Business Categories Reports Podcasts Events Awards Webinars
Contact My Account About

Just The Numbers: The Real Cost of Beauty Supply Chain Waste

Published November 22, 2022
Published November 22, 2022

Debates surrounding the logistics of zero-waste beauty have been ongoing. While some brands have achieved such status, others are still working towards their zero-waste goals or finding different ways to invest in sustainability through their brand. According to The Missing Billions: The Real Cost of Supply Chain Waste, a report by Avery Dennison, over 10% of beauty and personal care products go to waste. Of this 10%, 4% is due to the product being damaged or unfit for sale, and 6.2% is due to overproduction. This total accounts for 2.8% of annual profits being lost, which is estimated to amount to $4.8B overall. The study analyzed 61 global beauty and personal care firms across the US, UK, France, and China, including manufacturers, wholesalers, distribution firms, and retailers. Here are the key findings from the report:

Areas of Supply Chain Improvement

  • The beauty industry had the highest total loss of inventory at 6.2%, in comparison to other industries like apparel (3.9%), pharmaceuticals (3%), food (2.9%), and automotive (1.1%).
  • 93% of beauty business respondents said they feel pressure to become more sustainable.
  • 23% stated their total sustainability impact comes from their supply chain activities, but despite being aware of this issue, they are not investing the funds required to fix it.
  • 3.6% of technology budgets from brands are specifically dedicated to supply chain sustainability improvement.
  • 18% of beauty brands struggle due to a lack of visibility from trading partners.
  • 52.5% track unique items in their supply chain, while 38% plan to in the future.

Technology Advancements

  • 33% believe radio frequency identification (RFID) is the most strategic way to address supply chain waste over the next 24 months, compared to 23% naming autonomous delivery vehicles and 16% robots as alternative solutions.
  • RFID is currently used by 26% of beauty companies, set to rise to 80% by 2025.
  • 6.6% of companies use blockchain to help with supply chain tracking; this is expected to increase 15 times to 98% over the next three years.
  • The use of robots across supply chains is set to see an increase from 3.35% to 93.5% by 2025.
  • The adoption of autonomous delivery vehicles is set to rise from 9.8% to 90% over the next three years.

Eduardo Kawano, Digital Transformation and Supply Chain Senior Manager at Grupo Boticário, who was interviewed as part of the report, comments, "A key challenge for the industry is product expiry while on the shelf leading to wasted inventory. We have addressed this by adopting RFID, and a 'first expired, first out' model which ensures the products with the shortest shelf life are positioned at the front of store and sold first. This is crucial to help us reduce waste and help our sustainability goals."

Francisco Melo, Senior Vice President and General Manager at Avery Dennison, adds: "The current supply chain disruption is leading to a waste crisis in the beauty industry and elsewhere. Having visibility is key to optimizing supply chains for efficiency and sustainability, as well as helping to build trust and transparency with consumers. Digital identification solutions play a vital role in supply chain planning strategy, and it is encouraging to see that companies are committed to further drive this change through the increased use of RFID technology in the coming years.”

The report also collected data from 7,500 shoppers globally to understand consumer spending shifts. Given the current economic turbulence, purchasing cost-efficient yet reliable products became more important, but the economic impact of these buys still remains a substantial factor.

Consumer Priorities

  • 22% named cost and quality as their main concerns when buying a new product.
  • British consumers are the most cost conscious, with 28% naming price as their top priority.
  • Japan and France came a close second, both at 25%.
  • China is a significant outlier, with only 6% surveyed naming cost as a priority.
  • 16% of universal consumers name sustainability in their top three dedication factors when purchasing.
  • 12% prioritize ethical sourcing of their products.
  • 43% said transparency of a product's origin and journey is important to them.
  • 36% said that brands being transparent about ingredients encourages them to make more sustainable purchases.

With the beauty industry being the biggest contributor to product waste, it is clear changes need to be made by both brands and consumers alike. While the finger is usually pointed towards packaging waste, the report shows that there is more to the problem, and supply chains hold heavy weight when it comes to sustainability issues. For customers, ensuring the ethical production of their purchases, even when being mindful of cost, will encourage more brands to dive deeper into their sourcing and production process to keep their consumers' needs met.

It can be concluded that the best way to tackle these issues in the future is to be more transparent with consumers and invest more time, money, and effort into advanced technologies such as RFID to maximize supply chain sustainability benefits. There is strong evidence that brands intend to crack down on their wastage issues, using different methods of tracking and delivery to combat current problems, which will eventually result in being able to be more honest with consumers about product journeys.


2 Article(s) Remaining

Subscribe today for full access