More than 10% of stock is discarded due to issues such as overproduction and excess inventory, the study from Avery Dennison found
More than 10% of beauty products – an estimated $4.8bn worth – are going to waste in brands’ supply chains, a new report has revealed.
Overproduction and excess inventory were found to be the biggest culprits in supply chain waste, accounting for 6.2% of discarded goods, according to the data from materials science company Avery Dennison.
4% of stock, meanwhile, goes to waste due to perishing, spoiling or damage to the products – a growing concern for brands, who could be losing up to 2.8% of their annual profits.
“The current supply chain disruption is leading to a waste crisis in the beauty industry and elsewhere,” said Francisco Melo, Senior VP and General Manager at Avery Dennison.
“Having visibility is key to optimising supply chains for efficiency and sustainability, as well as helping to build trust and transparency with consumers.”
Brands are increasingly aware of these issues, with more than three quarters (77%) of respondents – which included more than 60 beauty and personal care businesses across the US, UK, China, France and Japan – currently tracking their supply chain waste.
However, 18% of these cited a lack of visibility and transparency across trading partners as their biggest challenge to achieving resilience in their supply chains.
In response, companies are increasingly adopting new technologies to boost their supply chain efficiency, with 52% tracking unique items in their supply chain and a further 38% saying they plan to in future.
Radio-frequency identification (RFID) – which uses electromagnetic fields to automatically identify and track tags attached to objects – is a key strategy, with 33% of respondents citing the technology as the most effective way to address supply chain waste over the next two years.
Autonomous delivery vehicles (23%) and robots and cobots (16%) were also identified as solutions.
RFID is a solution to help brands keep track of their supply chain waste
“Digital identification solutions play a vital role in supply chain planning strategy and it is encouraging to see that companies are committed to further drive this change through the increased use of RFID technology in the coming years,” added Melo.
“Connected products not only shine a light on supply chains but also reveal valuable new information to enable consumers to make better decisions, including transparency and carbon footprint data.”
The findings come as consumers are becoming increasingly sceptical about brand’s sustainability claims, with 23% of respondents’ sustainability impact estimated to come from their supply chain activities.
However, only 3.6% of companies’ technology budgets are dedicated to improving their supply chain specifically, the report found.