The upcoming event of Brexit appears outwardly to consumers to have yet to have had any effect on them. We are told its slowed the economy and growth is at its lowest but in terms of affecting day to day buying of commodities little has been felt.
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.
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 pallette 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 require 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.
Larger Brands have instructed their suppliers to stock pile the regularly used materials, putting prices and availability once more at risk.
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 future is currently still unknown and the potential effect of tariffs and import duties as yet to take effect, however this is something we monitor regularly and will be able to advise on once more information becomes available.
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.