5 SUPPLY CHAIN HACKS (for physical products e-commerce brands)

Introduction

Running a physical products brand has become increasingly challenging due to various operational headwinds in recent times, especially since the onset of the COVID-19 pandemic. With tariff and freight increases, slowdowns, and shortages affecting manufacturing, transportation, and delivery processes, brand operators must adapt swiftly. Below are five supply chain hacks that can help you save both money and time, making you a more elite operator in the physical products space.

1. Keep Safety Stock in China for Free

One effective strategy is to maintain safety stock at your manufacturer's facility in China. Aim to keep at least 30 days’ worth of inventory on hand, and in some cases, up to 90 days might be more beneficial. With the increased challenges in the 3PL environment—such as finding adequate storage space and justifying costs—storing inventory at your factory can be a cost-effective solution. By discussing your needs with your manufacturer, you can arrange for a purchase order (PO) to be partially paid (typically 30% upfront) while storing goods without incurring additional costs until they are shipped. This allows you to streamline your lead times significantly.

2. Deep Dive into Long Lead Time Parts

Another crucial step is to identify and understand the lead times for the components of your products. Reach out to every factory you work with and acquire a full Bill of Materials (BOM) that outlines the materials used in your products and their respective lead times. This information will help you identify long lead time parts. By partnering with your vendor and their sub-suppliers to establish floor stocking agreements, you can ensure that critical components are always available, allowing for shorter production times and keeping the overall cycle time efficient.

3. Use Mats and Shipping Lines or Ocean Fast Lanes

In today's logistics landscape, considering alternatives to traditional shipping methods can yield significant time and cost savings. Instead of only packing full 40-foot high cube containers, explore fast lane shipping options, such as those offered by Matson Line, which provide quicker transit times (10-14 days) and fewer delays at ports due to their dedicated facilities. Although slightly more expensive, this approach significantly reduces the risk of stockouts and costly delays associated with your products being held up during transit.

4. Negotiate with Your 3PL Warehouse

In light of fluctuating demand and pricing in the 3PL space, don’t hesitate to negotiate storage terms with your warehousing partners. If you have an established relationship with a 3PL and can demonstrate consistent volume, consider asking for the first four weeks of storage to be free. While it may be a tough ask during high-demand periods, it never hurts to inquire, and you may be able to leverage existing goodwill.

5. Optimize Your Carton Sizes

Lastly, be proactive in evaluating the sizes of your cartons. Many businesses accept factory recommendations without questioning if they are optimal for shipping and storage. By adjusting carton sizes, even slightly, you could drastically reduce wasted space, allowing for more efficient stacking in containers and warehouses. This minor adjustment might lead to lower shipping costs and enable easier handling and transport of goods.

Incorporating these five supply chain hacks into your operations today—whether it's storing safety stock in China, understanding lead times better, using fast shipping options, negotiating with your 3PL, or optimizing carton sizes—can make your business run more efficiently and increase profitability.

Keyword

• Supply Chain
• E-commerce
• Safety Stock
• Bill of Materials (BOM)
• Lead Time
• 3PL Warehouse
• Carton Size Optimization

FAQ

1. What are safety stocks and why should they be kept in China?
Safety stocks are extra inventories meant to prevent stockouts, and storing them in China can significantly reduce storage and operational costs due to lower fees associated with keeping products at the manufacturing site.

2. How can I identify long lead time parts in my inventory?
You can determine long lead time parts by acquiring a Bill of Materials (BOM) from your factory, which lists each component of your product along with its respective lead time.

3. Why would I consider using fast shipping lanes?
Fast shipping lanes, such as those offered by specialized lines like Matson, can significantly reduce transit times and the risks associated with delays at congested ports.

4. Is it reasonable to negotiate with my 3PL warehouse for free storage?
Yes, if you have a strong relationship and can demonstrate consistent volume, negotiating for free storage can be a strategic way to cut costs.

5. How do I optimize my carton sizes effectively?
Review your carton sizes and configurations, and consider slight reductions in dimensions to maximize space utilization during shipping and storage, ensuring you're not missing out on valuable capacity.