15 Major challenges of cosmetics manufacturers and how to solve them

Here are 15 major challenges that cosmetics manufacturers face today and some key strategies to overcome them.

With a growing amount of people valuing self-care, the cosmetics industry is set to continue expanding in the coming years. The industry has an expected growth rate of 4.2% from 2023 to 2030.

Operating in a fast-paced environment like the cosmetics industry comes with its own specific challenges. Changing global cosmetics regulation for cosmetics manufacturers, innovation and cost-efficiency are some of the hurdles that make it difficult to succeed.

Which is why we’ll delve into the 15 major challenges that cosmetics manufacturers face today and provide you with the key strategies to overcome them.

Cosmetics contract manufacturers and their current struggles

Market developments heavily influence the way cosmetics manufacturers operate. You need to be flexible and adapt to changes in the market if you want to stay ahead in the cosmetics industry. 

For instance, working with the right type of (available) ingredients for production, while also creating products that consumers actually want to purchase offers a significant challenge for manufacturers. 

But that’s not the only hurdle cosmetics manufacturers face. Let’s take a look at some of the major challenges that impact your operations right now.

Major challenges of cosmetics manufactures and how to solve them

Here’s a breakdown of today’s major challenges. We’ll provide you with some practical tips on how to solve each of these. 

1. Meeting regulatory standards across different countries

Regulatory standards in the cosmetics industry refer to the legal requirements and guidelines that govern the manufacturing, labeling, safety, and quality of cosmetic products. 

These standards are put in place to protect consumer health and safety, ensure product quality, and provide transparency to consumers.

Regulatory standards in the cosmetics industry can vary significantly across countries due to differences in laws, regulations, and cultural preferences.

How to cope with regulatory standards?

For cosmetics, the EU cosmetic regulation applies to all countries within the EU (and EEA). If you’re planning to enter the EU cosmetics market, you’ll need to read up on this regulation.

Other parts of the world have their own legislation, like the USA (with the newly adopted change to its cosmetic legislation called MoCRA), China, ASEAN (a collection of Asian countries), Japan, Australia and Canada.

When you manufacture a product, it’s essential to know exactly which laws the product must comply with. This includes staying informed about ingredient restrictions, labeling requirements, and safety testing regulations.

Stay informed today, but also tomorrow – as laws get updated quite frequently. 

2. Doing all product quality checks simultaneously

Manufacturing a cosmetic product that is safe and compliant is not an easy task, since each product consists of lots of subparts. Think raw materials, physical aspects like pH and viscosity, correct labeling, good manufacturing practices (GMP), packaging and shelf-life tests.

The subparts of cosmetic products depend on each other. You need to have your sourcing in order (raw materials, packaging materials) before you start assembling products. 

Additionally, you need to know the product’s shelf-life in order to put the correct expiration date on the artwork. As a manufacturer, you’re not doing this for one or two products at a time, but you have to manage hundreds, if not thousands of products simultaneously. 

How to deal with multiple product quality checks?

Rapid adaptation to changes is crucial. These changes can differ from new customer requirements, legislative updates or suppliers that are unable to deliver a specific raw material. 

A streamlined workflow is the only way to cope with that. You need to be able to have a full overview of the statuses of all of your products. A central dashboard will help you with a complete overview. 

This also helps you spot the impact of the different changes on your entire portfolio.

For cosmetics, the EU cosmetic regulation applies to all countries within the EU (and EEA).

3. Securing quality ingredients affordably – supply chain issues

One of the biggest challenges when it comes to sourcing quality ingredients is ensuring timely delivery while also balancing quality and costs.

To make sure you can keep producing cosmetic products with no delay, it’s vital you keep a good stock of raw materials. 

In a rapidly changing world, however, supply chains will be impacted. Think of massive shipping issues during Covid, the Evergrande disaster, or the impact of the war in Ukraine on sunflower oil.

From one day to the next, you may find yourself running out of raw materials. Yikes! At that moment, you may have to tap into your inner MacGyver and get creative with your formulations.

How to secure quality ingredients? 

You might need to change your formulations altogether. Those changes may also impact the safety of these products – even if the change applies to just one batch of products. After all, consumers must always be able to presume the products they use are safe.

Tiny changes impacting product safety must be checked by a safety assessor, and the changes must be included in the Product Information File

These changes may needlessly increase the administrative burden, so it’s best if you and your safety assessor implement a process or technology solution to eliminate this burden.

4. Adapting to specific brand formulation needs

As a cosmetics manufacturer, you are part of an intricate supply chain. Your role as a manufacturer is to produce high quality and safe products. And, very importantly, products matching your customers’ specifications and expectations. 

As part of their brand identity, brands often have very specific formulation needs. Think ‘vegan’, ‘microplastic-free’, or ‘highest quality for lowest price’.

Those specific formulation needs come in the form of a ‘brand blacklist’, which is a – often very detailed – description of what can and cannot go into their products. 

These blacklists may also change from time to time, so products you have produced for these brands yesterday may no longer be relevant tomorrow.

How to deal with specific brand formulation needs?

Besides dealing with complicated and ever-changing cosmetic legislation, your customers also demand flexibility.

It’s important to talk to your customers. Sometimes, a certain change to a formulation cannot be done, when it impairs product efficacy, for instance. 

Open and transparent communication, attention to quality control, and a long-term partnership mindset are key for success. Stay updated on industry trends and technologies to provide innovative solutions that meet your clients’ unique requirements.

As part of their brand identity, brands often have very specific formulation needs.

5. Adjusting production based on brand requirements

Besides formulation needs, brands can also have even more stringent needs for products that impact the production stage.

Imagine receiving a request from a client that wants products that are 100% ‘halal’. When you’re using raw materials like alcohol and shellfish, which are ‘haram’, you have to make huge changes that impact the production process.

How to adjust production to meet brand requirements?

The only way to deal with such requests is being flexible and seeing how adjustments can be made in the production process.

We’ve seen a real example of a manufacturer that set up a separate production line and employed an imam. The imam checked the production line to ensure that the products were completely halal.

6. Delivering products on time

Time is the one thing you can only spend and never get back. That’s why it’s critical you’re always able to deliver cosmetic products on schedule. 

True, your clients may believe that ‘on time’ means yesterday, when you know that developing safe and stable products takes an average of 6-9 months. 

But, at the very least, you want to keep your customers waiting as little as possible. So, how do you go about doing that?

How to deliver cosmetic products as fast as possible?

There are a few stages in the cosmetic manufacturing process impacting speed of delivery. 

  1. Product briefing → Agree with your customer what the product should look, feel, smell like.
  2. Composition Ensure you’re using the right raw materials for the job. Having a system in place to only use pre-approved raw materials will save a ton of time and eliminate mistakes.
  3. Formulation → Check whether the overall product formulation is safe and complies with relevant legislation and client blacklists.
  4. Prototype → Check whether the product is stable, both as is and in its final packaging.
  5. Finalization → Artwork and doing the final regulatory steps (compiling the PIF and CPSR, CPNP notification). You may also want to run a pre-production or two to ensure the product looks good when you produce at scale.

Smooth and error-free processes will allow you to deliver products on time. 

7. Safeguarding product formulas and secrets

Just like a restaurant, your product recipes are your best kept secret and likely a USP setting you apart from the rest of the competition. You definitely don’t want your product formulas to fall into the wrong hands. 

At the same time, this information must be accessed by specific people who need it. Not only within your company (like R&D, QA and Regulatory affairs teams), but also people outside your company. 

How do you know these external parties have their information security in order?

How to deal with information security to safeguard product formulas?

Making a list of the many bits of information is the first step. Next, you should explain implicitly which roles have power over this information and what kind of authority they have. Do they have admin or view-only access? 

This permissions list applies to roles both inside and outside of your company. In the case of an external safety assessor, ensure they have access to sufficient information in order to show the safety of your products.

You might also require certain quality criteria from your external vendors. Consider ISO 9001 (quality management) or ISO 27001 (information security) standards. These standards show businesses care about quality and keeping your secrets… well, secret.

Alex van der Burgh on keeping cosmetic product recipes a secret.

8. Balancing competitive pricing and costs

Prices for energy, materials and personnel keep rapidly increasing while your customers keep demanding more competitive prices for your cosmetics products. This means you have to maintain a fine balance between speed, quality and costs. 

Obviously the cosmetic products you develop and produce must be safe and comply with legislation, but often you don’t have the resources to set up an expensive internal team to ensure you maintain this fine balance.

How to balance pricing and costs?

You might want to consider outsourcing part of the work. It could be a very smart move as it gives you more flexibility while maintaining high standards.

Here’s a list of things you could consider outsourcing as a cosmetics manufacturer in order to balance costs:

  • Ingredient sourcing
  • Packaging and labeling
  • Quality contract and testing
  • Regulatory compliance
  • Logistics and distribution
  • Online sales

9. Adopting sustainable and eco-friendly practices

The cosmetics industry is often looked at as a contributor to environmental waste, but in fact this industry is a front runner in regulating itself with regard to environmental impact. 

Consider that one time the cosmetic industry in the EU decided on their own to stop using plastic microbeads. This was years ago, and it dramatically limited the occurrence of these ingredients in sewage.

How to implement sustainable and eco-friendly practices

You can implement sustainable practices by incorporating environmentally responsible principles into various aspects of your operations. 

Here’s a list of principles you could consider implementing:

  • Sustainable sourcing for responsible sources and renewable ingredients
  • Green formulations that are free from harmful substances and that are eco-friendly
  • Reduce waste by using precise measurements and reducing unused materials
  • Invest in energy efficiency within your manufacturing facilities
  • Eco-friendly cleaning products to minimize water pollution
  • Eco-friendly packaging
  • Opt for eco-friendly transportation such as electric or hybrid vehicles
  • Maintain transparency in the supply chain 
  • Work with circular economy initiatives like recycling of old products 
  • Ensure full compliance with environmental regulations and standards in the cosmetics industry

10. Designing appealing packaging that conforms to guidelines

Packaging material plays a pivotal role in cosmetic products. 

Packaging protects the formulation against the environment and vice versa. It keeps the products pressurized. It carries the artwork that conveys the correct information to consumers and it’s used to attract and market the product.

The materials you use for packaging matter a lot. Whether you use glass bottles since that embodies luxury, or plastic because that’s most convenient for shower products, or even naked products like bar soaps because they don’t necessarily need packaging.

How to deal with appealing cosmetics packaging that is in line with legal requirements?

Packaging, like the formulation itself, has to comply with appropriate legislation in order to be considered safe. The last thing you want is for the packaging to become incompatible with the product and begin leaking, melting, exploding, or altogether failing.

This is especially crucial when dealing with recycled materials. 

Did you know that using recycled plastic from a mixed waste stream is now almost impossible? Because you’re dealing with a complex mixture of various polymers (PET, HDPE, and all the other acronyms), additives (colorants, UV filters, plasticizers), and impurities. 

Sometimes packaging suppliers don’t know how to prove this either. 

The most valuable tip is to know whether the packaging is safe and compliant during the sourcing process, rather than after you’ve filled these packages with the product and are doing this as a last quality check. Basically, you need to make sure you think ahead. 

11. Innovating and researching new product ideas

Do you know that feeling you get when you’ve just visited a trade show and you’re now pumped with new ideas you want to implement in your products – but you don’t know where to start?

It can be quite tough to innovate and research new cosmetic product ideas, especially with ever-evolving safety standards.

How to successfully come up with new cosmetics product ideas

You can, of course, start with directly putting this idea into practice by developing a new formulation. It may take some effort in stabilizing the formulation, as novel raw materials may have a slightly different chemical makeup than what you’re used to. 

Then, after a few attempts in days or even weeks, you come up with a new product concept.

Just to find out a safety assessor indicates you’ve been using too much of the new raw material, so it now exceeds safe use concentrations. 

There goes your hard work down the drain. This shouldn’t happen. To solve it, make sure to have this safety check done before you’d actually try to create a concept with the new material.

It can be quite tough to innovate and research new cosmetic product ideas. 

12. Maintaining clear communication with client brands

Just like Rome, a cosmetic product isn’t built in a day. Customers have specific requirements, the formulation has to be chemically stable, and the product must comply with all relevant legislation.

It’s important to manage expectations and communicate clearly already in the stage of a  product concept. Can the customer’s dream be turned into reality?

Developing a product for a customer is a dialogue between all parties involved. 

How to clearly communicate with client brands?

As a manufacturer the last thing you want is telling your customer you cannot deliver the product you promised them.

We often see there are technical and legal boundaries that must be respected. A product may already be sold on the market in the USA, but it doesn’t fit the legislative cosmetic framework of the EU or vice versa. 

One example would be a lip plumper using capsaicin, the active compound in spicy peppers.

In the EU, using capsaicin for this purpose would turn the product into a medical product rather than a cosmetic product – which not only means different legislation applies, but it also involves a much more stringent and costly process.

It’s key to keep a clear line of communication with your customers. Don’t presume and hope for the best, but instead rely on clear results, evidence and legislation. 

When you involve your customers in every step along the way, your clients will gain a much better understanding of your processes, leading to better communication overall.

Alex van der Burgh on innovation and research in cosmetics manufacturing.

13. Addressing concerns if a cosmetic product is faulty

Your goal is to create beautiful products that aren’t only great to use, but also safe and compliant. Mistakes are easy to make, so how do you fix a faulty product if it’s already produced, shipped and delivered?

How to fix a faulty cosmetic product? 

Here’s a list of analyses you have to run and measures you’ll need to take when dealing with a faulty product.

Root cause analysis

The key issue you must address is to demonstrate whether the product is still safe. In order to do so, you must first find out what kind of fault occurred. 

Was it a production error? Was an incorrect raw material used? Is it a legislative issue? Impurities such as heavy metals are too high? A microbiological contamination? Or was it just a silly printing error on the artwork?

Impact analysis 

After you’ve identified the root cause of the faulty product, you must estimate its impact. This may involve an additional risk assessment, especially in the case of a contamination or a mistake in the product formulation. 

These risk assessments are often performed by safety assessors, as they already know the product and its components.

Corrective measures

Now you know the impact, you can make a plan on how to fix it. If the mistake has negatively impacted product safety, this may mean you must work together with your customer to enforce a market stop on the product. 

If you found out the product really has become unsafe for use, you may even go a step further and issue a product recall. 

This is a heavy action, as this obviously impacts the brand image of both your customer and yourself, but it’s always better than letting customers find out themselves they’re using a faulty product, right?

Preventive measures

With the damage fixed, you can now implement actions to ensure this incident doesn’t happen again. Examples may include additional control steps, automating manual processes, or eliminating waste. 

Having access to cosmetics safety software will help you automatically show changes made by the cosmetic regulation. It’ll also show you the impact this has on your products. 

Using software is much more reliable and quick than manually checking each and every product in your portfolio. 

14. Adapting to current market trends

There is nothing more volatile than consumer demands. Especially in a world where social media trends change more rapidly than the seasons of the year. 

You need to be able to answer these trends if you want to develop and manufacture cosmetics products consumers love.

How to answer current market trends?

Staying on top of trends is one thing. It’s also vital to have a clear vision of what your USPs are. Do you focus more on the bigger brands, or the smaller ones? Personal care, or beauty? 

Or would you even want to focus on specific product types? The cosmetics industry is large and offers many opportunities. Determining your key focus area will help you diversify and position yourself successfully.

There is nothing more volatile than consumer demands when it comes to cosmetics.

15. Managing product stock effectively

Bigger is always better, right? If you grow larger as a business, you gain more purchasing power, allowing you to buy more raw materials at a lower price. But growing also has its risks.

If you try to anticipate product demand, you may choose to already pre-produce some products. This is especially the case for private label and white label solutions, in which the same formulation is sold to different customers. 

If you forecast demand correctly, you produce product stock well ahead of time and you can deliver products to your customers really fast. Awesome! But what happens when you guess wrong? 

If multiple customers buy fewer of your products, it can cause big issues as products don’t last forever. Or what if you pre-produce products and suddenly the cosmetic regulation changes? 

How to forecast product demand? 

If you want to forecast product demand, you must stay on top of legislation. Try to get to know about these legislative changes before they’re actually turned into legislation.

Another important aspect is to communicate closely with your clients to gain insights into their marketing plans and sales trends. This will help you make more accurate production forecasts. 

Work with SkinConsult and never worry about these issues again

We feel you. Staying on top of the latest trends, while meeting all the safety standards and cosmetics legislation is tough. 

All you want to focus on is providing your customers with safe and high-quality products they love. Preferably, as quickly as possible, right? 

Want to stop worrying about cosmetics safety and legislation and focus on developing your products instead?

SkinConsult’s Safety-as-a-Service for manufacturers offers a step-by-step solution to ensure products are 100% safe and compliant. 

We’ve brought over 9,000 products to market for major cosmetics manufacturers. Read our brochure to learn more about quick and easy cosmetics compliance.

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