Could Your Business Benefit From Warehousing + Consolidation at Your China Origin?

Ashley Boroski MendozaManufacturing, WarehousingLeave a Comment

Warehouse with forklift.

What is buyer cargo consolidation? Buyer cargo consolidation consists of combining cargo from many shippers into one ocean or air shipment. This saves money as bulk rates are applied when more cargo ships at the same time.

Why consolidate and warehouse in China? For companies already manufacturing or using suppliers in China, warehousing and consolidating at origin can increase profitability and make your organization run much more efficiently.

What are the benefits of consolidation in China?

  • Consolidate from multiple suppliers and/or manufacturers into one shipment.
  • Ship product when you need it for just-in-time inventory.
  • Warehousing & distribution are generally more cost-effective in China verses more expensive transportation markets, such as the United States.
  • Implement quality controls earlier in the supply chain to increase vendor control.
  • Frees up cash flow by allowing more frequent and smaller purchase orders to take place.
  • Flexibility to work with more suppliers who will only sell full container loads.
  • Buy minimum inventory from suppliers will often sell minimum quantities domestically, but not internationally.
  • Drop ship direct from the Chinese warehouse to the end consumer, fully-consolidated with your supplier information protected.
  • Frees up inventory space and prevents dead inventory at domestic warehouse, as well as the overall domestic burden of freight distribution.
  • Allows for transportation flexibility, including fluid cargo ready dates in a rapidly changing ocean freight markets

Example Scenarios

Problem: A small distributor wants to order from multiple suppliers in China, but they each have a FCL minimum order.
Solution: Since warehousing costs in China are significantly less than most countries, smaller distributors can warehouse their goods close to their supplier and pull out inventory to be shipped when needed. As an added bonus, some suppliers will also allow smaller orders to be released when shipping domestically versus shipping internationally.

Problem: A U.S.-based distributor’s client base places orders with a short lead time, only allowing time for transport.
Solution: One of the hardest challenges logistics managers face is the lead time it takes to process an order from the supplier or manufacturer to the end user. Eliminating the manufacturer allows just-in-time inventory to be within grasp as the product is already within your control. Keeping product ready that will be available to consolidate and ship at a moment’s notice will sometimes be the key to customer acquisition.

Problem: A manufacturer completes all quality control checks at destination after the goods are shipped straight from a Chinese supplier. After realizing there are mistakes in the order, replacement parts must be shipped separately and assembled domestically.
Solution: By placing quality control measures at a trusted warehousing facility in close proximity to the original supplier and/or manufacturer, you save transportation time should there be an issue with the product and the separate cost of shipping expensive loose cargo. Labor costs will also be decreased should the product need additional assembly.

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Ashley Boroski Mendoza
Ashley has worked in the George W. Bush Presidential Administration in both the White House and DHS. She later worked as a policy advisor in the Senate and representing top retailers to the federal government at the premier retail trade association. Currently, she is the Director of Global Growth Strategy at LILLY+ Associates ensuring exceeded growth annually.

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