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Capturing regulatory chaos in a bottle

| Product Lifecycle Management | Regulatory Compliance | Cosmetics & Personal Care
Posted By: Selerant

pp Selerant July 2022 PCG V2_HFedits (1)-1-1

This article first appeared in the July 2022 edition of Personal Care Magazine.

In August 2020, lilial, a common fragrance used in cosmetics, was banned in the EU and Northern Ireland. Deemed a carcinogenic, mutagenic or reprotoxic substance, companies had two years to remove the floral scent from products in these markets.

This meant engaging with stakeholders across several brands, several product lines and digging into numerous ingredients lists to rapidly reformulate, then reregister mixtures with various authorities to verify compliance.

The industry had gone through a similar process a few years prior, when Lyral (butylphenyl methylpropional), another common fragrance allergen, was added to the list of prohibited substances. As with lilial, Lyral would no longer be permitted in Europe after August 2019, with existing product lines permitted to stick around until August 2021.

Only two years apart, the new regulations proved to be a complex and confusing minefield, but this is the new normal for companies doing business across global markets. Regulations will continue to evolve, new guidelines will be introduced and companies will have to react if they wish to continue doing business in those countries.

Navigating the response effort has widespread implications for the industry. The process is often fraught with anxiety, with plans and teams often derailed by the disruption. Opaque and disparate business structures make it difficult to track progress and verify compliance measures. This lack of traceability and visibility often results in loose ends, which can spell serious disaster for regulatory adherence and customer safety.

Not everyone is on the same page

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Even with a long runway to implement change, new regulations can sneak up on companies. This is especially true for a large organization, where operationalizing a company-wide effort can be difficult.

It is common for bigger enterprises to be made up of several brands, each of various size, likely split into several divisions focused on specific goals. There can be additional segmentation, like a separation between fragrance or skincare lines, which are further broken down into product groups, all tasked with different responsibilities.

This degree of fragmentation means information can be incomplete, inaccurate or even get lost in all the confusion. The problem of silos creates several inefficiencies for an organization, but it can introduce a major obstacle for compliance.

Regulatory affairs inform stakeholders of the impact of new legislation, but unless there is one person looking at all functions across brands and product lines, it is easy for directives, including those from regulatory, to get muddled or sent adrift.

Some teams might not even know about the change or which products are affected until late in the game.

Why? It is not always immediately clear which line items contain the prohibited ingredient. Without clear recordkeeping and a strong database of ingredients and formulas, there is no easy way to evaluate product lines. The more stock keeping unit (SKUs) in a product line, the harder this investigation becomes.

Unless the enterprise has consolidated its product information, there is no easy way to automate formula analysis or perform a catalogue-wide search. Instead, every step in the process must be validated manually, across every division, group, product, and team. Variant products, like the division between saleable, samples, and testers—including different sizing options—only increase the complexity of this task.

And the climate is always changing. New regulations or frequent revisions to existing legal definitions and requirements create an uncertain foundation for compliance efforts. Lack of consensus across different authorities fuels the confusion; what is permissible in one market or country can easily be prohibited elsewhere.

This contributes to additional SKU lines and mix-up, introducing new product formulas to examine for compliance, each intended for different markets with different regulatory requirements.

Managing this complex web of brands and stakeholders, all owned by different people, falls upwards to the individuals who understand how departments and teams fit into the bigger picture. This responsibility flows to the parent-brand, who must and will be accountable for regulatory compliance. The systems leveraged and enforced by the company will determine how much chaos is introduced as a result of new regulations.

Racing against an unforgiving clock

Regulatory deadlines are non-negotiable; if you are also still producing lines with prohibited ingredients for these markets, you are not only risking consumer and brand safety, but you are about to lose money due to recalls.

Avoiding serious loss means executing a swift and decisive response. Once regulatory affairs inform an organization of a necessary compliance action, it is all-hands-on-deck. Company focus now shifts to addressing crucial business questions and developing a strategy to mitigate any negative impact.

What is your plan with the existing inventory? Do you have visibility into how often you are producing new stock? Will you be stuck with the old formulation while you are planning for the future? If you have slow turn, what is your plan for unsold product? You cannot produce more with the old formulation for this market, but you have to avoid an 'out of stock' issue with customers.

It is time to reformulate. Everyone is involved with this kind of change. Regulatory, R&D, marketing, packaging design, and sales. You have some time to replenish product lines with the updated formula, but not much.

R&D is going to need to prioritize this lift, but first they are going to need to know which products to dive into. They are going to want to work on the best-selling, highest-turn product lines first. How are you going to track this information down for them? And once the big, obvious products are updated, how are you going to ensure that nothing has been missed, especially those easy-to-overlook SKUs?

Your procurement team and suppliers are not going to have the background on the important products; you will also need to bring them up to speed.

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Changing your product in adherence to global regulations affects everyone downstream. Sales teams need to update ordering systems so that the correct SKU is delivered to customers. Furthermore, someone is going to have to figure out which markets you are about to launch new products into. Formulas and safety information will need to be registered with authorities, and new packaging and labels will have to be created to reflect the changes.

It can take months to resolve all the issues that arise during a reformulation, and without the right systems in place, it can quickly fall apart due to inefficiencies created by fragmentation.

What has been done in the past

The complicated structure of brand, product, fragrance, and then type encourages a fractured response to regulatory changes. In lieu of a centralized system, homegrown solutions - sometimes the faithful mix of spreadsheets and spiral bound notepads - are utilized for documenting product status, guiding the reformulation effort.

Yet with no unified process codified, important product knowledge can easily be lost to employee turnover, company reorganizations, and poor version control. You thought you were looking at the latest formula, one without the prohibited ingredient, but what you were really skimming through was a different product line entirely.

And those changes you did make? They were only for a sellable SKU, not the product samples and testers that will also need reformulation and repackaging.

These recordkeeping systems degenerate as new owners take over. More so, stakeholders from different brands, teams, products, and type have no visibility into your homegrown solution, as the disparate approaches and locally managed copies introduce additional silos.

In some instances, digital tools have been acquired to help encourage collaboration and visibility, but frequently, these systems fail to fully integrate, meaning stakeholders with different responsibilities using different tools find themselves trapped in familiar silos.

The same structures that help focus parts of an enterprise on specific goals introduce fragments and silos. Agility, the ability to pivot and respond quickly in the face of major changes, becomes increasingly difficult when efforts are split across so many factions.

Managing chaos with a single source of truth

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Hidden behind the various silos and partitions is critical product data that inform an organization's decisions. When these insights and bits of knowledge are trapped in their respective groups, tucked away in spreadsheets and notepads, the value of the data is restricted.

Consider a spreadsheet saved on a local network, say it is an ingredient list for a 0.17 fl.oz. / 5ml sample of lotion that needs to be updated for compliance. Without the appropriate digital resources, the only way to grant access to this information across company partitions is to make a copy and forward it along to the appropriate stakeholders.
Yet there is a risk here. What happens when the original gets updated? Do stakeholders email out a new version and everyone else deletes the old file? How does the organization verify that all parties are using the same, current information?

It is called data fragmentation, which increases the risks and challenges associated with synchronizing multiple versions of the same data. Fragmentation only adds to the confusion around making important business decisions, like updating a formula due to a change in global regulation.

Yet there is an inverse that is also true. When an organization collates information, creating single source of truth, stakeholders can leverage data to do more, including moving quickly and with certainty in response to market forces.
A single source of truth is a system where data is not duplicated or siloed but referenced. And for an organization with lots of stakeholders and products, a single source of truth might be the best method for introducing efficiencies into operations.

Instead of copying product data, which creates variants and fragmentation, sources are aggregated, linked, and stored in a single location. This guarantees that everyone is looking at the same information and data. Access rules keep proprietary information safe, but stakeholders can find and illuminate important pieces that would normally be locked away behind silos.

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A single source of truth is enabled by a central data warehouse or repository, like the cloud, which avoids partitions, eliminates redundancies, and maintains a current version for stakeholders. The system also preserves version history, giving a clear record of the past so that changes can be tracked over time.

It is this kind of technology that enables companies ensure compliance when reformulating and relabeling product lines.

A platform for centralizing product data

As new digital solutions are brought in to transform the enterprise, stakeholders find themselves encountering familiar complications, including point solutions and offerings that solve one stakeholder issue but fail to fully integrate with other company resources.

With no way to monitor or communicate along the linear progression of a product, companies discover efforts are stifled by digital manifestations of the silos they were looking to avoid. A product lifecycle management (PLM) system could be a life-saving element for a number of these organizations.

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In capturing end-to-end data from across the entire product lifecycle, from ideation to transportation, cosmetics companies gain the important traceability and visibility they have been seeking. Instead of serving as a single point solution, a PLM platform is a suite of tools that can cater specifically to formula and process-based industries.

Once this data is ingested as a single source or truth, the company can introduce important efficiencies and governance. All processes, formulas, and product interaction - such as when, where, what, and who - are now documented and searchable.

PLM platforms introduce important controls and oversight, including accountability. Process owners can be quickly and easily identified, their action items accurately documented, and unresolved steps can be addressed. With this information, product status is never a mystery, optimizations can be embraced, but more importantly, loose threads are eliminated.

Thanks to technology like the cloud, this data is available to stakeholders throughout the organization. More so, it can be accessed and shared from offices and plants located around the world.

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This is the peace of mind and confidence companies need to successfully operationalize a response. When new regulatory guidelines are introduced into a market, impacted products can be immediately highlighted. A good PLM platform is granular enough to identify which formulations contain the restricted ingredient and require remediation.
Formulation tools inside the platform mean R&D can immediately get to work on drafting up a new product. Once the new direction is confirmed, the formula can be assigned to different lines, allowing the ingredient swap to be fast and manageable.

Since the formula is preserved as a single source of truth across the entire system, teams all work with the same information. Product labels will be accurate and compliant, important regulatory documents, including the SDS, can be automatically authored and registered.

More so, claims can be validated. With the ability to trigger approvals across the product development lifecycle, process owners can verify that changes have, in fact, been made and are accurately represented. This degree of oversight and assurance reduces the operational burden related to authenticating formula updates.

Important business data that was once scattered and hidden across the company can now be leveraged in an organized way. Instead of relying on one person to have all the important product information, companies can lean on technology to serve as that record.

Conclusion

The increasingly global nature of the cosmetics industry means that companies have offices and plants in multiple countries, are serving a variety of markets, and need to be in adherence with a wide breadth of regulatory bodies.
Having a reliable product lifecycle management platform in place as a single source of truth gives you the peace of mind needed to stay agile. Fast, secure, and accurate holistic information empowers companies to make these decisions with confidence. This is how the disruptions created by changes in regulation can be easily managed.
Yet there is another conclusion here—product development is driven by a variety of trends, not just compliance. Companies who embrace connected technology can respond faster, even leading the pack with faster time to market.