Supply Chain Solution Proposal — Sample
Executive Summary
[client] is a UK-based company that markets and sells Star Wars-inspired cosplay products and has been planning to launch its products in the UK and the US in Q2 2025.
On April 1 2025, [client] started to engage Surpath Inc. (Surpath), a logistics company headquartered in California, USA, to carry out origin consolidation operations at Surpath's warehouse in Shenzhen, China.
A trial run operation was conducted over a two-week period from April 1 2025 to April 15 2025. During this time, Surpath collaborated with [client]'s manufacturing partners to collect five shipments, performed sortation operations, prepared export documents, and coordinated with [client]'s freight forwarder to get their first UK-bound airfreight shipment delivered on April 23 2025.
Drawing on direct observations from the trial run phase – alongside our expertise in global logistics, supply chain management, and trade compliances – we propose the following supply chain strategy recommendations for [client]'s consideration.
- Contract a qualified Origin 4PL+ provider in China
- Implement compliant solutions for tariff optimization
- Drive immediate process improvements
- Formulate supply strategies to mitigate geopolitical risks
- Prioritize data integrity as a prerequisite to scaling business
Preliminary analysis suggests that, under current global trade conditions, the implementation of action 1, 2 and 3 alone could enable [client] to reduce upfront supply costs by up to 48% and transition to a significantly smoother operation model.
Additional long-term cost savings may arise from alternative sourcing, inventory placement optimization, and the reduction of other hidden expenses. A detailed, quantified saving analysis will be addressed in a separate project.
Background: [client]'s Current Supply Chain
Manufacturers
[client] inherited two China-based factories from the previous owner. Initial purchase orders (PO) were issued to these factories in Q1 2025. As of April 15th 2025, both have reported that orders have been completed.
Order Fulfillment
Historically, the consumer orders were fulfilled using the Direct-to-Consumer (D2C) model. [client] decided to transition to a Make-to-Stock (MTS) model. Under this approach, products will be imported into the UK and the US based on sales forecasts, and stored in local warehouses.
International Shipping
The specific Incoterm agreed between the factories and [client] remains unclear. Based on the trial shipment behaviour, the factories appear to be treating the shipments as EXW (Ex Works).
Systems and Data Transmission
[client] has chosen WooCommerce as its consumer-facing platform and Mintsoft to manage order intake, inventory visibility and order fulfillment. Factories may lack capability for compliant data.
Collaboration
Communication between [client], factories, freight forwarders, and warehouses is fragmented and occurs through WhatsApp, WeChat, Email, and Phone calls.
Recommendations
#1 — Contract a qualified Origin 4PL+ provider in China
Fourth-party logistics (4PL) refers to a business model where a company outsources its entire supply chain management and logistics to a single external provider.
Origin 4PL+ Solution (O4PL+) is a unique concept tailored to support businesses that require control tower services at a foreign origin country.
We recommend [client] to pair O4PL with Export of Record (EOR) service.
Origin Process and Data Management
Direct collaboration with business partners, onsite visits, process assessments, data integrity.
Logistics Sourcing
Cost and service level evaluation before awarding 3PL business.
Buy and Sell Products
Back-to-back procurement contract, lump-sum payment coordination, multi-entity AR/AP.
Import & Export Documentation
Working with factories and freight forwarders on compliant documentation and certifications.
Project-Based Sourcing and Services
OEM/ODM sourcing, PSP referrals, packaging coordination, TCO data analytics.
#2 — Implement compliant solutions for tariff optimization
Export Rebate
Under specific conditions, Chinese factories or EORs may be eligible for an export rebate of up to 13% of the declared value.
First Sale and True Product Value
The US CBP allows the product owners to exercise "first sale" rights for import tariff and sales tax.
The following model demonstrates cost reduction of up to 48% when combined with FCL shipping.
Table 1 — Parameters
| Parameters | AFR | 20FCL |
|---|---|---|
| Units | 1,000 | 5,000 |
| Weight (KG) | 1,055 | 5,275 |
| Volume (CBM) | 5 | 25 |
| DDU Freight Unit Cost | $10 | $3,500 |
| Freight Cost UOM | KG | Ctnr |
| Supply Cost Assumption | US | US |
| Import Tariff | 145% | 145% |
| Mfg Assumption | $35.0 | $35.0 |
| Mfg Cost | $10.0 | $10.0 |
| Other R&D Cost | $25.0 | $25.0 |
Table 2 — Cost Comparison
| Shipment Volume / Mode | AFR | 20FCL |
|---|---|---|
| Baseline Units | 1,000 | 5,000 |
| Baseline (No Optimization) | $96,300 | $432,500 |
| Total Payment to Factory | $35,000 | $175,000 |
| Import Tariff | $50,750 | $253,750 |
| DDU Freight | $10,550 | $3,750 |
| Potential Compliant Savings | $40,450 | $202,500 |
| Export Rebate | $4,550 | $22,750 |
| First Sale Tariff Relief | $35,900 | $179,750 |
| New Cost (Optimized) | $55,850 | $230,000 |
| Unit Cost — Baseline | $96.3 | $86.5 |
| Unit Cost — New | $55.9 | $46.0 |
| FCL & Optimized Tariff vs. AFR & Baseline = | 48% |
Disclaimer: All assumptions are placeholder numbers and require validation.
#3 — Work on immediate process improvements
Factory Outbound Process
Conclusion: The physical cargo movement process is swift and reliable. Data exchange and documentation need major improvements.
Pickup coordination: Was fast and reliable. Both factories were very prompt and cooperative. Average lead time for pickup was less than 4 hours.
Product Information: The product IDs and descriptions on the factories' packing lists were of little use. Factories did not cross reference [client]'s product IDs and descriptions.
Carton Content: Since a single carton often contains multiple product units, it should be mandatory to record product details for each carton. At least one factory failed to provide this information.
Carton Label: The carton labels were poorly designed, with multiple labels applied to a single carton. Our recommendation is to standardize carton label content across all factories.
Carton Size: Inconsistencies in carton sizes observed, leading to suboptimal storage utilization.
Factory Data Integrity: Information can be captured using spreadsheet templates, reinforced through contractual agreement, in-person training, and verification processes.
Origin Consolidation
Conclusion: In the short term, this step serves as additional verification at extra cost. In the long term, the operation will become a cost savings enabler.
Advantages: The origin consolidation warehouse acts as a central hub for collecting goods from multiple factories, optimizing international freight costs, and conducting secondary inspections.
Disadvantages: This process adds an additional step in the supply chain, leading to higher costs.
Long Term Opportunities: deferred allocation, sort-to-gateway, optimized inventory placement.
Inco Terms and Freight Ownership
Conclusion: Our recommendation is to take the "4PL+EOR FOB" or "4PL+EOR DDU" model.
The key distinction lies in who manages the global transportation leg. We recommend "EOR DDU".
US Operations Readiness
Conclusion: It's recommended that [client] closely monitor the evolving dynamics of the US political and market environment and take proactive steps to scale its business accordingly.
First Time Importer: new importers face increased scrutiny, inspections, and IP infringement risks.
Inventory Placement: TCO should be calculated 4–5 months in advance of planned implementation.
Destination Backoffice: outsourcing back-office operations to bridge initial growth phase.
#4 — Formulate supply strategies to mitigate geopolitical risks
Tariff Deferment
Since April 2, 2025, the US has initiated a tariff war with China. To manage this uncertainty, US importers may leverage specialized warehousing options.
Facilities such as ECCF, CFS, bonded warehouses and FTZ can provide flexibility.
Assembled by Other Countries
[client]'s products require assembled-to-order (ATO) before they can be sold to the markets. Assuming that US CBP permits the country where final assembly is performed to be the country of origin.
The following model compares potential costs of assembling in Vietnam, the UK, or the US.
Table 3 — Assembly Location Scenarios
| Scenario | 1 (Baseline) | 2 | 3 | 4 |
|---|---|---|---|---|
| Parts | CN | CN | CN | CN |
| Assembly | CN | VN | UK | US |
| Market | US | US | US | US |
| Tariff % | 145% | 35% | 10% | 145% |
| Landed $ | $96.3 | $72.1 | $68.4 | $94.0 |
| Mfg 1 | $35.0 | $35.0 | $35.0 | $35.0 |
| Mfg 2 | $0.0 | $8.0 | $12.0 | $15.0 |
| Freight 1→2 | $0.0 | $2.5 | $4.0 | $6.0 |
| Freight 2→3 | $10.0 | $6.5 | $5.0 | $3.0 |
| Tariff 3 | $50.8 | $18.1 | $5.2 | $0.0 |
Table 4 — Cash in Inventory
| Scenario | 1 (Baseline) | 2 | 3 | 4 |
|---|---|---|---|---|
| Cash in Inventory | $96,300 | $108,200 | $120,400 | $132,000 |
| Mfg LT1 | 30 | 30 | 30 | 30 |
| Trans LT 1→2 | 0 | 7 | 25 | 30 |
| Mfg LT2 | 0 | 10 | 14 | 18 |
| Trans LT 2→3 | 35 | 21 | 5 | 3 |
| Safety Stock (mo) | 2.0 | 2.0 | 1.5 | 1.5 |
Disclaimer: All assumptions are placeholder numbers and require validation.
#5 — Make data integrity a prerequisite to scaling business
Data integrity is the first step
Traditional supply chain teams focus primarily on the visible costs, such as sourcing optimization and on-time and in-full delivery of the physical goods. However, they often lack the processes and tools needed to manage the flow of information and documentation with the same level of efficiency.
Before data can be used to troubleshoot, extrapolate, or simulate businesses, the first step is to obtain clean and accurate data from the origin.
Origin data granularity needs major improvement
As described in the process improvement section, current factories do not exercise the rigor to provide data in the format to make it easy for downstream use. Improvements made in this area will largely benefit the entire downstream supply chain.
[client]'s near-term data flow outlines the key elements of the supply chain across all stages.
Data Flow Diagram
Conclusion
As a brand owner, [client] has strong capabilities in designing, marketing and selling its products. However, what can truly set [client] apart from its competitors is its ability to enhance profitability through thoughtful and proactive supply chain design, reduce unplanned costs and maintain a healthy cashflow – all essential as the business scales in a fast-evolving and intensely competitive market.