CHINA VALUE ADDED SERVICES

There has long been a common trend for companies to offshore logistics to Asian sourcing countries, particularly China. A core focus of ours has therefore been to implement a new distribution solution at destination, where bypassing the traditional distribution centre is a major component. To this end, we’ve put in place a new distribution model, based on shipments from origin direct-to-store or to you, as the buyer. It bypasses the distribution centre which sits within your business or state-wide, depending on handling requirements.

Direct-to-store distribution

This direct-to-store distribution model takes advantage of the sourcing consolidation platforms in China, where goods are consolidated, prepared ready for the store or customer, and then shipped to its final destination. Orders/shipments bypass the distribution/warehouse supported by a cross-docking solution that allows for reach of the final destination.

Consolidation platforms

Direct-to-store distribution relies on sourcing consolidation platforms located in China. This has led to us identifying significant opportunities to improve control and efficiency in the sourcing process and in the international/domestic transport requirements by setting up consolidation platforms in China and operated by companies such as Raw Global.Through these consolidation platforms:

  1. Buyers consolidate cargo from different suppliers (assisted by Raw Global) within China or coming in from different countries within the sourcing region. The consolidation operations provide more flexibility to companies in the volumes purchased to suppliers, and provide a better control of the flow of goods coming from suppliers in outside areas.
  2. Vendor (Seller) management is a common Raw Global service performed at the consolidation points. When buyers have a large number of suppliers, we can monitor sellers production, provide QC, manage logistics assuring a timely delivery to the relevant delivery point with transparent reporting/system integration.
  3. Companies receive outbound transportation efficiencies, with improved container optimisation and a reduction in LCL shipments. Companies can maximise container load-ability with multiple vendors product or, in other cases, shift from one order-one shipment to several orders-one shipment. Improving container loadability can also reduce ocean container freight.
  4. Outbound shipments can be tailored to demand, organising shipments with less quantity but more frequency.
  5. Multiple product configurations can be elaborated. Different products or products from different sellers can be combined and packaged together. In certain situations, companies locate consolidation platforms in bonded warehouses (Free trade zones, Bonded logistics Parks, etc.,) or operate through trading partners in
    order to avoid a surplus of cost due to customs duties and taxes payment.

These situations include:

  1. When importing products from other countries into China for re-export;
  2. When a light processing or a re-packaging (combine different products or combine products from different suppliers) results in a different product category to export (ex: co-packing, a carton display with several products for a retailer);

Value added logistics activities

In order to increase profit margins, labour intensive activities are being moved up the supply chain. As a buyer requirement, some value added logistics activities are being performed by suppliers at a very low cost or even no cost, such as pick and pack operations. For example, fashion industry manufacturers in China (or sellers) deliver products already packaged per country of destination. They also deliver product pre-packs which consist of preparing packaging units with predefined quantities of several SKU such as style/size/colour assortment. However, even if in some sectors sellers go so far already, value added logistics activities are in general performed at the consolidation platform, because it is the consolidator of goods coming from different suppliers.

When globalisation involves the whole supply chain, from sourcing to distribution, there is a clear advantage in moving value added services like quality control to origin. Problems can be identified sooner and at a stage when it is still easy to fix them. Products are still close to their manufacturer/seller and it stops balance of payment event which in turn means payment made but QC issue still apparent. Importers can homogenise the quality control criteria and the packaging and appearance of products destined to different markets. More importantly, importers can protect their business by erasing any track of the suppliers.