INGREDIENTS PROCUREMENT

Natural fragrances are composed of incredible quantity more or less complex ingredients. The same is also valid for synthetic fragrance. Almost every fragrance ingredient has its specific scent, but that is not enough for building effective fragrant product. Recently I analyzed our production and came to conclusion, that we must use many ingredients to compose only 3 basic products. What can we do for simpler fulfilling by maintaining same high quality of products?

 

Sources

For SME (Small and Medium Enterprise) direct sources are scarce opportunity. It is a problem for procurement of natural resources as synthetic ingredients. It is huge task to organize production of agricultural raw materials and organize a chain from basic plant material till end product (raw extracted or already processed to natural ingredients). If you have some local production you can do that but raw materials are spread around a world. Specialized organizations are much moreeeffective for this task.

Similar situation is for synthetic ingredients. As SME you probably don’t by chemicals in containers or silo. The biggest order is in range of barrels or 1000 kg containers. Fragrance compounding demands also many ingredients in 1% or less in composition. In my opinion only reliable source are specialized companies that deal with big warehouses and as many as possible customers. Fortunately there are some very trustworthy enterprises with offers suitable for SME. For some bulk chemicals it is possible to find long term partners with very good service and reliable prices.

 

Procurement

SME in fragrance production have average production of 1000 to 4000 tons with average of 100 kg batch, many ingredients must be purchased in 1 to 10 kg range. Not a big issue for specialties (all users pay about a same price) but for common about 2000 materials you have big problem for achieving reasonable prices to have production cost control. Another issue is a problem of shelf life of many ingredients. There are some with shelf life about 1 year most of them can last 3 under good storing conditions and few more. Good warehousing with oxidation prevention system and possibility of temperature control are base for good ingredients control and avoiding of production problems. Actually most of us control production so well, that rejection of batches is quite low. Good information system and careful planning of sales is issue that demands careful data acquisition and coordination of sales data. Good cooperation between purchase and sales personal is big advantage and can produce extra profit.

 

Inventory

Based on my experience inventory of expensive materials is quite large and has turnover maybe half a year or more. Most used materials are not so expensive and also turnaround can be under 2 months in some cases under 1 month. Generally greatest task is to maintain actual data of inventory to avoid unnecessary dispatching of ingredients that exceed shelf life. There is good and skilled laboratory staff of great value by control of quality. Beside of producers documentation for maintaining even quality input control of core materials is crucial. Practically you should trace all data about input batches and documentation to avoid surprises.

Great help are properly maintained warehouses designed correctly as for fast approach to materials as for safety (fire safety). Nitrogen and temperature control should be on high level.

 

Production planing

In fragrance business we have to solve a challenge how to optimize production with optimal flow of ingredients, utilization of sources (people and equipment). SME have investment limits for investment into oversized capacity so bottlenecks in production can occur any time. Variation in load (orders) are another challenge for employees. Here very small companies (family owned and managed) can find advantage and flexibility for customer. Most of SME will be in situation to apply over time work for satisfaction of customers’ wishes. Procurement and marketing must cooperate with production   based on exchange of trusted data and by avoiding collisions between input and output demands. By very fast change of market demands processing times under 1 week are needed. Perfect coordination between sales team, perfumer`s staff and ingredients procurement can “save life”.

 

I have outlined some general aspects of ingredients procurement. It is not possible to avoid discussion about other business processes in this issue, because we can optimize ingredients flow only in case of good planning and cooperation of all business functions.

 

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