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Health & Beauty Order Fulfillment: Getting the Details Right Boosts Customer Loyalty
Think of the range of consumer health & beauty products — skincare to cosmetics, hair care to oral care, etc. — and within each, an endless variety...
6 min read
The health and beauty industry is a highly competitive market, with a huge range of products, endless variations within SKUs (color, size, style, quantity, quality, etc.), and an extremely diverse audience across every conceivable demographic. Health and beauty order fulfillment, then, is an extremely complex undertaking with exacting standards, often including adherence to strict health and safety regulations.
From demand forecasting on the front end to logistics and distribution on the back end, and everything in between, getting health and beauty order fulfillment right is crucial for achieving customer satisfaction. This includes key elements such as maintaining product quality and improving operational efficiency. Here are eight key tactics that will help make your fulfillment operations a success and enhance customer loyalty in both B2B and DTC/e-commerce.
Demand Forecasting and Inventory Management
Grooming and cosmetics products, especially gift sets and luxury items, see significant order spikes during holidays and heavy promotional campaigns.
Accurate demand forecasting is challenging but essential for maintaining customer satisfaction and adequate stock levels. Historical sales, market trends, competitor moves, and real-time POS data are analyzed to predict demand patterns. Flexible production and procurement plans are necessary in order to adjust inventory levels in sync with both forecast and opportunistic demand.
Balancing inventory levels to meet demand without overstocking is a tricky proposition, especially with such a diverse range of products. Higher holding costs, including storage, insurance, and product obsolescence are all downside risks. On the other end, stockouts lead to missed sales and dissatisfied customers.
Inventory management techniques such as Just-In-Time (JIT) and Economic Order Quantity (EOQ) are tools that help avoid excess operations costs. Inventory management software enhances inventory visibility and helps drive smarter decisions. It’s also important to regularly review and adjust inventory policies based on sales data and market trends.
Supplier Reliability and Quality Control
Ensuring consistent product quality is paramount in health and beauty fulfillment. Any variability in raw materials can impact quality, adversely affecting brand reputation and customer trust. This is why it’s essential to maintain high quality standards with all suppliers.
Establishing strong relationships with reliable suppliers and conducting regular audits can help in ensuring that quality standards are consistently met. Implementing stringent quality control processes and setting clear expectations for suppliers also mitigates risks associated with variability in raw materials.
Long or uncertain supplier lead times disrupt production and order fulfillment schedules. This is especially damaging during peak periods with high demand. To mitigate risk, maintain adequate safety stock levels, and negotiate better terms with suppliers, create a diversified supplier base.
A supplier management system can also help with tracking lead times and supplier on-time performance, allowing you to make proactive adjustments to production and inventory plans. If you’re looking to outsource your fulfillment operations, a trusted 3PL partner can handle many aspects of supplier relations, especially in situations requiring emergency shipments.
Production Scheduling
Scheduling production to meet demand variance while maximizing capacity utilization is crucial for maintaining efficient operations. Capacity planning matches production with demand forecasts for optimized throughput.
Capacity planning tools can analyze demand patterns, production capabilities, and resource availability, creating flexible schedules that can be adjusted as orders fluctuate. Regular maintenance and upgrades of production equipment prevent bottlenecks and improve capacity utilization.
Minimizing downtime and production delays due to equipment failures or supply shortages is essential for maintaining a smooth production process. Implementing preventive maintenance programs can help in identifying and addressing potential issues before they cause significant disruptions.
Maintaining a buffer stock of critical components and raw materials can also prevent delays caused by supply shortages. Employing lean manufacturing techniques and continuous improvement processes can further enhance production efficiency and reduce downtime.
Warehouse Management
Efficiently utilizing warehouse space to store a wide range of products, especially with varying sizes and packaging requirements, is essential for optimizing operations. Poor space utilization can lead to increased handling times and higher storage costs.
Implementing warehouse management systems (WMS) can help in optimizing space utilization by providing real-time visibility into inventory locations and facilitating efficient storage practices. Using vertical storage solutions and reorganizing the layout to minimize movement can also enhance space utilization.
Maintaining high levels of picking/packing accuracy reduces costly order errors and rejection based on noncompliance with retail guidelines. This leads to lost customers and increased costs from returns, stocking, and storage.
Solutions include scanning, automated picking systems, engineered processes and SOPs, and a modern WMS. Regular training for warehouse associates and rigorous quality control checks at various stages of the fulfillment process also help reduce errors.
Health and beauty products often require some level of kitting and assembly of component parts into a single new SKU. This is a highly specialized capability that can quickly become labor- and cost-intensive for a brand. An experienced third-party logistics provider can bring engineered standards and lean processes that reduce labor kitting and assembly labor costs while increasing productivity.
Shipping and Distribution
Balancing cost-effective shipping with the need for timely delivery is critical in both B2B and DTC health and beauty order fulfillment. Shipping costs are usually the highest operations expense after warehouse labor and have a significant impact on unit profit. Therefore, optimizing these costs while hitting SLAs is essential.
Depending on order volume and the leverage it brings, negotiating better carrier rates is a key tactic for reducing shipping costs. Given the excess capacity in the market, this is an opportune time to seek better rates. Rate shopping software tools are another good weapon for shippers, along with consolidating shipments via LTL when possible. Offering customers multiple shipping options and end-to-end tracking helps enhance the overall delivery experience.
Establish partnerships with reliable carriers, monitor performance, and have a contingency plan in place in the event of delays and sudden disruptions. Taking a multi-carrier approach also provides flexibility and reduces dependency on a single provider.
Regulatory Compliance
Ensuring all health and beauty products comply with regulatory standards for labeling, ingredients, and safety is vital to avoid legal issues and maintain customer trust. Non-compliance results in fines, product recalls, and a damaged brand reputation.
Stay up-to-date with all regulatory requirements in all markets, and implement a strong compliance management program. Regular audits and quality control checks help identify and address potential compliance issues.
Managing the complexities of international shipping, including customs regulations and tariffs can be challenging, but is crucial for avoiding delays and additional costs. Customs brokers and trade management software help streamline customs clearance and ensure compliance with international trade regulations. Track changes in tariffs and trade agreements in order to help guide international shipping strategy.
Technology Stack
Using enterprise resource planning (ERP) software as the system of record is a good place to start to build your tech stack for health and beauty order fulfillment. It significantly enhances operational efficiency by becoming the central hub through which all data and applications flow.
The e-commerce front end and order management system routes orders through the ERP to the WMS for processing in the warehouse. The ERP can also integrate with inventory management and shipping software to make the fulfillment process even more efficient. AI tools can provide a greater degree of real-time visibility into available inventory and order/shipment status by “seeing” and analyzing data across systems and channels.
Benefits of an ERP include improved data accuracy, better decision-making capabilities, and streamlined operations. Regular updates and customizations can further optimize performance.
Using application programming interfaces (APIs) and middleware facilitates a smooth integration of your e-commerce platform with ERP, WMS, OMS, and other tech stack elements. This ensures a smooth information flow and reduces the risk of errors and delays.
Sustainability and Ethical Sourcing
Sourcing sustainable packaging and component materials is increasingly important in health and beauty, as in other industries. Consumers are generally more environmentally conscious, and this approach is not only the right thing to do ethically but enhances brand reputation and customer loyalty.
Balancing sustainability with cost management, however, can be challenging. Work closely with suppliers to develop cost-effective options. Regularly communicate your brand's sustainability commitment to customers through social media and digital channels to keep your standards top of mind.
Ethical sourcing includes fair labor practices, environmental sustainability, and avoiding the use of harmful substances. Overcoming challenges this can bring, such as limited supplier options and higher operating costs, requires a top-down commitment to sustainability. Build long-term relationships with ethical suppliers, and implement stringent sourcing policies to achieve and maintain these goals.
A Complex Process in a Massive, Highly Competitive Industry
Health and beauty is a huge industry encompassing everyday products, projected to generate $646 billion worldwide in 2024. But competition is fierce and choosy consumers look for brands that reflect their values in terms of ethical sourcing and sustainability. Research has also repeatedly shown that a poor fulfillment experience leads to customer attrition, while retailers have little patience for missed OTIF and MABD commitments.
Keeping track of everything from inventory management, supplier relations, production, warehouse management, etc., across channels and within a highly regulated industry, can quickly become overwhelming for health and beauty brands.
That’s where Productiv comes in. A company with an impressive track record in the industry, Productiv is a health and beauty fulfillment specialist, helping brands consistently hit SLAs for major retailers including Sephora, Ulta Beauty, Walmart, Target, CVS, and many others.
A state-of-the-art WMS and automated systems ensure seamless operations, inventory accuracy, and timely deliveries. Engineered fulfillment standards steeped in lean and Six Sigma principles drive greater efficiency, order accuracy, and low cost-per-order metrics. To learn more about how Productiv can help you improve your health and beauty fulfillment process, talk to an expert today.
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