EDI for health, beauty and cosmetics retail and supply

by | Mar 21, 2018

EDI has played an important role in the growth and streamlining of the retail clothing, industrial supplies and grocery industries. And it can have a positive impact on the cosmetics and beauty retail vertical as well.

There’s a growing demand for healthy, beauty and cosmetic products. Forbes describes it as a $445 billion industry. That’s a lot of money to be made and lost.

Whether you’re operating a cosmetics manufacturing or distributing business, beauty products e-commerce website or simply have a cosmetics department in a retail store, EDI can help you reduce errors and find efficiencies in your supply chain, improve relationships with your trading partners and grow profits along with scalability.

EDI for cosmetics and beauty supply chain

EDI for the beauty and cosmetics industry is beneficial in the same basic ways it’s helped general merchandise retail and other sectors – it improves accuracy, efficiency and speed in a world that demands it.

EDI stands for electronic data interchange, which is basically a fancy way of saying it replaces all of your paper documents, transactions and communications with your trading partners into a standardized, digital, instantly transmissible format. Through EDI, documents including invoices, purchase orders, credit adjustments, advanced shipping notices (ASN) and more can be exchanged with your trading partners using the exact specifications they require. It can also be used to translate all documents you receive from trading partners into the right format for your business needs.

Beyond nullifying the need for paper documents, EDI automation can fix common issues. First and foremost, it can reduce or eliminate manual data entry needs and the human errors that go along with it. EDI can significantly reduce stockouts, backorders, late deliveries, delayed payments, improper transactions and fraud. It can help with abolishing data silos between the different departments of your company when your EDI is integrated with the ERP, WMS, accounting software, carrier programs and other systems,

EDI can help improve internal processes in a variety of ways. Most importantly, EDI assists with maintaining document accuracy, in particular when it comes to order management processes and evaluating invoices for payment. When all of your documents are digitized and the information transferred to the appropriate destinations, even the most complex order management processes can be fulfilled efficiently. Similarly, when all transactions can be called up and compared, it makes the three-match process, order-to-invoice process and other payment reconciliation methods a snap – no more accidentally paying for items you never received or accidentally billing for items that were canceled.

EDI can improve your supply chain. With the enhanced speed and accuracy of the exchange of information, you can keep better track of your inventory needs. Use the data you collect to make superior forecasts for the future, as well as identify where issues and opportunities may exist. A specific document, EDI 846 Inventory Inquiry/Advice, can be set to automatically trigger and update inventory information from other trading partners. When your trading partner network grows and you have a new supplier or retailer to work with, EDI reduces the time it takes to onboard them into your system and start doing business.

EDI improves scalability of your business. With manual data entry requirements reduced or eliminated, you can redirect these employees to help with other parts of the business. If a large retailer or a large brand requires EDI (as many large companies do), you’ll be ready to connect. With EDI, you can more easily add fulfillment capabilities such as buy online pick up in store, ship to store, drop shipping through a vendor or third party logistics company and more.

Issues revolving around cosmetic/beauty supply chain

The business of health, cosmetics and beauty supplies has its own specific problems that are unique from other retail sectors. EDI can help with addressing some of those issues as well.

One of the first things that’s important to consumers is available colors, scents and other key features. Skin tone, hair color, personal preference, ingredient allergies and other factors can impact what a consumer desires in a product. The accuracy of information EDI offers throughout transactions can be helpful with making better-informed forecasts for existing products and point to ideas where opportunities exist for new products.

Another thing that’s important to consumers is the safety of cosmetics and beauty products, for themselves and for anyone or anything that came in contact with the product from it’s creation. Cruelty-free, sustainably sourced, fair trade, all-natural, organic, even vegan beauty and cosmetic products are more and more in demand. An EDI system can not only assist with supply chain traceability, EDI can help you share those product details for product pages on e-commerce sites and other sites, so consumers can learn what these products do and don’t promise.

The Advanced Shipping Notification (ASN) that EDI facilitates is also especially helpful when dealing with cosmetics and beauty products. The ASN can confirm that a delivery is on its way along with important shipment information, whether it’s a package on its way to an end consumer or a whole truckload on the road to a distribution center.

The ASN combined with a barcode scanning system can be particularly useful for cosmetics and beauty products. The cosmetics industry has many small products – lipstick, blush, eye shadow, foundation compacts, lip pencils, eye pens. All those little packages inside larger boxes, and those boxes are stacked on pallets that could contain hundreds or thousands of products. It’s not uncommon to have to open up cases and count boxes, and to even open boxes to count individual units as a way to confirm shipments. This is time consuming process that chews up a lot of staff resources can be over in a blink with the ASN and a barcode scanner. Simply scan off each pallet or box as they come off of the truck, and the inventory inside can be automatically reconciled against the ASN for accuracy and added to your system.

These are just the basics of how the cosmetics and beauty vertical can see a lot of benefits from using an EDI system as part of their supply chain operations. Imagine the possibilities of what all could be done when communication across your trading partner network is accurate and instant, with all of your sales channels connected, internal departments working together and the inventory pipeline is visible.

How SPS Commerce helped Green Goo

See the case study how SPS Commerce helped J.R. Watkins fuel new growth. If you would like to learn how to use SPS EDI system in your cosmetic and beauty business, please visit our website for more information. You can also speak with one of EDI experts who will be more than happy to answer any questions.

Watch the EDI 101 Webinar Replay

Watch the EDI 101 Webinar Replay

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Scott Bolduc

Scott Bolduc

Director of Supply Chain Strategy at SPS Commerce
Scott Bolduc is a multi-time winner of the Supply & Demand Chain Executive Pros to Know. He has worked with e-commerce retailers on their growth strategies and helped retailers transform their freight spending strategies to maximize efficiencies.
Scott Bolduc

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