Smooth operator

zoom

How Beiersdorf is using a combination of different partners to conquer 16 countries in the Middle East.

For the thousands of Afghans living under the shadow of austere Taliban militia it would seem that skincare is the least of their worries. But in a sign that the country is increasingly looking towards a liberal future, Nivea products are beginning to gain popularity.

In order to capture this market, and other emerging economies in the region, brand owner Beiersdorf has this month completed an impressive revamp of its logistics base and facilities in Dubai.

The Hamburg-based firm has up until now based its third-party logistics operations in the Jebel Ali Free Zone, from where it has distributed goods to 16 countries in the Middle East and West Asia regions. With a recent change in 3PL provider, matters look positive for Beiersdorf, despite what supply chain director Didier Jourdan describes as "heavy challenges", not least, understandably, in Afghanistan.

"We still need to provide a lot of documents to register our products," says Jourdan. "A lot of paperwork is being requested despite the fact that our products are fully approved and fulfil one of the strongest sets of regulations on cosmetics, as laid down by the EU. This is delaying new launches, new development and innovation."

Furthermore, the Beiersdorf executive also comments that access to Iran is blocked and there are significant hurdles in the ports, where shipments are being held for days.

"Shipping through Iraq is also a problem, but so far we have not lost any stock," he adds. "We've also had difficulties reaching Palestine, but, again, we've so far managed to find ways to get our products through. In this respect, we have had great support from our distributor who is responsible for importing the goods into that country." Jourdan strongly believes that consumer demand in the various countries it serves is such that it is worth trying to reach every single market to service its customer base.

"Afghanistan is not the best performer for us in our 16 countries, despite having a huge population. This is understandable because of the political situation. They have some internal topics to resolve before they are able focus on cosmetics," he adds, with a wry smile.

Beiersdorf established a presence in the UAE two and a half years ago through a small office connected to 3PL provider Agility. The firm currently has 50 employees and in a sign of its increasing confidence, has completely shifted its 3PL operations away from Agility to Deal Distribution International FZE, based in Jebel Ali South.

The decision was made after a five-month assessment of seven potential candidates based in the free zone. Deal, which has just opened a new warehouse and plans to open two more by the end of the next year, won the tender because of its specialisation in pharmaceuticals and cosmetics.

Beiersdorf has designed bespoke racking for the small, multitudinous products that make up its colour cosmetics range. "All our standard cosmetics are in normal racking in European pallets," says Jourdan.

"But for colour cosmetics, where our volumes are small, we have elected not to use pallet space, but dedicated storage spaces that have been specifically built to welcome these kinds of products."

The company has 6000 pallets in Dubai on a permanent basis and operates a tight replenishment strategy. Because fashion changes rapidly, stock often goes out of date and needs to be replaced on the shelf.

This means that the company has to tightly manage its demand and cannot stockpile products.

"All our products are traced by the batch so we have batch management along the whole chain from the supplier to our hub here," explains Jourdan.

"We need good traceability to ensure that our consumers have fresh goods. There are about 600-plus references for colour cosmetics where the product life - rather than the shelf life - is very short as it follows colour trends. We are replacing them quite frequently, so we need to have an efficient process to prevent obsolescence and losses for us."

According to Jourdan, more than 98% of volume is in replenishment from the firm's production centre, mostly in Europe. "On a daily basis we exchange our net demand to them, and they exchange their confirmation and production date with us via the APO platform in the SAP replenishment module. On a despatch basis, we are offering monthly deliveries to all our partners except the direct delivery service to duty-free locations, which we are managing directly in order to raise the status of the Nivea brand presence there."

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM