Freight 101 Library

Supply Chain Management Guide: Process, Planning & Strategy

Supply chain management for eCommerce businesses is more important than ever. Check out these actionable tips from the import experts at Nolk.

Devorah Wolf is privileged to work with leading edge companies across the globe that use our marketplace platform to access digital freight shipping with transparent pricing and robust customer support. 

Take for example Nolk

Meet Nolk

Nolk are digital first brand architects that leverage proprietary Genius Wire technology to identify, curate, acquire, and amplify bold new brands.

Nolk is building a refined portfolio of in-house direct-to-consumer products driven by operational expertise and social responsibility. 

Nolk Co-Founder & CEO Alexandre Renaud knows what it takes to successfully build an eCommerce brand and make a smooth exit. He joined us, along with Nolk’s Global Supply Chain Manager, Jason Yan, to share supply chain management tips with the community. 

Building a Successful Supply Chain 

The recent rapid growth of eCommerce has created new opportunities for online businesses, but with so much competition and global market uncertainty, it’s more important than ever to build a streamlined and effective supply chain. 

Jason shared some great insights about building and scaling supply chains from sourcing to fulfillment and everything in between. 

For Nolk, finding the best logistics partners at each stage of supply is integral to success. 

Sourcing and Supply Chain Partnerships

Finding a successful supplier to source goods can be a challenge. While there are many available suppliers, finding one that’s great is the real test. 

Here’s what to look for in a supply chain partnership:

Quality control process

eCommerce brings a new level of transparency where customers can publicly review your goods, so finding the best supplier is vital.

The last thing you want is defective or poor quality products getting in the way of your brand reputation. One way to protect yourself is to ask potential suppliers what quality control processes they have in place. 

You can choose for the factory to conduct inspections, or retain a Quality Control provider. Third-party QC providers offer a number of benefits:

  • Providers are independent of suppliers so there’s no conflict of interest.
  • Quality Control providers are often faster at inspections than factories and have inspectors in numerous regions.
  • 3P QA providers can go beyond basic inspection to develop a comprehensive audit program for your supply chain.

Find out more with this handy calculator from the QA experts at Qima:

Expert Tip: Concrete indicators of quality control are certificates like ISO 9000 or the FDA’s cGMP.

Product Inspection Instant Quote

Manufacturing capacity

Scalability requires having a partner that can source the goods you want at the pace that you need. 

To make sure suppliers can keep up with surges in demand, ask them about:

  • The size of the factory
  • The number of years the factory has been operational
  • The factory’s monthly production volume
  • How many full time employees they have on payroll

Timeline from prototype to production to fulfillment

Success in eCommerce demands getting goods to the end customer quickly and this begins with production. Plan your lead time to guarantee delivery times and prevent disappointment.

Timelines can vary from product to product.

For common materials and more popular products, managing the supply chain means making sure you leave at least 3-6 months from prototype to fulfillment.

For less common products or products requiring multiple steps to produce, 6-9 months is a safer bet. 

No matter what you’re selling, ensure that your supplier can meet the supply chain timeline from the outset.

Supply Chain Business Model

Different factories for sourcing goods operate differently, so it’s important to understand how various suppliers run their businesses before committing.

Some things to consider in your supply chain business model include:

  • Is the supplier a trading agent or a factory? 

Factories give importers more control over the production process, but trading companies can help facilitate communications, negotiate pricing, or verify quality control on your behalf.

  • What is the minimum order quantity? 

Too large of an MOQ might mean it’s not worth it to order with a specific supplier.

  • What is included in the product catalog? 

Understanding what items are already in production will give you a good idea of whether the factory is equipped to produce what you need. 

  • What processes are in house and what are outsourced? 

Depending on the product, there may be additional steps in the process. If these are outsourced it complicates the supply chain and can make it more difficult to maintain quality control. It’s best to have full production in one place.

  • What incoterms are goods shipped under?

Depending on the supplier, you’ll need to assume responsibility for moving the goods along the supply chain.

For Jason, the main two incoterms he recommends shipping with are FOB and EXW. These put more shipping responsibility on the supplier rather than the buyer, which avoids a lot of time and hassle in supply chain management.

Free on board/FOB: 

The factory is responsible for the cost of moving the goods to the port in China. The buyer is then responsible to get goods from the port of origin (generally in China) to destination. 

Ex works/EXW: 

The factory is only responsible for customs clearance documents, so buyer must get the goods directly from the factory to the port and manage the entire shipping process from end to end.

  • What are the standard payment terms?

You should generally expect to put down a 30% deposit pre production, with the remaining 70% paid before shipping the goods. If your supplier is generous, you may be able to pay this when goods arrive at the destination port, but this isn’t standard. 

Negotiating payment terms will depend on the supplier’s general basis volume and the type of products you’re sourcing, but if possible try to negotiate more flexible terms to maintain cash flow. 

A rule of thumb is that the more volume you produce, the better the trade deal you’ll be able to secure.

Effective Supply Chain Strategies at Destination

Once goods are shipped and arrive at their intended destination, importers need to secure efficient last leg logistics services to get these items to end customers quickly. 

How you manage the delivery process is integral to maintaining your brand’s reputation, especially with recent pandemic-related supply chain disruptions. 

So what can importers do to keep things smooth? 

It depends on whether you’re selling multichannel or on Amazon exclusively. 

Strategies For Amazon Sellers

Amazon services are basic and straightforward, making FBA attractive to many eCommerce sellers. But they handle huge volumes and this can cause delays – especially in the high season between October and December.

If you use Amazon for fulfillment:

  • Plan ahead to cover any lead time or processing time caused by Amazon delays.
  • Ship larger quantities, otherwise it may not be cost efficient. Plus, over limiting may lead to inventory blackouts if demand surges.
  • If your brand is Amazon only, stick to Amazon fulfillment.

Strategies For Multi Channel Sellers

Diversifying fulfillment is a good strategy to reduce costs, maintain operational efficiency, and protect against gaps in inventory. 

The drawback of multi channel selling is that supply chain management is complex and hard to keep track of. 

Drawing on his vast experience with multi channel sales and fulfillment, Jason recommends that sellers invest in enterprise resource planning (ERP) software to keep everything centralized and accessible. 

A well-integrated ERP system will let you avoid manual work and will capture all of the information from various sales channels in one place and allocate them to whichever fulfillment center makes the most sense.

Amazon can actually fulfill multi channel orders if you link your ERP to Amazon’s shipping system (which is cheaper than most third party fulfillment centers).

Apart from Amazon, there are many third party fulfillment operators to get your goods where they need to go. 

Here are some things to look for when choosing a third party fulfillment partner:

  • Speed: fulfillment processes should begin within the day of intake and be delivered to customers within 3 business days 
  • Digitization: fulfillment partners should have the capacity to integrate with your ERP system
  • Return/refund processing efficiency: eCommerce has a higher rate of return than retail, and customers expect to get their money back on time and in full. This makes it vital to partner with fulfillment centers that can process returns efficiently.  
  • Customer transparency: the right fulfillment partner lets you and your customers track packages easily and in real time. 

Key Factors In Successful Supply Chain Management

To sum up, pick the right supplier, source the best shipping solutions, and find the perfect fulfillment partners so you can build a solid, scalable supply chain to propel your business success.  

Jason nolk

“I always keep this in mind when I work — never assume. Especially in the logistics world, there are always some potential problems and it’s important to make sure every step of it is well-thought out.” 

– Jason Yan, Global Supply Chain Manager of Nolk

If you want to hear more from Nolk and, you can watch our recent From Here to There webinar any time!

Thanks, Nolk!

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