A sense of fulfillment: here’s how products go from idea to warehouse

Continuing our series showing what happens behind the scenes in fulfillment, in this blog we’ll walk you through all the steps in the journey that a physical product makes from the factory through to the warehouse and onwards to the customer. 

What’s the big idea?

In fact, why not start even before the factory: while your product is still an idea. If you’re a solopreneur or just planning a side hustle, maybe inspiration struck while you were out jogging. If you’re in a startup, your concept might be the result of a group brainstorming session. If you’re in an established business, maybe evaluating the market has shed light on an unexplored gap. Whatever way the lightbulb flickered on, you’ve pictured this product in your mind’s eye and you think there’s an appetite for it. 

Once the vision starts to take shape, you research it a little more and validate it with feedback from people you trust. Now it’s time for the next step: how to get it made, and get it into your customers’ hands. This is where the supply chain begins. 

Building your supply chain

Your product — or its components — will need to move from one location to another. You need to find out if there’s a manufacturer somewhere in the world that’s already making finished products that you can sell in your local market or badge as your own. Or, if it’s a brand-new creation, you’ll need to source the components from suppliers and arrange for them to get to your chosen factory.

Where’s your chosen factory based? Does it have the raw materials on site, or do you need to arrange for them to get there? How much will it cost you to have the finished goods transported to your warehouse? 

In our experience, businesses will often do an initial manufacturing run to test the design and have the samples sent to their HQ for approval ahead of full production. Those samples tend to be shipped through couriers as priority so no expense is spared. 

Shipping from the factory

Once you’re happy with the product quality, what are the steps involved in getting your products from its facility to either your premises or an outsourced warehouse in Ireland or the UK? 

Let’s suppose you’ve identified a manufacturer in China: it usually takes six to eight weeks for a shipping container to get from there to Ireland or the UK, once it’s been customs cleared. Air freight takes around five days for a similar journey, so it’s definitely a faster way to transport your products. However, it’s also more expensive than a shipping container, so you’ll need to consider how much profit margin you expect to make on your product, and to think about whether the product size is suitable for transporting by air. 

Also, you normally need to pay for air freight in advance, so this could affect your cash flow. Due to issues we’re experiencing now, like fluctuating global fuel prices, transport costs are in constant flux so you might want to keep an open mind on which option works best for you. 

Think about your manufacturing strategy 

One more thing to add about the manufacturing stage: although the Far East might be the place everyone thinks of for mass production, it’s not the only option open to you. There’s a growing trend towards sourcing in Europe. If you factor in the time that it takes to get from China, having your product manufactured in Europe eliminates lengthy shipping times since the product will arrive by truck, and probably over land. 

What’s more, a European factory might well provide credit so you might have already sold your product to a customer by the time you have to pay the factory for making it. (Some of our customers are working with manufacturing operations in Portugal and Italy for exactly these reasons.)

Once it’s made, where’s next on the product’s journey? Here’s where things can get complicated. Every region in the world has specific supply chain challenges, and each continent applies different sets of rules. 

For example, if a product goes into a warehouse in Europe, you need to pay import VAT and you need to be registered for VAT in the country where you have your warehouse. The United States doesn’t apply import VAT, but there’s a sales tax that’s applied on top of the purchase price, and this varies by state. But if you’re selling exclusively online and don’t have a physical presence in a particular state, that tax may not apply to you. 

Also, if you’re selling in the USA, you need to be registered in each state where you are selling, you need to set up as a foreign importer of record (FIOR).

As we’ve hopefully explained here, the product lifecycle can be complex with a lot of moving parts. You shouldn’t expect to know all this yourself. That’s why it’s useful to work with a reliable, trustworthy third-party logistics (3PL) specialist that has done this before, and can advise you on the right approach for your business. 

<p>Sense of fulfillment</p>

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