The cosmetic industry is a saturated industry in which rivalry is extremely evident. A substantial slice of the progress is realized through innovation. Innovation is essential to preserve competitiveness, to increase product performance, to enhance safety problems and to reduce the environmental impact of the products (OECD, 2007). Beertil Heerink of the European cosmetics association Colipa approves this concept by asserting that “the cosmetics industry thrives on the capacity to innovate” (Nichol, 2010). Cases of drivers of modernization are the varied population and the changing consumer needs. Examples of innovation are new formulations of products and new testing methods. As it has been mentioned before, consumers want to be conscious about the ingredients used in the cosmetics products. These ingredients need to be noticeable.
That is why it is essential to recognize who is doing what in the supply chain. To make ‟ awareness and consumers” trust concerning natural or biological components, cosmetics companies need to be able to make clear where those ingredients come from, who is producing them and how they are treated into the last products. The supply chains are quite short for small-medium sized companies. This also counts for the companies that are specialized in natural ingredients in which the supplier can be the producer. The supply chain can be quite long and complex for bigger enterprises. The materials might come from a foreign country or from a trader, treated in another establishment. In certain cases, the ultimate packaged product is bought from the distributing brand (OECD, 2007). In addition, the supply chain can play an innovative role in socially responsible packaging. The cosmetics industry is searching new methods to diminish packaging waste. Examples of the new ways of packaging could be the use of biodegradable plastics and recycled materials. Other packaging techniques are up cycling (reusing an object in a new way) and light weighting (use of less material) (Organic Monitor, 2010)