inventory and save on transportation costs. While other types of consolidation rely on timing and depend on outside orders, retailer-driven consolidation programs pool a group of manufacturers headed to the same retailer into one single purchase order, maximizing each truckload. By combining orders, the logistics provider can then deliver a full truckload headed to a single distribution center rather than shipping multiple partially loaded trucks, thereby reducing costs and delivery times.

The Beauty of Technology

The ideal logistics provider will deliver full supply chain management with its services and support team yet still allow you to drive the planning through a totally visible technology system. Many top providers have moved to a Web-based system portal that allows companies to log on from anywhere in the world to review their supply chain. This includes the essential capability to place orders, track inbounds and outbounds, and snapshot inventory. Higher level systems will be more reactive to your needs and provide alerts on out of stock products. More tech-savvy providers will give you the control to program e-mail alerts so that you are notified when a self-determined shortage threshold has been reached. These notices allow sufficient reaction time to surges in demand and seamless replenishment with lean inventory.