Order Fulfillment for Beauty and Cosmetics: Routing Guide Compliance
From special packaging materials and pack-out processes to temperature- and humidity-controlled storage requirements, order fulfillment for beauty and cosmetics is difficult for a multitude of reasons; however, routing guides – with their subtle nuances and not-so-subtle penalties for non-compliance – are especially notable. Routing guides establish logistics frameworks which must be followed by those who sell products to large retailers such as Neiman Marcus, Saks Fifth Avenue, Barney’s, Macy’s, Nordstrom, and Lord & Taylor, just to name a few. These routing guides are oftentimes intimidating—to such an extent, in fact, that they are one of the most commonly-cited reasons for sellers to initiate conversations with third-party order fulfillment providers. Though a few beauty and cosmetics sellers may be able to generate enough traffic to bypass the need for large-scale wholesale business (and the accompanying compliancy headaches), the overwhelming majority have no choice but to embrace routing guides for what they are (legitimate guidelines to streamline receiving processes for large retailers) and either develop the ability to internally comply or outsource the task to those who already possess such a competency.
Order Fulfillment for Beauty and Cosmetics – Common Routing Guide Requirements and Penalties
Though they differ widely across retailers, routing guides are sets of binding instructions issued by (generally large) retail buyers to their suppliers – either manufacturers and/or distributors – mandating that inbound shipments be prepared and communicated in particular ways with non-compliance leading to either monetary penalties or shipment rejection. Though frequently onerous, these guidelines are quite practical for the retailer as the receiving process in their absence would almost certainly be both inefficient and error-prone. Though no two routing guides are the same, it is common to see requirements like these (which merely scratch the surface):
Material safety data sheets (MSDS) must be provided to [the] safety manager[s] at receiving facilities prior to shipment receipt
Tamper-resistant seals must be included for all cosmetic merchandise
Sample products must be packed separately from actual products and labeled accordingly
Certain protective materials must be utilized – such as bubble wrap – to protect fragile items like fragrances
Certain void fill options are prohibited such as packing peanuts
All SKUs must be clearly labeled with the retailer SKU and UPC
Unlike SKUs must be clearly separated from each other within a carton (by means of inner cartons, bags, etc.)
Unlike SKUs must be segregated into different cartons and/or pallets
Multiple POs must not be mixed in a single carton or pallet
Packing slips must clearly indicate PO, retailer department number, retailer store number, etc.
The outside of each carton or pallet must display a list of SKUs and quantities contained therein – and such labels must be placed at [a] certain place[s] on the box or pallet
Maximum weights and dimensions for parcels and pallets shall not exceed certain thresholds
Shipping must either be incurred by the vendor, shipped via a mandated third party parcel/LTL account, or shipped collect via a particular parcel/LTL carrier
This list could literally be extended for pages (comprehensive routing guides are often one hundred pages or more in length); however, the above underscore the nuance which can be so overwhelming—especially for smaller, fast-growing sellers where all participants have a multitude of responsibilities.
Order Fulfillment for Beauty and Cosmetics – Non-Compliance Penalties
Penalties for routing guide non-compliance are generally monetary assessments (known as “chargebacks”)—though extreme non-compliance and/or repeated non-compliance frequently lead to shipment rejection. A few examples from the most up-to-date Neiman Marcus routing guide (as of the time of this article’s publication on March 20, 2019):
Unauthorized direct-to-store shipment (instead of to a distribution location): $150/carton
Freight charges for unauthorized carrier: Cost of freight plus $50 processing fee
Valid PO not listed on BOL or carrier freight invoice: $150/carton
Mis-route/Shipment shipped to the wrong address: $150/shipment
Though these penalties may seem borderline excessive, their existence is designed to simultaneously pay for and deter non-compliance—instances of which absolutely lead to real costs for the retailer.
Order Fulfillment for Beauty and Cosmetics – Benefits of Leveraging an Outsourced Order Fulfillment Provider
Routing guide compliance demands that a seller either develop the capability to internally meet standards or to outsource to a third-party which already possesses such a capability. Internal development is often possible; however, for resource-constrained firms, the investment of time needed to not only digest routing guides, but to consistently abide by them, generally comes at a substantial opportunity cost—especially if a principal of the firm need be involved. Though not all order fulfillment providers engaged in the beauty and cosmetics space embrace routing guide compliance, many do—and the costs of maintaining compliancy with their help are often much lower than might be expected due to a combination of both efficiencies and a transference of routing guide compliance risk from the seller to the order fulfillment provider.
Routing guide compliance is understandably intimidating; however, whether we like them or not, routing guides are here to stay. That being said, they are manageable—they simply demand the right preparation and/or partner.