SUPPLY INGREDIENTS
for its vendors or the company, it nevertheless has several measures in place to anticipate and avoid stock issues. Smith and Bourgeois say the company shares the supply risks with its vendors, “acknowledging that LMC can’t only rely on them to fix the material shortages”.
The cosmetics industry is typically in a stronger position to deal with ingredient shortages than others such as the food industry, which saw supplies of ginger (below) run low due to poor harvest and labour issues
“Material is also stocked at different locations, should a transportation route be temporarily unavailable.” Moreover, for botanical ingredients, the company holds two years’ stock of raw material, which “allows for a poor harvest year, or if there are natural disasters like bushfires or cyclones”. It is also “putting greater emphasis on supply contracts with our suppliers and getting our purchase orders in much earlier, so that we are effectively ‘first in the queue’”. O&3’s Kerfoot agrees that stockpiling where possible is always good practice: “With natural disasters, it’s very simple. With the parts of the world that we know are affected year-on-year, we plan for the worst. So, when contracting, we make sure we lock into our contract that our manufacturers produce that stockpile for us. We always keep enough stock in place – and then some more just in case there is an increase in demand too!”
Henry Lamotte Oils, meanwhile, emphasises the importance of remaining close to the challenges its suppliers face and finding joint solutions. A current example is the company’s castor oil plant value chain, which “held steady even in 2020, despite the lockdown”. Here, “intensive cooperation with our Indian partners ensured that our customers received their products and the local people earned an income”. In addition, “wherever possible, we source raw materials from several sources to minimise risks and costs, for our own company as well as for our customers, who are saved opportunity costs by our delivery reliability”.
“The coronavirus pandemic has exposed vulnerabilities in ingredient supply chains,” sums up Ecovia Intelligence’s Sahota. “It has highlighted the limitations of globalised supply chains whereby ingredients could be bought at low prices from different parts of the world. Already, companies are looking to set up regional and local supply chains for natural ingredients so they are not so exposed to future supply shocks.”
A QUESTION OF TRANSPORT It would be remiss to cover the unexpected struggles of 2020 without discussing the coronavirus pandemic that has underpinned pretty much everything since last March. That said, the consensus seems to be that Covid-19 has not had too much of a negative impact on supply. Cargill Beauty’s Managing Director, Bente Korsgaard Andersen, for example, tells Cosmetics Business that “while the Covid pandemic has
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resulted in some unforeseen challenges for companies across the globe, Cargill Beauty’s supply chain has remained largely unaffected”. Indeed, the past year’s events have been credited with helping Cargill Beauty become more agile in accelerating change.
And, if there has been an issue throughout the Covid era, it’s not been with growing raw materials – the hardship has been getting these raw materials to the desired destination. “Covid-19 has not affected agriculture so much since food production is considered essential. It has, however, impacted the cosmetics industry when non-food crops could not be harvested or processed,” Sahota tells Cosmetics Business. “For instance, India entered a lockdown in March 2020 and many agricultural crops could not be harvested or processed because of emergency measures introduced by state governments. This led to disruption in the supply of natural ingredients, such as ashwagandha, as well as spices and herbs.”
Commenting on O&3, Kerfoot says: “In terms of [2021], I don’t see any major concerns. Stuff is slower, no doubt about it. It’s harder to get hold of [materials] and if something suddenly comes up for stupid volumes, it’s going to take longer than usual. But I don’t see the Covid thing being ultimately too impactful. The problem is logistics: whether you’re dealing with a courier, or a shipping company, that is where the issue is. It’s not with the production of the material. The producers are all there saying ‘we’ve got it here, we want to ship it!’” He tells Cosmetics Business that UK-based O&3 airfreights many tonnes of products and that, during the height of Covid-19, airfreight prices, for whatever reason, quadrupled. “Pallets of drums to or from Australia used to be £800 per palette, but we were paying £4,000 mid-Covid-19,” he says.
It is an observation echoed by Lucas Meyer Cosmetics, with Smith and Bourgeois explaining that while Southern Cross Botanicals’ raw material supply was luckily only marginally impacted by the Australia bushfires, “a major problem from coronavirus was availability of air cargo capacity in Australia and a four-fold increase in cost”. Interestingly, Kerfoot reveals that, “however horrific this pandemic is, the biggest challenge for UK manufacturers [like O&3] is not the pandemic, it’s going to be Brexit. That’s a whole different conversation! But it’s a bigger issue for us than the pandemic, that’s for sure.” Ultimately, to keep the wheels of supply moving whatever mother nature or human nature throws at cosmetics ingredients suppliers, the best defence against the unexpected is communication and planning. As the idiom goes: hope for the best, but prepare for the worst
January 2021 17
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