5 SUPPLY CHAIN HACKS (for physical products e-commerce brands)
Running a physical products brand has become increasingly challenging in recent times. From tariff increases to freight delays and shortages, every aspect of manufacturing and delivering products has become more difficult. In this video, we will discuss five supply chain hacks that can save you money, time, and make you a more efficient operator.
Hack #1: Store Safety Stock in China
To reduce the cost and time associated with storing inventory, consider keeping some safety stock at your manufacturer's facility in China. This is particularly beneficial when facing increased shipping costs, tariffs, and warehousing expenses. By storing a few orders' worth of goods at the factory itself, you can significantly reduce manufacturing lead times and avoid operating costs and fees associated with storing inventory.
Hack #2: Identify Long Lead Time Parts
Reach out to your factories and request a complete bill of materials (BOM) for your products. This will allow you to see each component and its corresponding lead time. By identifying the long lead time parts, you can work with your vendor and their sub-suppliers to establish floor stocking agreements. This ensures that these critical parts are always available, reducing production and cycle times.
Hack #3: Utilize Fast Shipping Lines
In the current environment of supply chain delays, it may be more cost-effective to use fast shipping lines rather than waiting for full container loads. The Matson shipping line, for example, offers faster transit times and avoids check-in issues at California ports. While more expensive, this approach can help you avoid stockouts, delays, and costly storage fees.
Hack #4: Negotiate with 3PL Warehouses
When working with a third-party logistics (3PL) warehouse, negotiate to have the first four weeks of storage for your inventory waived. If you have an existing relationship or move significant volume, leverage that goodwill to avoid initial storage fees. Communicate your intentions and demonstrate the value of your partnership to secure this cost-saving arrangement.
Hack #5: Optimize Carton Sizes
Take a closer look at your carton sizes and pallet structure. Small adjustments, such as reducing carton size by a few centimeters, can enable you to fit more units into containers, warehouses, and trucks. This optimization can lead to cost savings in storage, transportation, and more efficient use of space.
These five supply chain hacks can be implemented to enhance your physical products brand's operations, save costs, and improve overall efficiency.
Keywords: Safety stock, Long lead time parts, Fast shipping lines, Negotiation with 3PL warehouses, Carton size optimization
Q: How can storing safety stock in China help save costs? A: By storing safety stock at the manufacturer's facility in China, you can reduce manufacturing lead times and avoid the expenses associated with storing inventory in the US or other locations.
Q: Why is it important to identify long lead time parts? A: Identifying long lead time parts allows you to establish agreements with your vendors and sub-suppliers to ensure those critical components are always available. This helps reduce production and cycle times, improving overall efficiency.
Q: How can utilizing fast shipping lines benefit e-commerce brands? A: Fast shipping lines, like Matson, offer shorter transit times and avoid delays at ports. This helps e-commerce brands avoid stockouts, minimize costly delays, and reduce storage fees.
Q: How can negotiation with 3PL warehouses help save costs? A: Negotiating to waive the initial four weeks of storage fees with 3PL warehouses can help e-commerce brands reduce operating costs and mitigate the financial impact of storing inventory.
Q: Why is optimizing carton sizes important for physical products brands? A: Optimizing carton sizes allows brands to maximize space utilization in containers, warehouses, and trucks. This optimization leads to cost savings in storage, transportation, and overall logistics operations.