Jonatan, when manufacturing hundreds of products, how do you manage the complexity of custom manufacturing, especially when a portion of the products are sourced from overseas?
We use an MRP (material requirements planning) system to track all components of a product ranging from packaging to batch specific ingredients. The digital record of production serves as a checklist to ensure the right materials are being used for the right product. Inventory tracking coupled with predictive analytics allows us to mitigate the risks of sourcing products from overseas by leveraging expected lead times with expected production runs. We’ve always try to use common components. By slotting in these components into multiple products, we reduce complexity and inventory costs while still being able to provide a lot of variety. The MRP system we use, called MRPeasy, allows us to handle these components easily.
Skin Actives also custom packages the product, including labeling. Are there compliance rules with regarding to labeling in different countries? And how do you ensure the labeling is compliant?
Yes, many of the countries where our customers operate their businesses have very specific requirements for cosmetic product labels. These customers, for the most part, know the requirements for their own countries and provide us with that information. We use in-house graphic design and printing, so we can ensure their products are labeled up to specifications.
When you source your raw materials and ingredients globally, how do you ensure and/or test for quality?
All raw materials that enter our facility are run through qualitative analysis to ensure all specifications are met. Many of our suppliers provide ingredient documentation, such as certificates of analysis, before the product ships, which allows us to identify potential issues prior to receipt. In the case of new suppliers, we request samples to determine formula compatibility before purchasing at scale.
What kind of system does Skin Actives use to work with its global suppliers to ensure raw materials are available and can be shipped quickly?
We maintain consistent open lines of communication with our suppliers and partners to determine product availability. Since availability of material supplies can shift with seasonal, economic and other factors, we prefer to rely on dynamic communication rather than static or automated catalogs.Good communication with established suppliers is critical. We do not add new suppliers lightly and we try to work with suppliers that have excellent customer service, as well as great ingredients.
You of course build redundancy into your global supply chain to ensure the availability of raw materials. Where does that take you (what countries) around the world?
With the inclusion of secondary distributors, our raw materials have come from nearly every continent. We’ve directly purchased materials from the U.S., Canada, Australia, India, England, France, China and Japan just to name a few.
Is there a system in place for tracking the price of materials from overseas, and how much does the price fluctuate based on currency exchanges, supply and demand?
We typically negotiate for static pricing from our overseas vendors, so thankfully we are somewhat insulated from everyday fluctuations in currency exchange rates. For materials that do have more volatile pricing, the purchasing portion of our MRPeasy software system allows us to track historic pricing data and determine our cost ranges.
The price of ingredients has been increasing significantly over the past few years. At Skin Actives, we do not purchase in large quantities, so we counter these increases by being more efficient in our ordering. We have an advantage over most other manufacturers in that we produced our most expensive components ourselves.
Software has been a great enabler for the running of manufacturing operations. In addition to MRPEasy, what software packages and technologies do you have in place to ensure efficient operations?
We are also currently using Cosmetri and Hubspot to manage the operational flow from sales to purchasing to production. These systems ensure that every team member, from production staff to management, has instant access to job-critical data. We also use Asana for some project management tasks. MRPeasy has been critical for us and our early adoption allowed us to work with the designers to ensure that some of the functionality we needed was built into the system.
What about selling overseas? How has computing and IT improved the ability to serve these customers?
In 2018, we added new software to our e-commerce platform that allows international consumers to view cart totals in their native currency, prepay for customs charges and import taxes on shipments and enter shipping label addresses in country-specific formats. A collaboration with UPS allowed us to integrate Zonos checkout into our B2C website. This has been really important in reducing problems on receipt. We use Shipstation to ship products; it produces the documentation we need for overseas shipments.
Allocating and tracking of batch numbers is important for companies like Skin Actives, which has FDA compliance requirements in the U.S. How does technology help in this process? Does it provide the ability to trace ingredients back to an international supplier, post manufacturing?
Our MRPeasy system gives us the ability to easily back trace every ingredient used in a product. Each stock lot is assigned a unique identifier during purchasing, and all relevant documentation can be attached to that stock lot. The same system is used for our own manufactured product, so we can quickly identify every material used in a product.
What emerging technologies are you looking at implementing?
We would like better integration of our systems and quality/document systems. We have not found the right solution for this, but we will continue to explore opportunities to reduce the burden of producing documentation. I am also looking at the possibility of linking our customer service systems to our MRP system and to our sales systems—allowing for greater visibility on order status for customers and reducing the opportunity for data entry errors.
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