UK Beauty Market and Argan Oil Supply Chain Analysis

This assignment provides an in-depth analysis of the UK beauty market, including its growth rate, trends, and statistics. It also examines the supply chain of argan oil, a key ingredient in many cosmetic products, highlighting the importance of logistics management in ensuring smooth operations. The assignment includes references to various sources, including books, journals, and online articles, as well as appendices containing an export declaration and certificate of origin.

PROCUREMENT,
SUPPLY CHAIN
AND NEGOTIATION
REPORT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Market Outlook......................................................................................................................1
TASK 2............................................................................................................................................3
Procurement of Argan Oil from two countries.......................................................................3
TASK 3............................................................................................................................................4
Best Supplier, Port of Origin and Shipping Line...................................................................4
TASK 4............................................................................................................................................6
Customs Regulations..............................................................................................................6
TASK 5............................................................................................................................................6
Risk Management Plan...........................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
APPENDICES...............................................................................................................................11
Appendix-1...........................................................................................................................11
Appendix- 2..........................................................................................................................14

INTRODUCTION
Supply Chain refers to an overall systems of activities, people, information and
organisation as well as resources which are included in moving an offering of a company from
suppliers to customers (Christopher, 2016). On the other hand, negotiation refers to processes as
well as actions to reach a certain agreement through avoidance of disputes or arguments. The
following report is based on supply chain management of HF which is a beauty retail chains in
the UK. It covers Market outlook, channels as well as trends in hair care products as well as
procurement of hair care offering which is 30ml Argan oil from two countries. It also covers
research of the best supplier, customs regulations as well as a detailed risk management plan.
TASK 1
Market Outlook
Beauty and Health industry in the UK is experiencing a rise due to better products, higher
market demand and customer centric products. Within the industry, there are various factors such
as customer awareness and enhancement in technologies have encouraged beauty organisation to
develop products which are rich in skincare and environmental friendly (Monczka and et. al.,
2015).
The United Kingdom is the sixth-largest market dealing in beauty as well as personal care
products. Worth of this industry has been estimated more than £10bn in 2017. Moreover, in the
same year, per capita expenditure on personal care and beauty products in the country was higher
than £150, which is the fifth highest globally. This industry has four separate market categories,
which are personal care and beauty products, each of which is commanding 20% share of the
market, Salon and Spa services, commanding 30% share, barbershop and hairdressing services,
commanding 30% share of this market within the country. Estimated expenditure of customers
on salon, spa and beauty treatments have been more than £7.5bn in 2017 (What is the current
state of the UK beauty market? Key findings, 2018).
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Illustration 1: Market value of beauty and personal care in the United Kingdom (UK) from 2015
to 2020 (in million euros)
(Source: Market value of beauty and personal care in the United Kingdom (UK) from 2015 to
2020 (in million euros), 2019)
As per the above statistics, the market value of this industry has been forecasted to be
continuously rising in coming years. This market is female dominated and its customers are a
wide variety of women ranging from age of 16 to 54. Such a high range of customer
demographics are a strong reason for development of new trends within this industry.
As for haircare, the most important trend has been the rise in gluten-free and vegan
products. The development of vegan products has seen a significant rise from 6% to 20% within
a period of 2014-2018. in addition, gluten-free products have risen from 3% to 9% within a span
of two years in 2016-18 (Microbiome Skincare, Clean Makeup And Gluten-Free Haircare: The
Trends Driving Growth In The UK Beauty Market, 2019).
Another trend witnessed by this market is the rise of digital technology which has shaped
up the industry effectively. From development to its application, technological advancements
2

like Artificial Intelligence and Augmented Reality have shaped this industry in a better and
constructive manner (Beauty, Skincare and Cosmetics Retail Trends and Statistics, 2019).
However, currently, due to Brexit vote, the industry is facing a slower and steadier
growth. This, has resulted in increase in competition where beauty manufacturers and retailers
are working effectively to produce commodities which are according to the market needs and
preferable by customers. Thus, competition rate within this industry is quite high (UK:
Competition increases as growth slows in the natural cosmetics market, 2019).
The future holds even more advancements in the industry and with various health and
beauty products organisations, the industry is would be seeing a substantial and effective growth
in the coming years.
TASK 2
Procurement of Argan Oil from two countries
The industry is experiencing effective growth and it is necessary for its players to
appropriately develop effective business case weighing on developing a contributing supply
chain management (Ghosh and Shah, 2015).
HF in order to consistently expand its business and enhance its scope of profitability must
import hair care products for its customers. This would allow them to develop a wider market
with an enhanced consumer base within the country.
Product:
One such product for HF is Argan Oil. It is a plant oil which is effectively produced
through kernels of argan tree. It is a product which is recommended to be used for hair care.
Nature:
It is a bio organic product which is quite appropriate to be used for providing hair care
Benefits:
This product has various benefits. For instance, application of this oil helps in softening
and hydrating hair. Moreover, due to presence of antioxidants in high quantity, along with
Vitamin E and fatty acids, it assists in increasing elasticity of hair and effectively enhances
quality of hair.
Size:
3

HF is planning to distribute this oil in containers having capacity of 30ml. This would be
an adequate quantity to be sold to customers which effectively would help in developing an
effective customer market.
Price:
It is very crucial for a company to effectively determine correct pricing as per the demand
and supply. The firm is planning to import 15-20ft containers in the first year, which clearly
implies that there is a consistent and effective demand of this product in the country. For its new
product, the company would be applying psychological pricing techniques to effectively enhance
the scope of its selling. With all these factors effectively analysed, the firm would be setting its
price at £5.5 per bottle.
Packaging:
To develop its demand in the market, HF would be providing Argon Oil in polyethylene
terephthalate containers which is used globally to store hair care oils effectively. Other than it
being non-biodegradable, it has several benefits too. For instance, it is inexpensive, which would
help the company in saving its cost. It is resistant of moisture as well as has high strength which
would provide protection and safety to the oil (Everything you Need to Know About The World's
Most Useful Plastic (PET and Polyester), 2016).
Exporter locations:
Argan Oil is being exported and imported worldwide. However, it is an essential for HF
to determine two locations which serves effectively in shipping this oil to the company in desired
quantity. For this, the two nations through which HF would be importing Argan oil from are
Morocco and US. The reason of choosing these locations is that both of these countries are
recognised extractors and suppliers of Argon oil which is beneficial for HF in it business
prospectives.
TASK 3
Best Supplier, Port of Origin and Shipping Line
After determination of the product and quantity of Argan Oil which is essential to be
imported, it is essential that HF performs extensive research for suppliers which would be
shipping the product for acquisition by the company.
4

From various suppliers operating in the country, following is a supplier's file which
seems utmost convenient and effective for HF:
Supplier's file in United States:
Brand Name The company which is being chosen by the HF
is Organic Infusions Inc. which is one of the
most recognised suppliers in the US
Price The firm quotes US$ 28.75 for 120 ml of
Argan Oil (Organic Infusions: Argan Oil,
2019).
Quality Organic Infusions Inc. have certified organic
essential oils which is prime demand of HF.
Reason for Choosing the Firm HF would be choosing this company as its
supplier in the US as this organisation has been
certified for carrying out effective processes
which ensures ecological products, oils with no
chemical compounds, no animal testing, etc.
Moreover, this firm supplies pure products
overseas which makes it a prime choice for
HF.
Supplier's file in Morocco:
Brand Name From Morocco, the firm would be choosing
ZineGlob as its supplier of Argan Oil.
Price This company charges US$ 22- US$ 23 per
litre of Argan Oil (Argan Oil Wholesale Bulk,
2019).
Quality ZineGlob has certified quality of Argan Oil has
various certifications which includes USDA
Organic, ECOCERT Organic as well as FDA
5

(ZineGlob: Certification, 2019). This company
produces top quality Argan Oil and Supplies it
all over the world.
Reasons for Choosing the Firm The biggest reason for HF to choose this
company as its supplier in Morocco as it
provides the firm with utmost transparency in
information required about the product. In
addition to this, with such authenticated
certifications and effective image, the firm
ensures top quality and utmost safety of the
product.
After determination of suppliers for acquisition of Argan Oil, it is crucial and utmost
imperative for HF to choose best logistics company to work with. For both the countries, i.e., the
US and Morocco, this firm would be working with Fedex, which one of the biggest and
prestigious logistics company globally. The reason for choosing this company as its services are
recognised in almost all the world and it guarantees utmost product safety, convenient pricing
and limited transit time for shipping the product.
For the US, the most convenient shipping route for HF would be Port of New York,
United States to Port of Southampton, United Kingdom, having a distance of almost 3632
nautical miles (Port of Southampton , United Kingdom to Port of New York, United States,
2019). However, as for Morocco, the company would be choosing a shipping line from Port of
Casablanca, Morocco to Port of Southampton, United Kingdom having a distance of almost 1398
nautical miles (Port of Southampton , United Kingdom to Port of Casablanca, Morocco, 2019).
Both the shipping lines would be having Portugal as a connecting knot.
Estimated Shipping Cost of HF from USA and Morocco are mentioned below:
Estimated Cost of Shipping Process (in £)
COSTS USA MOROCCO
Set Up Fee 5000 6300
Packaging 3500 2800
6

Postage 500 650
Handling 350.5 400.2
Ground Fuel Surcharge 200 260
Administration Expenses 150 180
TOTAL 9700.5 10590.2
There are various challenges associated with procurements of Argon Oil from both the
countries. For instance, it might be quite challenging to find trusted and effective suppliers of
quality product and logistics company ensuring proper safety and timely delivery. Moreover,
another challenge associated with the same is acquisition of the most convenient route to import
the oil within due time and within most efficient cost. However, the target for shipment is to
acquire the products within due time, safely and within pre set quality without damage to ensure
more effective supply to customers.
TASK 4
Customs Regulations
Refer to Appendix
TASK 5
Risk Management Plan
It is essential for each organisation to effectively develop a risk management plan which
is essential for this firm to enhance the effectiveness of overall process of acquisition of Argan
Oil and mitigate the risk factors completely (Hugos, 2018). Following is the Failure Mode and
Effects Analysis table with potential risks and corrective actions.
Item/
Process
Failure
Mode Effect SEV Causes O
CC Controls DET RPN
Buying
Argan
Oil
Wrong
Interpretati
on of
With such
a flaw, HF
would be
7 Causes of this
risk would be
transferring of
1 The order must
be checked via
written
3 21
7

quantity by
supplier
charged
with
mismatche
d pricing
and
chances
are that
quantity
either does
not meet or
exceeds
than
required.
misinformation
from buyer or
mishandling of
information on
the seller's
side.
confirmation
letter to ensure
that required and
delivered quantity
are the same
Cargo
Shipping
Damage to
the
product.
Chances
are that
complete
loss of
goods
could
occur
which
would
have
negative
effect on
HF for not
meeting
orders on
time and
unnecessar
ily add to
9 This might
happen due to
natural
calamities or
due to
accidental fire
or theft.
2 To ensure safety,
the company
must use tracking
methods available
by Fedex to
regularly check
the status and
must obtain
insurance like fire
and theft.
1 18
8

cost.
Delivery
Untimely
acquisition
of goods
Would
have a bad
effect on
the
Customer
Relationshi
p which is
essential
for the
company
to enhance
its market
with Argan
Oil.
4
Might be
natural causes
for emergency
stoppage or
technological
error in the
cargo ship due
to which it
might turn
faulty.
3
Firm must set up
an effective time
schedule with
considerable time
gap giving
possibilities to
delay. 5 60
The table above effectively shows the possibilities, likelihood, causes and how risks
could be mitigated and managed within the company. These risks are ranked according to their
preferences to be handled which might serve effectively for the firm to handle all the
uncertainties associated with their acquisitions of Argan Oil.
CONCLUSION
Thus, it is concluded, that in order to effectively set up international trade and business, it
is important for any business organisation to indulge into effective import of products and
processes which would help it in appropriately carrying out its operations. Import would assist
the organisation in acquiring products that would further aid in setting up a new product line of
the company. It is however challenging to find appropriate suppliers and logistics to import the
desired products, however, import is necessary to enhance the scope of profitability and
international business. Lastly, supply chain must be determined to its utmost suitability and
logistics exercise must be backed up with risk management plan to ensure smooth running of
operations.
9

REFERENCES
Books and Journals
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Ghosh, D. and Shah, J., 2015. Supply chain analysis under green sensitive consumer demand and
cost sharing contract. International Journal of Production Economics. 164. pp.319-329.
Hugos, M.H., 2018. Essentials of supply chain management. John Wiley & Sons.
Monczka, R.M., and et. al., 2015. Purchasing and supply chain management. Cengage Learning.
Online
Argan Oil Wholesale Bulk. 2019. [Online] Available Through:
<https://zineglob.trustpass.alibaba.com/product/62002141526-231912129/
argan_oil_wholesale_bulk.html>
Beauty, Skincare and Cosmetics Retail Trends and Statistics. 2019. [Online] Available Through:
<https://www.thoughtshift.co.uk/beauty-skincare-and-cosmetics-retail-trends-and-
statistics/>
Everything you Need to Know About The World's Most Useful Plastic (PET and Polyester).
2016. [Online] Available Through:
<https://www.creativemechanisms.com/blog/everything-about-polyethylene-
terephthalate-pet-polyester>
Microbiome Skincare, Clean Makeup And Gluten-Free Haircare: The Trends Driving Growth In
The UK Beauty Market. 2019. [Online] Available Through:
<https://www.mintel.com/press-centre/beauty-and-personal-care/the-trends-driving-
growth-in-the-uk-beauty-market>
Organic Infusions: Argan Oil. 2019. [Online] Available Through:
<https://www.organicinfusions.com/products/argan-oil>
Port of Southampton , United Kingdom to Port of Casablanca, Morocco. 2019. [Online]
Available Through:
<http://ports.com/sea-route/port-of-southampton,united-kingdom/port-of-
casablanca,morocco/>
Port of Southampton , United Kingdom to Port of New York, United States. 2019. [Online]
Available Through:
<http://ports.com/sea-route/port-of-southampton,united-kingdom/port-of-new-
york,united-states/>
UK: Competition increases as growth slows in the natural cosmetics market. 2019. [Online]
Available Through: <http://www.premiumbeautynews.com/en/uk-competition-
increases-as-growth,11994>
What is the current state of the UK beauty market? Key findings. 2018. [Online] Available
Through: <https://www.cosmeticsdesign-europe.com/Article/2018/10/26/What-is-the-
current-state-of-the-UK-beauty-market-Key-findings>
ZineGlob: Certification. 2019. [Online] Available Through:
<https://zineglob.com/pages/certification>
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APPENDICES
Appendix-1
EXPORT DECLARATION
11

12

13

Appendix- 2
CERTIFICATE OF ORIGIN
US:
14

Morocco:
15

16