The European cosmetics market is extensive, reaching an annual consumption value of over €76 billion. With many of the largest conglomerates owning dozens of brands, each with their own extensive product ranges catering to different market segments, there is a complex web that must be carefully managed and regulated. Beth Peckover, VP Operations at Kallik, discusses the complex regulatory landscape for cosmetics firms and argues potential upcoming changes in the European market should spark a rush for greater digital management.
The cosmetics industry is a highly competitive, complex space to do business in – from formulation and testing through to design and go-to-market strategies. Yet many cosmetics firms still struggle with injecting agility, visibility and end-to-end management into critical areas of their business. These areas may function day-to-day without major issue, but introduce any unexpected change and it can bring the entire business value chain to a halt.
No more so than through the simple label. Picture a typical cosmetics product, such as a skin-care cream. The product is covered in labels, logos and regulatory symbols, then packaged in a box covered in similar assets and branding. For many products, they may also include an enclosed supplementary leaflet. The individual assets and phrases used in this will likely number in the dozens – each carefully designed, reviewed and approved. It’s easy to see from this that any amends or updates will have a significant ripple effect, which will be multiplied across each individual affected product line.
The winds of change have reached the cosmetics market
Since the EU Cosmetics Regulation came into force in 2009 – replacing the older Cosmetics Directive – cosmetics firms looking to sell their products into the EU markets have faced a consistent set of rules to comply with.
We’ve recently seen the EU overhaul legislation in other industries traditionally considered ‘highly regulated’, with medical devices the latest to be affected by tighter requirements, and an ongoing consultation on chemical labelling and packing. The cosmetics industry looks set to be next in line – and firms must prepare for the change and disruption this will entail.
With an ongoing public consultation on revising the Cosmetics Regulation to better align with EU sustainability goals, a shake-up – and most likely tightening – of the rules and requirements surrounding cosmetics products is imminent. Critical assets such as labels and artwork are unlikely to be immune.
Tighten asset management and visibility before it’s too late
With this in mind, major cosmetics companies with global product lines numbering in the hundreds or even thousands could face a significant challenge to identify, update and re-issue all affected assets to achieve compliance with any new or amended regulations.
These potential changes are solely for a single region – the EU. Other lucrative markets such as China and the U.S. will have their own regulatory regimes for products to comply with. It is clear a new approach to manage cosmetic product assets on a large scale is required to better handle these challenges.
There are three key ways cosmetics companies can embrace digital asset management to tighten regulatory compliance and at the same time enhance operations:
1. Knock down data siloes and build a single source of truth
A natural first step for any compliance project is to identify any cosmetics products affected by upcoming reforms before actioning the required changes. This is easier said than done, and often uncovers siloed assets, separate translations or region and nation-specific product lines that fall outside of the oversight of a central corporate team. Acquisitions of smaller companies can also introduce similar complexity, throwing new and unexpected product lines, outdated assets or new-language content into the mix.
Combine these issues, and the cost, complexity and timeframe of a compliance project can quickly threaten to spiral out of control.
Enter digital, centralised label and artwork management solutions. With a cloud-based platform that can be accessed by any team from any location, capable of managing all global and local assets within a ‘single source of truth’, cosmetics firms can better understand the scale of the task that lies ahead and avoid any unpleasant revelations further down the line.
2. Ditch the manual processes – this is just too complex to manage at scale
Consider a product range of 100 different cosmetics – each sold into the EU and requiring product packaging and labelling in each of the bloc’s 24 different languages. Each language or product type introduced adds another layer of complexity and scale to the task at hand. Multiple translations, requested and managed by different teams worldwide, can also rapidly increase the risk of duplication.
Add to this the departmental disconnects experienced by many large companies, especially those operating in numerous countries and regions worldwide, and it becomes increasingly clear that label, artwork and packaging assets cannot be easily tracked, managed and amended across every product line without investing significant time, capacity and money.
By introducing advanced technologies such as automation, companies can reduce the manual burden of identifying each individual affected asset, making the necessary changes in-house and running through the review, approval and reissuing process. By adding this digital helping hand, firms can also reduce the risk of human error being introduced – such as misplaced logos being printed on a product label, or outdated phrases used on packaging.
3. Time for a digital facelift for label and artwork management
As digital transformation efforts accelerate across the board, driven by factors from pandemic disruption to new business models and rising customer expectations, cosmetics firms simply cannot afford to stand still and continue with legacy processes and systems. Yet a new breed of advanced label and artwork management systems has arrived to help tackle many of these digital pain-points felt by the industry.
Kallik has extensive experience in helping firms operating in highly-regulated industries overcome their compliance challenges, ranging from chemicals to medical devices. Leading global cosmetics seller Mary Kay, for example, uses the Kallik Veraciti™ platform and capabilities such as “Where Used” functionality to better track and manage global assets affected by industry changes or evolving business requirements.
By moving away from legacy methods of asset management, firms can better get to grips with the global picture of their product lines and operations, unlocking the agility and resilience needed to respond to business disruptions such as regulatory change.
The price of inactivity is high – act now…
The challenges brought by non-compliant cosmetics operations are not simple a ‘cost of doing business’ – they can be wide-ranging and cause significant damage. This could range from product recalls and regulator investigations, freezes on selling products into certain markets and even long-term damage to brand confidence.
…and reap the benefits across the value chain
The benefits of digitisation don’t stop at compliance. They extend throughout cosmetics firm operations, adding greater accuracy, consistency and agility – such as the ability to rapidly update large numbers of labels with new product ingredients – to every step of the business value chain.
By acting now, cosmetics firms can establish truly end-to-end digital operations for managing all global assets in a single, secure cloud-based repository.