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9 Best Practices for Overseas Third-Party Warehouse Operation

by Sharline Shaw
9-best-practices-for-overseas-third-party-warehouse-operation
While global eCommerce has effectively removed borders for shoppers around the world, it also presents a whole new set of issues for the companies who have to fill those orders. To stay competitive and efficiently meet customer demand, maintaining overseas warehouses has now become practically mandatory.

Many Amazon business owners choose to establish or rent a warehouse overseas, as it allows them to optimize for factors such as product-delivery timings and costs. But export logistics can make cross-border eCommerce complicated and time-consuming, as exporters are subject to far more red tape. To avoid bottlenecks and provide shoppers with a seamless experience, some sellers contract a local third-party warehouse owner to manage their product storage, order fulfillment and shipping. 

Localizing cross-border trade while significantly shortening delivery time, this arrangement is a win–win situation for both sellers and shoppers. Sellers simply forward their orders to the overseas warehouse to fulfill, and the transaction is considered complete from their end. Sending orders to a warehouse located in the target market not only shortens delivery time but also lowers the risk of package damage or loss during transportation. 

If you’re an Amazon store owner located in North America but your target market is Australia, doesn’t it make more sense to have your warehouse in Australia? When you consider all your potential costs, including delivery and storage, a warehouse in Australia is going to be more cost-effective than shipping all the way from the States. 

Now that you’ve settled on your strategy, how do you make it work?

1. Install an Inventory Management System

If you’re ready to start working with a third-party warehouse, you should first have an inventory management system in place. Inventory management software will help you automate your business and save time in multiple areas, integrating with all your product info, including SKUs, product names, sizes, styles and colors. But the most important part is tracking inventory levels and locations. To monitor your inventory with clarity and ease, choose fixed and movable tracking options that are easy to understand. Make sure your inventory management system accurately reflects your physical inventory. 

Because inventory levels, purchase orders and other supply chain data are updated in the system automatically and in real time, you’ll know when to replenish items; taking into account local market demand and holidays can also help inform your promotional strategy. 

2. Forecast Your Inventory Procurement

Most products have a seasonal demand, so it doesn’t make sense to store your entire inventory throughout the year. Forecasting is the process of predicting how much inventory you’ll need to continue fulfilling orders on time. For optimal inventory procurement, sellers need to understand replenishment timelines for each product they carry. If possible, stock 1.5 times your normal business use. 

If you don’t have any historical data to help calculate the amount of inventory you need, leverage the buying and selling habits of your customers. By analyzing the data in your inventory management system, you can get an idea of market demand. From there, you can estimate future demand for your inventory and make the right sourcing decisions to keep your business moving. 

3. Keep All Stocked Items in Order

Stocked items—including raw materials, work in progress and finished goods—should be correctly grouped, clearly organized and kept in a clean and tidy area, accessible for daily operations. Think about customizing your space for your business needs. Consider shelf and space utilization against the best placement of product containers and think about how the items flow through from receiving, storage, picking, packing and shipping. By designating locations for each function, you’ll promote workflow efficiency and a tidier work space, making it easier for your staff to quickly locate any item. 

4. Uphold Warehouse Safety Standards

Make sure your warehouse environment is safe and secure and that all inventory is managed without incident. To avoid injuries and unnecessary loss, display safety signs prominently and require that safety standards are adhered to by all staff at all times. Administer proper training regularly and be clear about all key factors relating to safety. Ensure that all warehouse staff understand safety protocols and are trained in the safest ways to undertake each aspect of their job. Only staff trained to operate specific equipment may be permitted to use it. Check the safety of your equipment and facility regularly and comply with established warehouse safety rules and regulations. 

5. Establish a Labeling System

Is any product in your warehouse without a label? If so, fix that right away. Whether you choose low-tech thermal printed labels or scannable barcodes, labeling is essential for working efficiency and order accuracy. Despite their initial cost, customizable labeling apps can save your warehouse employees a ton of frustration while reducing potentially costly shipping errors. Assess your business needs before choosing but also consider what you might need in the future as your operations scale. 

6. Employ a Well-trained Staff

When you can’t routinely pop into your warehouse to check on things, having a well-trained staff becomes crucial. Make sure that all employees have a clear understanding of all working rules and safety regulations, your order picking process and how your inventory management software works. Any changes to existing processes must be communicated clearly, consistently and in a timely manner so that everyone is on the same page. To keep efficiency high and avoid any interruptions in service, consider cross-training staff to perform other people’s duties in the event that someone is absent. 

7. Create a Quality Control Process

Make sure all items are shipped in their advertised condition. To avoid customer dissatisfaction, refunds and possible negative reviews, sellers should verify the quality of all products before dispatch. Packers can check picked items for possible damage or defects or, depending on the size of your operations, you may want to employ a dedicated quality-control team to check ready-to-ship items between picking and packing. 

8. Track Your Warehouse’s Daily Performance 

To monitor warehouse operations and optimize your business strategy, track all tasks including inbound products, order fulfillment, quality control and customer service. For instance, tracking order fulfillment errors can shed light on solutions to prevent against future loss. Monitoring warehouse performance can help warehouse operators improve work efficiency. And tracking sales data can guide your purchasing decisions, so it’s not just about process. Monitor daily so you can react quickly, whether it’s to address safety issues, assess and replenish stock, or gather data that informs your business growth strategy. 

9. Choose a Reliable Logistics Company

To get your overseas warehouse going, you’ll need to partner with a logistics company, who will bear responsibility for getting your products safely into your customers’ hands. Choose wisely! Your business depends on it. Make sure your logistics carrier has great customer service and allows you to track all orders. Verify their expertise, service, technology, scalability, price and reputation before deciding if they’re the best fit for your business. The company should also be able to handle on your behalf any incidents that occur during transportation. 

If you’re at the beginning of your third-party warehouse journey, remember: location, location, location. The closer you are to your customer, the better. Also consider the size of the warehouse, the equipment you’ll need and estimated duration you’ll want to use the warehouse for. Then set yourself up for success by being as methodical and transparent as possible when it comes to your personnel, processes and data. 

About the Author
Sharline Shaw, founder of leelinesourcing.com, is an expert on Chinese export trade and has written many helpful articles on the subject. With 10 years of experience in the field of sourcing, Sharline is well-versed in all regulations and laws pertaining to exporting in China and enjoys sharing her knowledge.