The Cosmetics And Personal Care Industry Needs A Makeover. Here’s How Blockchain Can Help
Practically everyone has had a reaction to a lotion or cosmetic at some point in their life. For those of us with sensitive skin, it’s a constant guessing game as to what ingredient is causing the problem.
But chances are, no matter how many labels you compare, you may never know the real answer.
The cosmetics and personal care industry has come under fire recently for the lack of transparency in their supply chain — and for good reason. The lotions, deodorants, and makeup we put on our skin are eventually absorbed into our body. Because of that, many people mistakenly believe that those products are regulated by the FDA in the same way as food or medicine.
The New York Times reported that the “FDA normally receives about 300 to 400 complaints a year about bad reactions to cosmetics and personal care products, all of which are sold over-the-counter without prior government scrutiny.”
The FDA doesn’t even require safety testing of ingredients in cosmetics. The federal law regulating them is mostly unchanged from when it was passed in 1938.
That’s a huge problem, because on average, women use 12 personal care products a day, exposing themselves to 168 different chemical ingredients.
And in case any guys out there figure this doesn’t apply to them, the average man uses six personal care products a day, exposing themselves to 85 unique chemicals.
Thankfully, Senators Dianne Feinstein of California and Susan Collins of Maine have introduced a bill called the Personal Care Products Safety Act that would reform those regulations and ensure that the products we use every day are safe.
This bill is a strong step in the right direction, but the regulations themselves aren’t the whole puzzle. We have to make sure that companies have the tools they need to comply with the regulations and keep consumers safe.
Blockchain has the potential to solve major issues in the cosmetics industry for both companies and consumers alike.
The personal care and cosmetics supply chain is extremely complex but loosely regulated. As products get closer to the consumer, counterfeiting and diversion become major issues.
That’s because corporations that produce these products use contract manufacturers. From those manufacturers, the product is sent to a packager and then on to a distributor — let’s say a massive distributor in South America. But that distributor will often sell to unaccredited or unapproved sub-distributors.
And once the product is diverted, no one at the top has any idea where it’s gone or what’s happening to it.
Is the price being jacked up? Are the real products being swapped out for counterfeits? Are the fakes being sold to a customer somewhere? Is that Chanel eyeshadow you bought on Amazon real or is it going to give you a massive eye infection?
Blockchain gives companies a better option when it comes to tracking products throughout the supply chain.
Both visible and covert identifiers on products allow companies to work backwards and identify the issues in their supply chain.
If they find a product being sold on Amazon for exorbitant prices or a shipment of counterfeit products comes in, then they can use the identifier to look back through their supply chain and find the faulty link.
Companies like Chronicled can provide the end-to-end supply chain visibility for cosmetics from upstream supplier, to manufacturer, to distributor, to retailer, and ultimately to the customer.
But the problems in the cosmetics industry don’t only exist downstream.
The biggest challenges for everyone in the cosmetics industry lie upstream, where the ingredients are produced.
A cosmetic or lotion may have anywhere from 50 to a 100 ingredients in it, and those ingredients often come from all over the world. Unfortunately, there’s really no transparency at each touchpoint of the supply chain.
For example, mica is a shiny, flakey mineral that’s used to make products glitter or shimmer. It’s used not only in cosmetics, but also as an additive to automobile paint and as an insulator for electronics.
Two states in India — Bihar and Jharkhand — produce about a quarter of the world’s mica. But 90% of these mines are illegal, and human rights groups estimate that 20,000 children work in these mines while living essentially as slaves. The Guardian recently found that paint suppliers for some of the best known car brands (BMW, Volkswagen, Vauxhall and Audi) were linked to these illegal mines.
The solution to lifting these children out of poverty is complex and multi-pronged, but blockchain can provide a system of decentralized accreditation for workspaces and mines like the ones in India. Companies like BetterKinds are working to accredit source materials and facilities, where there is often the largest trust gap.
Even if only 10% of the mines are legal and ethical, it would be easy to identify them and then track the minerals through every point in the supply chain — from the moment they come out of the mine to the moment they’re purchased by a consumer.
Why aren’t corporations doing more about these problems?
We generally think that massive corporations have leverage over their suppliers, but the reality is they lack complete control. The suppliers end up dictating much of the process. Even if a company imposes certain standards, they’re often left with poor supply choices.
Once glitter has been deemed a necessity, the only question left is how to get it.
It doesn’t help that the supply chains in many industries, including cosmetics, are simply archaic. So many companies rely on paper invoices and money wires.
We need to focus on more robust systems, and the only one that really fulfills all the necessary requirements is blockchain.
There’s no other way to integrate all these inefficient, antiquated systems that are used by suppliers. We need a new backbone to share this information, and trace materials and products through the supply chain.
The Personal Care Products Safety Act is a great start, but we have to continue moving forward and building the best systems possible to keep consumers safe.