Detailed Abstract on Cosmetics Logistics

Global Cosmetics Industry

The cosmetics industry represents one of the most profitable and fast growing market segments in the United States in the past 50 years with cumulative sales of over $32 billion in 2005. The top players in the industry are L’Oreal followed by Procter & Gamble, Unilever, Shiseido, Johnson & Johnson, Avon, Revlon, Estee Lauder, Coty Inc, and Elizabeth Arden. The industry product categories are identified as cosmetics, hair care, skin care, sun care and perfume, which are developed, marketed and manufactured by powerhouses such as L’Oreal.

The five trends affecting the logistics operations of the cosmetics industry are centralization of distribution, innovation in packaging, evolution of new distribution channels targeted at men, search for suppliers of organic ingredients and information technology. The trend of centralized distribution is visible mostly in Europe where companies are consolidating distribution centers and warehouses to achieve increased efficiency. Innovation in packaging has allowed for better tracking of shipments and reduction in waste. Men now represent an emerging market; cosmetics companies will need to explore new distribution channels to take advantage of this. A market trend towards organic products has affected the way large cosmetics companies are securing suppliers of necessary ingredients. Information technology contributes to overall accuracy of forecasts, inventory tracking and loss prevention on the retail level.

Centralization of Distribution

The trend of centralized distribution is visible mostly in Europe where companies are consolidating distribution centers and warehouses to achieve increased efficiency. While centralization is still in progress, slowly consolidating distribution centers results in a decrease in total physical inventory, a reduction in backorders, improved delivery reliability, improved stock availability, and the standardization of inventory procedures. These characteristics are extremely important to the cosmetics industry because it helps manage and control finished products. Decentralization is great for products that need customization and fast delivery, but the cosmetics industry