With the advent of multi-directional trade “Buy” & “Selling” in Asia and global distribution, centralized warehousing is a must for any business entering or already involved in these operations. The question is where strategically is the central warehouse best located, close to buying or selling operations, and where will both processes exist as sourcing, retail and e-commerce markets diversify?
In general, the choices of hub location would be either close to your selling market which facilitating the fast stock replenishment or close to the manufacturing sources which consolidating the products from multiple channels, doing pick-and-pack based on the destination needs, so called “store-ready”, in order to optimize your freight and operation costs. It is not an “one-size-fit-all” strategy, which way to go will be all depended on your business nature, stock movement, high-end vs low-end products, big or small physically in size, fashion-able short selling cycle or evergreen general merchandises.
If sea freight is the major transportation mode in your supply chain model, which means you have some lead time already built-in your supply chain planning, then in general, you might be able to consider to have your DC off-shore in Asia to enjoy a relatively lower operating costs (assumed you are in the US/UK or other relatively higher operating costs countries).
The next step is how to moving forward? In general, it is the most cost effective to subcontract it to a 3PL company with the well-established logistics network coverage which fits into your sourcing network; meaning they could help you not just managing the hub facility but included the vendor management. Even though you may have your own sourcing office in Asia but you should leverage the 3PL’s logistics setup instead of inventing your own wheels.
Traditionally, products are sourced from multiple vendors in multiple countries, consolidated in a CFS at the countries to optimize your freight and then ship to destinations. A similar activities done in reverse way at destinations, then products are keeping in a distribution center, DC. Depending on the destination countries, you may have multiple layers of DC / RDC (Regional DC) to store-and-forward the products up to your stores. In the DC network, many activities may be happened, such as pick-and-pack based on replenishment requests; quality inspection or gift packing. Some of your products might be required to re-route to other selling markets that may be go back to Asia! Some re-handling tasks may be required such as inserting care cards, booklets in local language, cable with local electric plug, etc……
Therefore, besides the Asia hub could have cost savings, handling the destination store-ready pick-and-pack operations. It might be served as a supply point in Asia, having the value-added services before fulfilling your Asian orders.
If you have any questions of similar needs, you may contact Ken So for further discussion: firstname.lastname@example.org
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