How to Reduce Supply Chain Costs?

One of the best ways to reasonably control company expenditures is to reduce supply chain costs. Fortunately, this goal can be achieved in some simple ways.

However, what you need to understand when you start with this part is where the key points are because the correct reduction with a clear understanding will bring the greatest return in the future.

Next, this article will make some suggestions for reducing supply chain costs and increasing profits.

Reduce-Supply-Chain-Costs丨TASK丨ChinaDivision
Reduce-Supply-Chain-Costs丨TASK丨ChinaDivision

1. Cut unnecessary space costs

Making full use of the space you have will save you money every day. As we all know, renting a warehouse to store materials requires daily rent, which will be a lot of money for a long time. Evaluate the utilization rate of your current warehouse space and find a warehouse that is more in line with actual needs that can save some money.

2. Process automation

Warehouse automation is not only a fashion trend, but it can also help you achieve the purpose of reducing supply chain costs. Ask professionals to provide assessment and advice on how to implement automation.

3. Make timely adjustments to customer needs

One of the ways to reduce supply chain costs is to make timely adjustments to customer needs. As the season changes, you will find that customer needs are constantly changing. You can follow these changes to make more accurate sales policies.

4. Minimize product damage rate

The improvement of the product packaging level will help reduce the probability of damage to the product during transportation. Make sure that the staff responsible for this area pack your products correctly to minimize breakage rates.

Warehouse Management System(WMS): How to Choose the Right one?

How to choose the right warehouse management system(WMS)? The right solution can help your company achieve improved order fulfilment, increased inventory visibility, automated data collection, and more.

The warehouse management system(WMS) can quickly process data and assist in the movement of goods in the warehouse. This article will give you some suggestions for optimizing warehouse operations.

Warehouse-Management-System(WMS)-ChinaDivision
Warehouse-Management-System(WMS)-ChinaDivision

The benefits of deploying a warehouse management system (WMS) are as follows:

  • Efficient and effective labor management
  • Inventory visibility and traceability
  • Accurate inventory counting
  • Fewer picking errors
  • Fewer returns
  • Accurate reports
  • Improve response speed
  • Remote data visibility
  • Automatic replenishment
  • Improved customer service
  • Minimize paperwork

Before implementing WMS, you need to make sure that your company’s future business benefits are objective. This system requires capital injection and involves operating costs. The main cost is to support the entire warehouse team and senior management to use their expertise, enthusiasm, and commitment to ensure the normal and correct use of the warehouse system and regular optimization.

WMS can help you maximize the realization of automated warehouse operations. It is not just a warehouse control system and a data collection tool. When you decide to incorporate WMS, the following seven suggestions can help you choose the best solution for warehouse operations.

WMS-ChinaDivision
WMS-ChinaDivision

1. Calculate the return on investment (ROI)

The process of continuous verification is very important because it can help you set a reasonable budget for the project and focus your energy on key parts.

2. Decision procedure

Modern WMS is highly configurable (usually configured by the end-user) and can adapt to any type of warehouse environment.

3. Do due diligence on your existing system

Regardless of whether your company’s current enterprise resource plan or business system already has WMS, you need to make a full investigation of the existing system.

4. Evaluate the internal development capabilities of each supplier

Due to the advertising and marketing nature of the WMS market, few vendors’ internal developments are feasible. A typical WMS supplier may amortize the ongoing development costs of more than 100 customers. If the overall requirement is particularly strong, or the need to integrate existing internal systems, in-house development is sometimes feasible.

5. Request information

First, prepare a short request for information (RFI) document, which describes your business, future business direction, warehouse, and warehouse plan, and outlines the goals achieved by WMS. If necessary, you can use the services of a consultant to help you.

In RFI, ask the supplier about the budgeted cost and implementation time frame. Ask for supplier information, including:

  • Company History
  • Financial history and status
  • Number of sites using their current WMS products
  • Owner of the intellectual property and source code of WMS
  • Customer list
  • Daily rates and support fees
  • Scope of support
  • Development plan
  • Track record

Then send this RFI to 6 to 10 subjects. Focus on suppliers with experience in your market. A WMS provider who has no experience in this field is unlikely to have the features and expertise to help you. Focus on vendors that have track records linked to any business or ERP system you are running.

6. Assess suppliers

Select three to five WMS vendors. Price is not the main evaluation criterion at this stage, but it can be used to exclude suppliers who will exceed your budget. Meeting with suppliers will help you understand their professionalism, their ability to face your needs, and their ability to answer your questions.

7. Make a decision

Choose the best WMS supplier for your warehouse.

Artificial Intelligence (AI) in Supply Chain and Logistics

The increase in data accuracy makes artificial intelligence more and more widely used in logistics and supply chains.

With the increasing complexity of the supply chain, the room for data errors is rapidly decreasing. The fierce competition in the industry has caused more and more supply chain and logistics companies to choose to use artificial intelligence in their logistics systems. According to Gartner, supply chain organizations expect that the level of machine automation in their supply chain processes will reach 200% in the next five years. At the same time, a recent study shows that by 2020, the annual industrial Internet of Things (IIOT) expenditures of developing companies are estimated to reach $500 billion.

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Artificial Intelligence (AI) in Supply Chain and Logistics丨ChinaDivision

Artificial Intelligence (AI) in Supply Chain and Logistics

With the increasing application of artificial intelligence and machine learning, it will change the face of the industry to a deeper degree, and will further aggravate the gap between large and small enterprises in the industry.

Artificial intelligence and machine learning eliminate the problems of inefficiency and inaccurate data to a greater extent and provide more possibilities for companies to deal with supply chain problems. The application of AI in the supply chain has improved production efficiency and product quality, reduced costs, and created safer working conditions.

In the face of a pandemic like this year’s COVID-19, AI helps companies understand what changes and plans should be made to the original plan of the supply chain to better tide over the difficulties.

According to data from the Organization for Economic Cooperation and Development (OECD), the coronavirus may severely threaten the global economy, and multiple industries will face fatal blows. As the spread of the coronavirus has become more widespread, preventive measures (travel restrictions) aimed at preventing the further spread of the virus have resulted in the forced disruption of the global food, retail, and medical supply chains and the freezing of income.

The Advantages of Artificial Intelligence (Ai) in the Supply Chain

1. Improve the accuracy of inventory management

Accurate inventory management can ensure that the correct materials enter and exit the warehouse, and prevent problems such as excessive inventory, insufficient inventory, and unexpected shortages.

2. Improve warehouse efficiency

AI simplifies complex work processes and speeds up work. Artificial intelligence systems can solve multiple warehouse problems faster and more accurately than humans. Besides, in addition to saving valuable time, automated work driven by AI can also greatly reduce the demand and cost of warehouse staff.

3. Improve safety

AI-based automation tools can ensure smarter work plans and effective warehouse management, which can improve the safety of workers and materials.

4. Reduce operating costs

This is the automated intelligent operation of the AI ​​system that can work without errors for a long time, thereby reducing the number of errors and workplace accidents. The higher speed and accuracy of warehouse robots achieve higher productivity.

5. Delivery on time

The artificial intelligence system can automate the system to accelerate the traditional warehouse process, achieve the delivery target with the minimum effort, thereby eliminating the operational bottleneck in the value chain.

How Does Transportation Affect Logistics?

Transportation is an integral part of logistics. Although scenes of trucks and trains parked by companies on commercial facilities are common, few people know how much the economy depends on reliable transportation.

1. What is transportation?

Transportation has long become one of the largest industries in the world. It refers to the movement of products and raw materials from one destination to another. This process encompasses both the beginning of the supply chain and the final delivery of finished products to consumers.

Transportation is a key link in the logistics chain, which connects the components scattered in every corner. The transportation system properly manages and controls the various components of the supply chain, so that transportation and logistics can work together smoothly, which is enough to prove the strong communication between the various parts of the supply chain.

Import Goods from China Leading Sourcing Agent - ChinaDivision

2. What is the impact of transportation on logistics?

The way transportation affects logistics is as follows:

  • Transportation costs are affected by the company’s factories: warehouses, suppliers, retail locations, and customers, or consumers.
  • Inventory demand is affected by the mode of transportation: high-speed or high-priced transportation systems may require less inventory, while slower, lower-priced transportation systems may require a large amount of inventory.
  • The choice of low-speed or high-speed mode can change the delivery schedule or the way the goods are packed.
  • Packaging will be affected by the carrier’s classification rules and transportation methods.
  • Contract negotiation may change the mode of transportation.

The role of various transportation methods on logistics:

  • Road transportation: highly flexible and can be applied to door-to-door service. Road transportation helps transport goods to locations far away from ports, stations, or loading points.
  • Railway transportation: an important mode of transportation. Compared with roads, railway transportation can transport a large number of goods with high stability and low cost.
  • Air transport: It is usually recommended to ensure quality and is more friendly to high-value goods. The fast delivery speed minimizes transportation risks, thereby improving the overall quality of logistics services and reducing the cost due to the loss of goods in the supply chain.
  • Water transportation: The most commonly used transportation method in logistics, because it has the advantages of large capacity and low transportation cost, and is mainly used for international trade.
Import Goods from China - ChinaDivision
Import Goods from China – ChinaDivision

3. In conclusion

Transportation is critical to the success of logistics programs. The operation of transportation determines the efficiency of product delivery.

A strong system requires a clear logistics framework and appropriate transportation strategies to enhance production procedures. Logistics managers, researchers, and transportation planners need to understand the various applications of logistics and the integrated relationship between logistics and transportation.

Fulfillment Center vs Distribution Center: What’s the Difference?

Order fulfillment is the core part of e-commerce. Before choosing a fulfillment center and a distribution center as part of your e-commerce supply chain, you should be aware of the difference between the two.

As e-commerce becomes more prosperous, more and more consumers choose to purchase large items online, resulting in an increasing demand for warehouse space. According to data from the CBRE Group, the availability of industrial real estate in the United States is only 7%. Warehouse space in high-demand areas close to the city center is particularly narrow.

At the same time, CBRE data also shows that 1.25 million square feet of warehouse space are required for every $1 billion in e-commerce sales.

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Explanation of the fulfillment center

The fulfillment center is a warehouse for e-commerce fulfillment services. Your company’s products are shipped to the distribution center in the form of containers or pallets. The warehouse will store your products until they are sold. The fulfillment center is the final destination of your products before they shipped to consumers or wholesale customers.

When your sales platform receives an order, the product is directly transmitted from your sales channel to your fulfillment center. Most order fulfillment service providers will have an online dashboard, which can track the progress of the product in the entire warehouse.

The fulfillment center will remove the order items from the shelves and package them for delivery and transmission. The shipping station will label it and notify the carrier to prepare to pick up the package. Carriers such as FedEx, UPS, and USPS will regularly pick up the goods at the distribution center every day.

Many fulfillment centers also provide other services, including inventory management, multi-channel, and matching and customization.

There are other names for fulfillment centers, such as:

  • Fulfillment warehouse
  • Order fulfillment center
  • 3rd-party logistics warehouse(3PL)

Third-party logistics can refer to fulfillment centers or more complex logistics operations. In addition to 3PL, there are other levels of logistics services, such as 4PL, 5PL, and so on.

Explanation of distribution center

The distribution center is also a kind of warehouse, but its position in the supply chain is different. The distribution center redistributes the products in the warehouse, but the distribution center can also store products.

The direct docking object of the distribution center is not the consumer, but the transfer point that converts the product from one mode of transportation to another. Product advantages will be transmitted from the distribution center to the fulfillment center for order fulfillment. Besides, distribution centers can also serve as commodity centers for large retailers.

Fulfillment Center vs Distribution Center: What Kind of Business Do You Need?

If the center of your business is e-commerce fulfillment, your choice may be a fulfillment center rather than a distribution center. The next step in your decision is to find the most appropriate provider of fulfillment services for your business, which also involves the level of service your business needs, the size of your business, and the type of products you sell. Make sure that the service provided by the fulfillment company is what your company needs.

Fifth-Party Logistics (5PL): The Future of Logistics?

Due to the impact of COVID-19, the current global logistics has become more and more complex. However, the importance of logistics in the supply chain has not yet been explained.

Except for those who are extremely proficient in logistics, most people are still unclear on which level of logistics to choose. Company leaders choosing the right logistics service (1PL, 2PL, 3PL, 4PL, 5PL or even 10PL…) can bring great effects to the company’s profitability.

Most people may have heard of 3PL, 4PL, 5PL and other products. However, many people may not know what factors are required for each level of logistics services. At present, 3PL and 4PL are the most common and prominent services. However, the application of 5PL in the supply chain has gradually become more prominent.

What is Fifth-Party Logistics(5PL)?

Fifth Party Logistics, also known as 5PL, is a system in which an organization (client) outsources all its supply chain processes to a logistics service provider. 5PL company is committed to planning, organizing and implementing the client’s logistics solutions.

In these various supply chain processes, 5PL uses both third-party logistics (3PL) and fourth-party logistics (4PL) services and manages all networks in the supply chain. Moreover, 5PL company will set the price, but in some cases, the determined price will be renegotiated.

5PL service providers have implemented their work using the latest technology from implementing logistics solutions to negotiating rates. Like 4PL, 5PL’s business also includes this series of processes and can fully control the operational processes of the supply chain.

Fifth-Party Logistics (5PL): The Future of Logistics?
Fifth-Party Logistics (5PL): The Future of Logistics?

What Is the Key Role of the 5PL Company?

5PL service providers mainly play key roles in the following aspects:

  • Logistics plan planning
  • Organize and implement logistics solutions
  • Meet the needs of 3PL and 4PL

Unlike second-party logistics operators that do not participate in pricing, 5PL companies participate more. Besides, 5PL also includes professional work with other service providers to negotiate fixed prices. For example, 5PL also cooperates with airlines, transporters and carriers. This is the difference between 5PL providers and other logistics companies of different levels.

Why Does 5PL Appear?

Due to the impact of the popularity of e-commerce and globalization, compared with the previous models, 5PL tends to meet the needs of future logistics companies and has an important impact on the development of today’s Internet of Things. Among them, 5PL’s online payment function simplifies the consignee’s transaction, and the convenience of the customer’s direct call centre allows people to directly respond to the quality of the service. 

All in all, the emergence of 5PL has adapted to the progress of the times, and its more scientific and technical processes will make the operation of the supply chain more efficient.

How to Judge an Order Fulfillment Company’s Service Efficiency?

Although most e-commerce sellers have chosen order fulfillment companies, most people don’t know how to judge the company’s service efficiency.

Generally speaking, they will pay more attention to cheap prices or equipment with good condition. Today we are going to offer some tips to help you with the efficiency judgement.

  • 1. Observe distribution efficiency. This is a factor that many e-commerce sellers are more concerned about. Warehouses with low delivery efficiency will not be trusted by large companies.
  • 2. Figure out specific storage fees. You need to be wary of some storage companies that may have invisible charges, so your caution is needed about signing a contract for the low quotation.
  • 3. Research whether the equipment and systems equipped in the warehouse are more advanced in the industry.
  • 4. Ask the warehousing company about relevant brand cases for comparative analysis and observe specific data to make more rational judgments.
  • 5. Confirm the total area and the specific layout plan of the warehouse. It does not necessarily mean that the warehouse distribution efficiency of the storage company must be high enough, but the efficiency must not be high for warehouses with warehouse layout problems. So this is also an important aspect that must be conducted on-site investigation. At the same time, you need to pay more attention to whether the traffic conditions around the warehouse are convenient. Good traffic conditions are the guarantee of warehouse distribution efficiency.
  • 6. Check the employee work manual of the warehousing company. In this way, we can see the general operation process of the warehouse, judge whether the warehouse personnel’s operations are sufficiently standardized, and ensure the low error rate.
  • 7. Check whether the warehousing company pays enough attention to the safety of the warehouse. The inventory safety needs to be put first. No one wants all the goods in the warehouse to be stolen or burned.
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Daily warehouse cleaning brings better working environment and fulfillment performance

FBA or Order Fulfillment Company, Which One is Better for the Q4 Holiday Season?

Recently, Amazon has taken many measures for logistics and transportation issues(recruiting more warehouse employees, ordering electric delivery vehicles, and building distribution centers to deal with the upcoming shopping season). It seems that they are trying to get ahead of some of the issues faced at the start of the COVID-19 pandemic.

On the one hand, supply chains have been greatly impacted, with fulfillment centers prioritizing certain products over others and many overseas inventory orders taking longer than usual to fulfill. On the other hand, consumers are buying online now more than ever.

However, according to data at 8 o’clock on September 21, the cumulative number of confirmed cases of COVID-19 in the United States has exceeded 7 million. The continuation of the epidemic and fire has made the logistics and delivery of the United States very unstable.

At present, US imports from China have increased by 89% year-on-year. This is when e-commerce sellers are stocking a lot. Therefore, some warehouses can no longer withstand the pressure, making appointments more difficult, and product information updates are very slow. Therefore, it is necessary to choose an order fulfillment center that processes shipments faster.

FBA2020

According to some feedback, the most serious Amazon warehouses are CLT2, FTW1, AVP1, SMF3, and MEM1 while the more controversial warehouses are ABE8, LAX9, MDW2.

It is worth mentioning that CLT2 is the warehouse with the most serious feedback from Amazon sellers. Some sellers finished the shipment in early July and have not been fully received today.

Amazon customer service also said that there are a lot of backlogs in the warehouse, and there is no way to urge the warehouse to receive the goods on the shelves, because the warehouse receives a large number of shipments every day. If it can be urged, the warehouse’s receiving process will be slower and more complicated. Therefore, the warehouse does not accept any kind of urge, which made so many sellers choose the order fulfillment center.

Since Q4 is already one of busiest sales seasons, the ecommerce giant wants to help protect its business from issues like these. 5 professional and experienced teams have been formed in ChinaDivision for better service in the future.

Contact us and you can benefit more in the e-commerce market!

The Role of Barcode Scanner in Order Fulfillment Warehouses

If you are the owner of an e-commerce warehousing company, what is your plan of inventory management? How do you manage thousands of clothes?

There are many SKU with different colours, sizes and styles, which increases the frequency of sending wrong goods and returning them. So the barcode scanner becomes a necessity in the work of order fulfillment, but how should the warehouse use the barcode scanner to optimize management

1. Inbound

For those e-commerce companies that operate their own warehouses, because they are not equipped with some professional warehousing equipment, the warehousing of clothing is manually checked and accepted. When there are too many goods, they cannot be accurately checked and problems are prone to occur.

The e-commerce warehouse is equipped with a barcode device and an intelligent system. Before the goods are put into the warehouse, the corresponding barcode will be recorded, and the inventory data will be updated in real-time, which greatly improves the accuracy and timeliness.

2. Outbound    

If the workload in the warehouse increases during the promotion period, the e-commerce’s own warehouse may meet unexpected accidents due to insufficient manpower and insufficient specialization.

As a result, store reviews plummeted, and there were a lot of negative reviews. So how does e-commerce warehouse solve this problem? Therefore, the code scanner plays an important role, and the specific products can be quickly matched by scanning to ensure the accuracy of delivery.

3. Inventory Checking

Due to the large variety of products, inventory counting is also a difficulty for e-commerce sellers. For products of various colors, styles, and sizes in the warehouse, manual inspection takes too much time and is very error-prone. The scanner and system equipped in the e-commerce warehouse can perfectly solve this problem.

A product is matched with a barcode, which allows the warehouse staff to scan the barcode only when checking the goods, instead of checking the specific size, color, and style one by one, saving a lot of time.

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How to Ensure the Warehousing Safety While Keeping Order Fulfillment Efficiency ?

The efficiency of e-commerce warehousing operations is a problem that many companies pay attention to, which will directly affect the warehouse capability . So today we will share some safe operation methods for e-commerce warehousing.

  • 1. When someone is carrying inventory, the other employees try to avoid standing on the road.
  • 2. When placing high-height goods, the warehouse staff should pay attention to the stability of the item. They should sort the unstable item out in time.
  • 3. When warehouse employees are climbing the ladder, they need someone to help stabilize the ladder and take protective measures.
  • 4. Use targeted tools and handling requirements for operations according to the features of the goods in the warehouse.
  • 5. The workers are required to concentrate and avoid accidental injuries when using machine.
  • 6. When handling the goods, pay attention to whether the packaging of the goods is broken.
  • 7. When loading the goods, pay attention to placing them in a stable and close fit to ensure that the goods will not be damaged or lost during the subsequent driving process. At the same time, no less than two workers are responsible for loading and unloading.
  • 8. When there are some dangerous goods in the warehouse, employees should be familiar with the characteristics of the goods in advance, how to ensure safety, take necessary protective measures, and standardize safe operation methods.
  • 9. The warehouse needs to be equipped with sufficient fire extinguishing equipment, protective equipment and necessary medical supplies. When problems occur, simple containment can be carried out to ensure sufficient buffer time.

Although the efficiency of e-commerce warehousing operations is important, everything should be people-oriented. From the perspective of human safety, the efficiency of warehousing operations can be improved in a better way, accumulating corporate reputation and bringing more customers and benefits to e-commerce warehousing companies.