7 Ways to Optimize Your Supply Chain + Add Value to an Amazon FBA Business

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7 Ways to Optimize Your Supply Chain + Add Value to an Amazon FBA Business

Amazon’s product sourcing is a delicate balancing act. Every Amazon FBA owner hopes to discover the optimal mix of free and paid traffic. But acquiring products from other nations involves many moving components. Here are some great ideas for improving your business.

Tip 1: Protect intellectual property where it belongs.
Tip 2: Know your vendor.
Tip 3: Understand manufacturing profit margins.
Tip 4: Avoid costly errors and delays.
Tip 5: Look outside China to see when to diversify.
Tip 6: Improve supply-chain communication.
Tip 7: Avoid paying unnecessary customs and tariffs.

Let’s face it: getting items from abroad could be more accessible.

It’s a balancing act to manage shipments, inventories, lead times, and quality. Things can go awry.

Forbes predicted that “analytics will revolutionize supply chains in 2018.”

That was a great idea.

The data are arranged to help forecasting and tracking.

It improved transit efficiency.

It all needs to be better.

Data can now help FBA owners source products for Amazon from Asia or other places.

But that’s easier said than done.

“The Chinese century is well underway,” the Economist announced in October.

China’s growth rate since 2000 has been unique among “developing markets.”

They’re already a huge player online.

“It bears a disproportionate share of the burden of global change because China is so populous and developing,” the Economist explained.

“Astonishing share,” as in 45 percent since 2008. It’s a holy-shit statistic.

China’s worldwide economic influence is especially in ecommerce.

Yet the risks of importing products from China have increased.

That means now is the time to assess how these two developments will influence your Amazon business and plan your response.

How can you use data to improve operations and lower costs?

Undo the hazards of sourcing from China now.

In an ideal world, foreign product sourcing would look like this.

You’d know and trust your suppliers and know you’d get the greatest value.

Freight forwarders and industries would be able to communicate.

Uniform tariffs. The trade war with China would also have no impact on your profits.

In an ideal world, yes.

Bringing your supply chain online allows you to control it from one place.

This article will give you top recommendations for a physical-products company looking to optimize its supply chain and add value to its entire business.

Here are some great tips for sourcing things for Amazon.

Tip 1: Protect intellectual property where it belongs.

Amazon competition can be a major concern for individuals who imitate your products and sell them under your name.

It is good to buy products abroad and preserve intellectual property at the border.

That is, stop your merchandise from entering the nation and ending up in Amazon’s warehouses.

Should you register patents and trademarks in China or other Asian countries?

No! Most of the time, filing patents or trademarks in China is a waste of time and money.

The key is to show customs and Amazon that you own the brand and can maintain it if necessary.

Many aspects of IP protection in China center around good manufacturing relations. That’s being a prudent business owner.

Tip 2: Know your vendor.

It can provide you with a considerable competitive advantage.

Being aware of which factories you’re dealing with allows you to make smarter business selections.

The first step is to analyze the vendors.

Whom do you buy from? Is it a retailer? Who is a sourcing agent? A maker?

Work with a factory to keep your margins intact.

Many drop shippers and private labellers are careless that manufacturing facilities have their own suppliers.

Subsuppliers generate your product’s parts and components.

Follow the production cycle from start to end to uncover cost-saving options.

Vendor analysis allowed them to lower expenses on some furniture items.

They saved a lot of money after discovering the subsupplier who built the furniture’s casters.

And that’s only for enterprises that sell in bulk.

Yet understanding your supply chain is where each firm should start optimizing.

Too many Amazon sourcing business owners are in the dark and working with too many middlemen to make decent earnings.

Tip 3: Understand manufacturing profit margins.

If the factory is 1–3 percent off your production run, this is a warning.

Why? The margins are so small that no realistic or ordinary manufacturing plant could exist.

Manufacturers must pay their own suppliers, maintain and upgrade their equipment, and pay their workforce.

Margin is required to flourish and create a pleasant environment.

A 15–30 percent factory margin is viable. Business owners who are told a factory’s margins can be as low as 1–3 percent are dealing with dishonest vendors.

Transparency equals power.

Tip 4: Avoid costly errors and delays.

What is the most common sourcing misstep that business owners should know?

Save money by using your supply chain.

What are the riskiest and most costly shortcuts we should see?

Inadequate quality control checks and balances.

Quality control inspections are required. They must be completed before a cargo leaves the factory.

A quality control inspection mechanism and boots on the ground can be put in place for about $300.

That’s a no-brainer. It’s a must.

A solid valuation method lets you see preshipment photos and physically inspect 10–30 percent of the product.

The checks and balances should be in place for every production run.

A condition in your contracts with manufacturers saying that any products not meeting inspection criteria will be withdrawn from your purchase order is also recommended.

Another defense can save up to 3 percent off a buy order.

Tip 5: Look outside China to see when to diversify.

Diversifying the supply chain away from China and other Asian countries makes excellent commercial sense.

Businesses procuring products for Amazon can use it to reduce risk.

It’s a popular trend right now, given the trade war and the fear of more tariffs.

Other hot spots right now are the following:

  • Bangladesh is in Asia.
  • Vietnam is an Asian country.
  • India.
  • Philippines.

Sourcing raw material, infrastructure, and factory management remains hurdles for Southeast Asia’s newer rising competitors.

Tip 6: Improve supply-chain communication.

Communication issues are a key source of supply-chain disasters.

To handle production and shipment, most business owners use email and Excel spreadsheets.

These fragmented approaches work to a point but fail when a company expands and scales.

To unify suppliers and manufacturing cycles under one dashboard and sync communication with all parties, delegating factory-to-freight forwarder communications is critical.

The goal is to improve workflow management with less miscommunication and communication delays and, hence, less costly errors.

Forecasting in e-commerce is difficult, as is timing shipments to match with seasonal purchases.

Ecom Brokers can help you improve your business to maximize the potential value in the near future.

Tip 7: Avoid paying unnecessary customs and tariffs.

The final tip is saving large merchants millions.

After solving the raw material puzzle, it can be used for manufacturing, warehousing, and fulfilment.

For pick-and-pack B2C order fulfilment, it is possible to avoid customs and tariffs regardless of product origin.

Importing goods from Mexico is becoming more common.

Why?

Because things can be brought “in bond” into Long Beach, trucked across the border to Mexican warehouses, and then fulfilled from Mexico.

Delivered via UPS, USPS, or FedEx as normal, shipments valued under $800 can cross the border duty-free from Mexico.

Corporations wipe off millions of dollars in tariffs and charges this way. Also, warehouse and labor costs are reduced.

Consider why this is legal.

Under certain conditions, Section 321 of the Trade Act requires customs and border patrol to clear free of taxes and duties of any merchandise shipment having a fair retail value in the country of shipment not exceeding $800.

Because the box is clearly labelled, addressed to only one person, and the value is disclosed.

This method cannot treat the following:

  • Alcoholic beverages
  • Alcoholic perfumes
  • Tobacco
  • Cigarettes

Furthermore, NAFTA’s IMMEX program permits products to enter Mexico temporarily tax- and duty-free.

The beauty of this method is that it gives the same fulfilment experience.

It saves money and forces you to consider all supply-chain choices.

The ideal supply chain would be straightforward.

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