We have all experienced many difficulties in our lives since the World Pandemic arrived and with the UK’s departure from the EU, we in this industry have experienced ‘the perfect storm’. To us in the Cosmetic Industry it has already had far reaching implications. Since mid 2018 we have seen huge changes in the Supply chain especially when it comes to pricing, volumes and lead times of raw materials.
This has continued and been compounded over the last year
Minimum Order Quantity (MOQ)
International raw material suppliers started swapping distributors mid cycle, resulting in extended lead times, increased prices and changes to minimum order quantity (MOQ) mid-way through buying.
MOQ’s have a huge impact on our manufacturers, since many of the Brands we work with typically like to trial small runs of new products. This makes our opening ‘buy in’ very small.
As we tend to work at the “Blue Sky” end of the market we use a palette of unusual materials, each suited to the specific requirements and Ethos of the individual brands, alongside a number of standard materials to ensure the products we develop have the required USP.
Previously many suppliers would support us and split full drums, obviously with a price implication for doing so but ensuring no excessive stock holding for the factories of materials that may never be used again.
Now some of the suppliers want us to buy full drums and won’t import and split anymore which is not practical. For example, if we need 2.5 kilos a 40 kilo MOQ is high but a £3k full drum is impossible.
Raw Material Lead Times
Lead times also used to be dependent on stock holding in the UK and now when we order the given MOQ, we wait the lead time and then chase delivery to be told no one else wanted it so that haven’t brought it in yet.
We place regular orders for our clients for the same products and yet even here no factory will hold prices for more than 28 days, so literally every order is re costed each time.
The situation with importing is still somewhat precarious with huge increases in paperwork causing suppliers to add import costs, however this is something we monitor regularly and will be able to advise as the situation hopefully stabilises.
Material arriving by ship over the end of 2020 and the New Year have suffered huge backlogs caused again by increased orders all being shipped to try to beat the Brexit deadline, increased paperwork and shortage of people at the docks
We have seen some rises as high as 20% and even basic cardboard with the increases in home delivery during lockdowns causing a shortage has risen between 12.5 and 15%
Lead times normally 6-8 weeks for delivery of raw materials are extending to as much as 14-16 weeks but with the factories we use we try to forecast and forward plan with our Brands as much as we can.
The factories themselves are handling staff shortages, social distancing and putting increased safety measures such as PPE, Testing and cleaning stations in place, so they in turn are having longer lead times to Production
Hopefully in a few months everything will become somewhat easier in all areas again but we ask that clients and potential new clients understand that we have worked carefully throughout the last year to keep up our standards of service and will continue to do so.
If you found this article useful then our post on how Brexit impacts the Responsible Person Status may also be worth a read.
For futher advice on the effects of Brexit in the cosmetic industry or Compliance in General please don’t hestitate to get in touch via our Contact Us Page.