The supply chain is a map of how finished goods get into the hands of consumers. Traditionally, the supply chain was comprised of the following stages. Raw materials would be transported to the manufacturer who would create the physical product. The finished good was distributed to retailers. Consumers would then visit the retail location to purchase the good. In terms of the beauty industry, many established and traditional brands have abided by this model. Unfortunately, these types of brands are also declining across the three U.S. prestige beauty categories of makeup, skincare, and fragrance. The lack of innovation these brands are pursuing within the supply chain model is a factor playing into their decline. It is indicative of the disconnect these brands have with today’s consumer.
Today’s consumer expects more from brands than ever before. Four major expectations characterize the consumer-brand dynamic: transparency, speed, involvement, and customization. These four expectations are the reasons why the traditional supply chain no longer applies, as they call for a more integrated relationship between the brand and consumer. The traditional supply chain supports the exact opposite: its lateral structure keeps brands and consumers separate from each other in a rigid system. As a result, a new supply chain system is developing. This model is one in which the source, manufacture, delivery, and retail processes are interdependent and all emanate from the core relationship between the brand and consumer. Brands that are innovating within this new supply chain format understand the consumer expectations, and are delivering on them.
One such brand is Tata Harper, a skincare brand that leverages supply chain control. Ingredients for the brand’s products are grown on the founder’s farm, products are manufactured and packaged in-house, and the lab on the farm is responsible for quality assurance. The brand works with clean retailers like CAP Beauty and Credo Beauty to sell its products. In controlling its supply chain, Tata Harper is better positioned to oversee product development that fits the brand’s standards and natural positioning. The brand also delivers on the consumer expectations of transparency and involvement. To facilitate transparency, consumers can trace the origin of their product via batch number on the brand’s website and even identify the individual who made it. In terms of involvement, the founder often leads master classes to teach consumers how to use her products and pursue a green-beauty lifestyle. Through control of its supply chain and deliverance on consumer expectations, Tata Harper is carving out a place for itself in the saturated market.
Brands outside of beauty also understand the need to adapt to this new supply chain model. Adidas is one example. The brand recently opened its first Speedfactory to compete with the fast fashion trends. The factory is “equipped with time-saving robotics” and will be used “to produce small batches designed for particular markets”. This is in contrast to the tradition of mass production. By Adidas owning their production and working to become more agile, the brand’s goal is to “cut design, production, and delivery times from 18 months to 45 days”. The Speedfactory will not allow Adidas to meet the consumer expectation of speed, but also that of customization. The factory’s capabilities will soon be applied to designing and delivering premium-priced products for individual consumers.
The importance of the new supply chain rests in the fact that it connects the brand with the consumer, and leverages this relationship throughout the development and creation of product. This model represents unchartered territory, yet also great opportunity. The brands that pursue innovative applications and strategies within the new supply chain will differentiate themselves in a crowded and complex industry.
1 The NPD Group, Inc. / U.S. Prestige Beauty Total Measured Market, 12 Me Ending Jun 2017
2 Tata Harper website
3 www.businessoffashion.com “Adidas Unveils the First Speedfactory Sneakers”