Building and operating a supply chain is often difficult, regardless of the industry you’re operating in. Regulations can be restrictive, research and development and production costs can be high, and it can be challenging to find reliable low-cost resources, products, and packaging materials. But opportunities are endless.
Example, the beauty industry rakes in over $445 billion dollars a year, according to Forbes. The supply chain cosmetics industry is growing and innovating. Consumers spent almost six billion dollars in the 2016 holiday season on contouring kits, lip stains, and color-matched foundations. Here are some basic pointers to help make building and operating a commercial supply chain a little more straightforward.
A successful commercial supply chain means balancing a myriad of things: forecasting, production methods, transportation, passing regulation, and logistics networks, for example. Take a methodical approach when building your plan, ensuring your supply chain aligns with the goals of your business strategy in both the short term and long term.
Be prepared to make adaptations over time, and anticipate making necessary changes in order to support the business upstream. You may feel it’s worth bringing in expert consultants to assist you with this (a pointer discussed below), given how crucial the planning stage is.
2. Select your supplier carefully
Carefully selecting your supplier(s) is the only way to ensure the buyers and users of your products actually like what you’re offering, and continue to place more orders in future. You’ll need to consider quality, reliability, value for money, regulation and compliance, among other factors, which means undertaking extensive strategic research.
3. Carefully choose third parties for logistics, distribution, and manufacturing
Next, carefully consider which third parties you’re going to use for logistical support, such as storage and inventory-keeping, as well as distribution and manufacturing. The factors you’re going to need to pay close attention to within these areas will depend on the industry you’re operating in, but again, you’ll need to feel confident that each party is reliable, trustworthy and acting in compliance with the rules and regulations you’re subject to. Don’t be tempted to choose the cheapest option as it can often turn out to be poor value for money, and be sure to read up on reviews and testimonials from the past and current clients.
4. Plan for regulatory, legal and tax considerations
Next, you’ll need to put plans in place for regulatory, legal and tax considerations. This will already be an extensive task if you plan on simply supplying products within your own country, but if you’re building a global commercial supply chain, you’ll also need to know about compliance (as well as legal and tax considerations) for the countries you’re selling in. Seek specialist support for this if you don’t have knowledge or expertise in-house, and be prepared to invest money into this aspect of planning and building a supply chain very early on.
The supply chain cosmetics industry is a great example of the move to a demand market that most supply chains are experiencing. Product development is completely driven by consumer demand and quickly changing trends.
5. Use a consultant if necessary
A consultant can support you with all of the things above, or even stand in as an interim leader in any of these fields – including procurement and compliance, if necessary – provided you choose the right specialist.
If you’re in the biotech or pharmaceutical industry, for example, you could call upon the services of a consulting firm such as Alacrita if you need the support of a third party with specialist expertise, to assist you with building and operating your commercial supply chains.
There are numerous consulting firms on-hand for every industry imaginable, so seek out the most highly recommended experts in your field: although it requires investment on your company’s part, you’ll easily make your money back (and more) as you’ll be benefitting from the knowledge and commercial pragmatism of an expert consultant.