How it all begins

The owner of a small e-commerce website was having difficulty keeping her inventories stocked. This medical doctor and driven entrepreneur had contracted with another manufacturer to produce and deliver her self-formulated products.  Ten months had passed and her order of product was still not produced, even though she had placed a $35,000 down payment.  Meanwhile, demand for her brand of ethnic personal care products had only increased, and customers were seeing an increasing number of stock-out notices on product web pages.  Shortly before contacting BPI Labs, stock-out warnings had developed site-wide, and, with the situation growing more dire, our customer converted her own home into a provisional laboratory and processing area to fulfill customer orders.

BPI Labs’ Response

On February 12, 2012 BPI received a call from this entrepreneur, and with urgency, BPI set out to develop samples of her formulas for approval. First, BPI converted her formula processing instructions, which were optimized to work with household processing implements, into large-production processing instructions.  Second, BPI worked with the entrepreneur to create thoroughgoing specifications for product design so that BPI could ensure quality control on all production.  Finally, we expedited our order fulfillment process beyond our typical schedule to alleviate the back order situation.  Within weeks her inventories began to fill and the stock-out warnings were soon removed from her website. This is where the story gets interesting.

This is where the story gets interesting

The Custom Formulation

A customer called us looking for a domestic supplier of diaper rash cream, also known as a barrier cream. The customer had been purchasing a variety of barrier cream brands, and most were sourced from Asia.  BPI will often ask clients to send a sample product with roughly the same specifications as the kind of product they would like developed.  With this sample, the laboratory can replicate a customer’s preferred product qualities and reduce development time. In this case, BPI’s client submitted a product developed by an Asian company for BPI’s review.

The Problem

After studying the sample our customer sent to us, BPI learned that the petrolatum contained in this sample barrier cream could not be purchased domestically for less than the finished Asian sourced product.  This would mean that BPI Labs’ cost for just a single ingredient found commonly in barrier creams would cost more than the foreign sourced product even after it had been packaged in tubes and shipped to America.  But, this is where the story gets interesting.

This is where the story gets interesting

These barrier cream formulations are a low-technology composition containing mostly petrolatum with dispersed zinc oxide.  The zinc oxide in barrier creams is the active ingredient responsible for the product’s efficacy.  The petrolatum is used primarily for the suspension and delivery of the active ingredient, which results in the product having similar performance characteristics with any other petroleum jelly.  Incidentally, the amount of zinc contained within the sample barrier cream we were provided was not indicated on the outside of the packaging of the current supplier’s product, despite the barrier cream being an over-the-counter drug.

The Solution

Knowing petrolatum wouldn’t be a usable ingredient, BPI Labs turned to using a combination of cosmetic technologies to substitute the expensive petrolatum with water.  This had the effect of reducing the cost of our barrier cream formulation to something competitive with foreign sourced diaper rash creams.  We were able to do this while increasing the amount of active ingredient, zinc oxide, within the formulation to levels higher than the foreign sourced product. In the end, our formulation had none of the greasy and messy tactile feel consistent with petrolatum based products, and we were able to improve the efficacy of our formulation above that of the foreign competitors.

Conclusion: BPI Labs competes on cosmetic technology

Our customer not only found a domestic supplier, but they also received a superior performing product that was competitively priced.  The consumer response, we learned from our customer, was overwhelmingly positive when compared with the Asian sourced products, and our customer has requested no changes or updates to the formula since its approval.

…would be unable to deliver on 20% of the kits they were planning to introduce into the market, but this is where the story takes an interesting turn.

Unexpected Providence

The product our customer had been shorted was a hand wash. Our client’s marketing department, after hearing about the conversation with BPI Labs, called our company president back and asked if BPI could quickly make up their 20% shortfall. Because BPI Labs has created many hand washes, we so happened to have some hand wash material in stock. After quickly qualifying the material, overnight shipping a sample for their approval, and receiving packaging for their job, BPI filled, packaged, and delivered in under 2 weeks.  BPI Labs’ client was delighted with the response and was able to make a full, on-time introduction into the market.

Transitioning Gets More Complicated

Not long after this episode, BPI’s client decided to move all of their production of their kit items to BPI Labs.  They requested that BPI duplicate all the formulas for the kit. BPI was able to complete duplication work on 3 of the 4 items easily, but we recommended that the client seek to purchase the fourth formula from their current supplier in order to maintain a continuous user experience with the product.

BPI then consulted with their new client on how to acquire a formulation, including: processing instructions, exact weight-on-weight percentages, material specifications, and other oft-forgotten details. The formulation was eventually purchased, but with one troubling outcome. After the purchase, the previous manufacturer would not release the fragrance rights to the formulation. Without the release, the fragrance supplier could not supply BPI with the necessary proprietary ingredient. BPI then turned to its supplier relationships to duplicate the fragrance, and a substitute was quickly identified as being identical to the one BPI’s client had to abandon.

Conclusion: BPI Labs competes on extra effort

The customer’s foray into the market was not only on time, but also entirely successful.  BPI now produces all four items for the kit and many other personal care products for its client.  We were able to carefully transfer all of our customer’s technical information, although we will be recommending our clients make the fragrance rights part of their negotiated technical transfer.  We eventually made all of our customer’s manufacturing turnkey as their products gained traction in the market.