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10 Reasons: Why Skin Care Manufacturers Outsource, And Why We Don’t

February 17, 2018

10 Reasons: Why Skin Care Manufacturers Outsource, And Why We Don’t

Note: We proudly manufacture our own line of effective, all-natural skin care products. To learn more about our founder's story, go here. You can also view our line here.

Many of the brands you'll find on a box store shelf today are manufactured in a facility that the brand does not own. They are made in an outsourcing plant, or “lab” as they prefer to be called.

Chances are high that the competing brand sitting right next to it was manufactured in the exact. same. facility.

So who's working for who? Does the plant work for the brand to produce the products? Or might it be more accurate to say that the brand is a marketing agency for the plant they outsource to?

Keep those questions in mind as we take a look at the kinds of pressures that drive decisions to outsource skin care products, why we as a brand choose to resist those pressures, and finally what it all means for your skin.

The First Five Reasons: Why They Outsource

A manager giving evaluative feedback to an employee to illustrate management in skin care.

#10: Team Building (aka Management) – Building and maintaining an effective team is an essential part of growing any business, no matter the industry.

Usually (but not always) the creative types prone to found their own skin care brands are eager to surround themselves with the people they understand best: other creatives.

They feed off one another’s energy, busily bouncing ideas off one another - bethey anything from product concepts to branding strategies. And that’s great.

But there’s a catch. Creatives are usually pretty good at managing other creatives. They understand them. The problem is that, typically, they aren’t so good at managing - for lack of a better word - labor.

People who work labor build up subtle yet powerful insights into the tasks that they are given to accomplish. How things could be done faster, more efficiently, or of higher quality. They do so through repetition and common sense.

By the same token, managers may miss the value of these insights and what those lessons can do for them, their business, their brand, and their customers. Because (the thinking goes) if they were that good, they’d have their own business to lead…right?

This can result in workers viewing management as a pie-in-the-sky types with no practical understanding of the way things actually get done, and workers being viewed as insubordinate and lacking proper respect.

Sound far-fetched? We would beg to differ.

Skin care is a world that anyone can throw their hat into. All you need is talent, time, knowledge, and a little luck, and you may find initial success with a good product. What you don’t need prior to that success are any management or leadership experience or skills. After all: this kind of business starts small. Very small.

And because there are dozens of massive plants eager and willing to take over the nagging role of labor, the majority of up-and-coming brands view them as a convenient fit. “After all,” they reason, “then we can get back to doing what we love: dreaming up new products.”

Oddly, that royal "we" never seems to include the people who do the grunt work. They aren't really part of "us."

When put like that, such a mindset doesn't seem so inclusive, or forward-thinking, does it? But I bet it does sound familiar.

Man hanging from a clock tower to illustrate skin care manufacturing liability.

#9: Liability – There's a host of responsibilities inherent in running a plant. Even a small one.

Heavy objects are moved all over the place all day every day even in relatively small operations. And when you involve heavy objects, things go wrong.

People lift said objects incorrectly and get hurt. People drop said objects. They fall from high places. They spill, creating slippery conditions (or worse). They can be caustic, or hot, or damaging to eyesight…

On top of that, when a manufacturer gets the chance to scale up, they are confronted again with a new set of crucial decisions: Buy or rent? Location? Local Talent? Offices? Employee health care?

And when someone gets hurt? What about their families? And equipment? Refrigeration? Is permitting required? How long will that take?

And there’s formulation errors. Since you’ll be hiring new talent, do you trust them? When there’s a batch error how will you handle it? And the next time? What about if it creates negative customer reviews? Or causes a recall?

Which leads us to #8.

Darts scattered on a dartboard to illustrate inconsistency in skin care product manufacturing.#8: Inconsistency – The big plants are largely robotic. They have mixers, conveyers, pourers, fillers, toppers – the works.

They advertise perfect consistency and you don’t even have to worry about payrolls (let alone mentorship) for those pesky employees. That saves you money and headaches, too!

What more could you ask for?

On top of all that, you can scale up or down on a whim: “Sales are down? Why, don’t you worry! We store all your ingredients in-house and they’re shared among all of our accounts! You only pay for what YOU use!

Sales up? Well that’s great, too! You can expand and expand and expand and we’ll meet ANY demand! Want to change a formula? It’s a breeze! Adding a product? Couldn’t be simpler! Changing package size, shape or branding? We’ve got you covered!”

Yes, that’s exactly how they market themselves. They’ll also ship directly to Amazon (or Wal-Mart, Target, Sephora, Ulta, CVS, etc.) so you don’t even have to see let alone touch your own products. At all.

You can even automate Amazon (or any fulfillment center) to alert the manufacturer when they are running low. Sounds like the business runs itself, eh? Mai-Tai-on-the-beach time? Yes, please.

But there’s a catch… a few, actually, and we’ll get to those in a moment.

A stack of two in binders full of paper to illustrate records management in skin care manufacturing.#7: Records– I suspect that many start-ups just assume that expanding out of a kitchen is no different from moving into, well, a much bigger kitchen.

And in some ways they’d be right, assuming they had been keeping proper records in accord with good manufacturing practices while they were working out of their kitchen. Somehow I doubt it.

And so every batch needs to be recorded and held on file for a number of years (generally seven). Every. Batch.

That means the formula is to be filled out and annotated by whoever made it: special instructions, anomalies, temperatures, ingredients, volumes/weights – anything that made that batch what it was should go into the record. And then be saved. Forever. Well, not quite, but basically.

Then there’s fouled batches. Defects. Bad ingredients. It’s all got to be recorded. All of it. As do any lab analyses, customer complaints, adverse reactions, batch recalls, and so on. Sound like a headache yet?

That’s on top of the samples that are to be saved from every batch (yes, every batch) that’s been produced. This precaution is in case of an adverse reaction or recall, in which case it will be used for lab analysis.

A checklist on a notepad to illustrate the many facility responsibilities of skin care manufacturing.

#6: Facility Responsibilities – We’ve covered management, liability, consistency and records. What about the actual, physical plant?

Well for starters, facility cleanliness is paramount. Hopefully for obvious reasons.

This entails ensuring that all equipment and surfaces are cleaned meticulously, that everyone’s wearing hair nets (yes, those ‘look at us we’re formulating’ shots you see from companies with their hair flowing everywhere are very, very wrong), generally covering exposed skin, and wearing gloves.

Bonus points for dust or surgical masks to keep your droplets to yourself (we generally wear them, but they aren't required).

Then there’s equipment cleanliness, its maintenance, the replacement of broken or faulty equipment, and upgrading. All things a scaling business gradually faces the more they grow.

On top of all that, the facility will need its own SOP (standard operating procedure). How it’s written will depend on the facility and the equipment placed in it.

It will need quality control procedures. It will need training guidelines. Equipment will require calibration, which requires its own procedures (and records).

Even a simple weigh scale used for ingredient batching will have to be periodically calibrated, and that calibration requires a guideline and record of completion.

And of course all of the above ties directly into that magic word: risk. Will you risk your business on a mistake, when all you have to do is pick a major outsource lab and just say "yes?"

The reasons above outline the justifications for why skin care brands elect to outsource.

Of course in some sense it all boils down to profit, which we'll touch on more below.

So, are you feeling the pressure to “sell out” yet? Would you outsource your manufacturing? Before you answer, let’s take a look at why a tiny minority – including we at Ladyloved – choose not to, and what that might mean for your skin.

The Second Five Reasons: Why We Don't

Rows and rows of large ingredient canisters.

#5: Ingredient Care – Giving up responsibilities means losing control of some very basic aspects of what makes your business tick. Things that you take pride in, both big and small, end up outside of your purview and in the hands of others.

In the case of skin care, outsourcers do not generally hold ingredients on-hand for specific client accounts. They have a huge stock of ingredients that are shared among all of their client fulfillment obligations.

This means that your ingredients are not really yours. Sure, you get to specify them by name. But depending on where you outsource, you are almost certain to lose much of the control you once had over where those ingredients are sourced from.

That’s because the outsourcer has already built relationships and logistical networks over a number of years, and accommodating your requests will constitute a major cost headache for them. If you can't control their source, how can you control their quality?

Potentially more important than ingredient sourcing is the loss of ingredient storage control. Things age, after all. Especially natural things. Essential oils are sensitive, volatile compounds, and sitting in storage degrades their efficacy.

You’re basically telling the outsourcer: “I trust you to use proper ingredients of proper quality, store them correctly and preferably refrigerated, and periodically check to ensure that they've retained potency. If not, throw them out. I also want you to save me as much money as possible.”

The conflict is obvious. If you’re expecting any brand who outsources production (which is virtually everything you’ll find in a box store like Sephora) to treat your business with the care and concern that you do, then you’re fooling yourself.

A picture of the ladyganics skin care line.

#4: Product Care – Products are more than just the sum of their parts. When you bake a cake, do you look at the ingredient list, throw all the ingredients in a bowl, and begin eating? A decent skin care product is no different.

Imagine a bakery claiming to bake the finest pastries in the world, and at the same time contracting out the ingredient sourcing and cooking to Nabisco. Have they given up control over the quality of their pastries? More importantly: would you expect their pastries to be craft quality? Would they be justified in charging craft prices?

What’s more is that outsourcers can also act as fulfillment centers, or at least be tied directly to one. This is important, because they prefer to manufacture batches in very large quantities. It saves them costs - it’s why they have all that machinery in the first place.

Larger batches also means they don't have to save as may batch-samples in case of a recall.

As a result, they’d prefer to produce well beyond what your brand is likely to consume in the near-term. You’ll have to, anyway, if you want to save any real money. The result? A massive inventory of aging products waiting to fulfill orders.

And what conditions are they aging in? Are they being broken down by light? What about temperature? Are they refrigerated?

A large warehouse and shelving, to illustrate inventory management in skin care manufacturing.

#3: Inventory Management – In the case that a “lab” is also acting as your fulfillment center they’ll be managing your inventory. As discussed above, the temptation is always to produce large batches, set aside the products, and move to another client. Basic economies of scale.

Now, if you’ve worked in the industry, you already know that the gold standard for all-natural products is just-in-time production. All-natural products don’t contain much in the way of preservatives. There are some that can be added, and they do help. But again, we’re talking about plant compounds. Not synthetics. They break down.

The superiority of just-in-time production is obvious: the customer receives the freshest skin care topicals possible. Just like with food. The same is true for stocking ingredients: ordering smaller quantities, closer to when you’re out of inventory increases freshness.

It also increases logistical headaches, expenses, and the chances of going out of stock. With multiple large clients depending on any one ingredient, these aren’t risks that a manufacturing lab can take.

During the creation of a batch, ingredients are poured, mixed, heated, cooled, shaken, stirred, swirled and any number of other things. This is the time when oxidation really begins, because it’s when air has a chance to dissolve back into the liquids.

Due to this fact, product age plays an even larger role in efficacy and freshness than ingredient age. Which is yet another reason why inventory management is so crucial to product freshness.

This is also why ordering directly from a brand's website (assuming that they manufacture their own products) is always going to result in your receiving the freshest products possible.

A skin care product can sit in a Fulfillment by Amazon (aka Amazon Prime) warehouse for up to 900 days before it's considered expired. That's official policy. It's mind boggling, but it's true. All-natural, plant-derived botanical products. 900 days. Without so much as refrigeration.

Hands with latex gloves and a culture plate, to illustrate product quality in skin care.#2: Product Quality – They like to call themselves “labs.” They wear nice white lab coats, and their marketing brochures are fraught with beakers, begloved hands, bespectacled faces, and clean, well-ordered rooms.

You think to yourself, “Wow, maybe they’ll make my products better than I can!” And you’ll be encouraged in your thinking – after all, “they’ve been at this for decades.”

Well, so has Nabisco. While we have nothing against Nabisco per se, we would never take their pastries over a craft batch. Because it’s not just about sleek machinery and spotless lab coats.

It’s also about the little things. The on-the-fly tweaks that you make because an ingredient is a little thin, or pungent, or weak. With natural, plant-derived products these things happen.

Let's pose a question: is it important to ensure that the formula was followed precisely the way you’ve done it a hundred times before? Or is it important to ensure that the final product came out right?

The difference between those is the difference between mechanistic production, and the labor of love. Between mere synthesis, and craft.

Now ask: do you expect an outsourcing lab to perform the former, or the latter?

Which brings us to the greatest reason of all...

A woman who appears satisfied and at ease, happy about her life.

#1: Love and Fulfillment – Why go into any business, ultimately, if not for the love of the work involved? That’s a question we ask ourselves nearly every day.

Looking out across the landscape of businesses who outsource their production, we find that it can be difficult to personally identify with the people on the other side of the fence – the ones who made the decision to do so.

What’s troubling, really, is just how many brands do outsource. It’s nearly every brand you will find in any chain store. Sephora, Ulta, Target – you name it. Even brands designed look boutique-ish, or who only recently hit it “big time.” Chances are they already outsource, probably since before you'd heard of them.

We sort of get why. The first half of this list covers most of the major reasons. But after careful consideration, if you decide that you somehow don’t need control over product quality – that it’s worth all the trade-offs – then we have to also ask: do you not at least love the process?

The process is, after all, the heart and soul of the business. Creation. Making something that’s real. Not just blogs, ads, designs, images, social media content and the like. But putting hand to glove and creating something tangible for fellow people to enjoy.

Once you give that up, you’re nothing more than a glorified marketing agency, working for the manufacturing plant you outsourced to. It’s harsh, but it’s the raw, unvarnished truth.

Why do you suppose brands go to such lengths to avoid even hinting at the fact that they don't actually make their own line? People know instinctively that it just doesn't quite feel right. It feels inherently deceptive.

They'll use terms like "we created," "we made," "we formulated," "we're proud to present," and so forth. All referring to the product concept.

We've even seen brands "showcase their product manufacturing," which involved scheduling a photo shoot at their outsource facility during a production run of one of their products. The lab is presented as if it were their own, and no mention is made that it also creates their competitor's products.

Am I being uptight, or is that deceptive marketing?

We also understand why it’s hard for national brands to maintain all-natural ingredients. I laid out many of the reasons above.

Case in point: Burt’s Bees.

They grew up as an all-natural brand. And like many others they eventually sold out. To Clorox, specifically, in 2007. Yes, the company best known for bleach -  the chemical designed to kill every organism it comes into contact with - has owned Burt’s Bees for more than a decade.

Surprised? You might also be surprised to learn that many of their products contain amyl cinnamaldehyde, phenoxyethanol, retinyl palmitate, sodium borate and a host of others. They advertise themselves as “99.9% natural.” Close enough?

But this isn’t about attacking other businesses - several of them carry great products for many people's skin care needs. This is about educating consumers on the decisions that people who happen to run businesses have to make.

In Summary: It's about you, your skin, and your choices

Sometimes business decisions are moral. Other times they're practical. Other times they're about conviction. More often than not they're about profit. What can a brand do to cut costs without you pushing back? Because ultimately the person that all of us in skin care must answer to is you.

You tell us what to do by way of your purchase decisions. Are we making the right decisions? There’s only one way to tell a brand “yes” or “no” that ultimately counts.

The difficulty for consumers is that it’s hard to know which brand is doing what. When it’s popular to be natural, they’ll all suddenly adopt a veneer that screams "I'm natural." Or, as in the case of Clorox, buy a brand who already has it.

Let's talk about their "99.9% natural" claim. Did you know that the human body is 99.9999999% empty space? That’s right, you’re almost nothing but the space between atoms.

It’s that last bit that makes all the difference. So if you see someone in the road while driving, is it okay to plow right through them because they're 99.9999999% nothingness? Surely that’s close enough to 100%...

Brands will do anything to convince you that their veneer is a real patina. That they’re genuinely natural. That they genuinely care. That they genuinely labor over the love of their products to produce something delicate for your skin.

Meanwhile their line is made by people they don't know and robots they don't oversee with ingredients they can't source in conditions they don't control all in a facility they never visit  - other than to run a quick photo shoot to make you think none of that first part was true.

I called them brands, but what is a brand who outsources production, really? As we’ve said: they’re marketing agencies, and their clients are the manufacturing plant whose creations they market. Take a moment to really think about that.

So, now that you have our perspective, what do you think? Do you wish brands were more transparent about their outsourcing?

Or do you think it’s really no big deal? Does it depend on the product? Does outsourcing matter more for items marketed as “natural” and thus having a lower shelf life? Or is it really all the same?

Is all of this just consumer responsibility at the end of the day? Or should phrases like “natural” be more heavily regulated?

What is “natural,” anyway?

Give us your thoughts below, and if you enjoyed the article then please feel free to share it. You can use any of the social media buttons below if you like.