90-day Tariff Pause Is Ending. Here's What To Do As A DTC Brand

Foreign welcome to our workshop. Our workshop slash webinar for today. I'm Lara guevara, founder and CEO of Moo supply chain and good morning from Manila. It's 6:06am I mean this is the third time that we have improved out this topic in sharing how DTC brands can stay smart when tariffs hit regardless if it's additional 30% additional 125% even a small additional percentage is a huge destruction for our growth in dtc. It's a huge, it has a huge impact and we are in this workshop we are going to help you identify what can you do in navigating these tariff hikes. Like is there something that we can do to avoid it and how we are showing we're going to share with you practical next steps for your brand. We are going to teach you what are the projects. We are going to do a one on one discussion on that five different projects that you can work on immediately to to help you with the tariff hikes if this will be a continuous 30% or even higher. So regardless of what products you are, regardless of what products you have if you are getting from China or Southeast Asia if you're getting from other countries as well you are we are all affected. It's just companies or brands from the US getting from China are the most impacted in this dari far and so we have clients from Australia, UK and majority in the United States. But the major the main affected of these issues are of course DTC brands in the US and also we have been globally sourcing ever since. But again this is not just an issue for China but other countries also other Asian countries also have increased tariff Example for that is Vietnam, Thailand, Cambodia, India and Pakistan. Again just to give you a little bit of background because we had multiple updates since the start of the year in the announcement of the reciprocal tariff there. The latest was there was a pause that started last April 10th and it's they said it's going to be a 90 day pause. So in the past few weeks a lot of the DTC brands are have started actually have started to do these projects and majority of our clients right now have been trying to source outside China. Although there are still increase in tariff it's lower than what's what we are expecting. So at this moment we are at 30% reciprocal tariff or tariff from China and some other Asian countries. They are not the increase hasn't been taken effect yet and so the latest announcement is that there will be an extension. It should have ended last the first week of July, but they have extended it until August 1, the announcement of the tariff rates for other countries. So including, they will finalize it including Europe, Canada, Japan, Malaysia and more. So we are, we don't know if they will put it back to 125% or they will continue to do the 30%. Yeah, it's a sur. It's going to be, we're going to wait and see on August 1st what will be the announcement. But regardless again of the number of percent we are going to tackle then how to mitigate that risk, how to help you with that tariff increase. And actually I've been quite vocal about this in all content that I'm creating that even with the tariff situation we should have multiple source of our products. It's not just from one vendor, could be from multiple vendors and it's just not from one location but multiple locations. Because again, supply chain disruptions are not new. We have different supply chain disruptions that we've experienced. If your brands have been serving before pandemic, then we, you have experienced the greatest disruption in supply chain which is, which is the pandemic. And so we've learned from that. This is the second wave of tariff. The first one was 2019 when section 301 was also implemented by the administration. And then the, what do you call this? The pandemic and then this again. So although tariff can be solved, we cannot assure you that there will be no other supply chain disruptions in the future. So just to be ready, all of the strategies that I'm going to share with you today are not just for tariff but just in overall preparation or support to increase your bottom line. That's the goal. I just wanted to leave this before I start. Panic leads to poor decision. Modeling leads to strategy. A lot of brands were in huge panic when the tariff was announced. And so the best thing that we can do to support our brand is to act immediately because again, we were given short period of time to find solution to this. So that's why again, thank you for joining this workshop and we'll be discussing all of that later on. Okay, so just a little bit of quick explanation of our tariff type. So understanding the tariff stack. What we have are four different source of tariffs and percentage. The first one is the baseline tariff which applies to all imported goods entering the US Regardless of its origin. It has, think of it as a universal entry fee. So it varies from countries to countries, but it's around, around 10%. It's not, it's not as much here in the Philippines it's 12%. In the US the estimated range is 10%. And then there was a reciprocal tariff that was the latest addition to the group. It's, it targets Chinese imports in response to trade tensions, but also applicable to other Southeast Asian countries and other other countries as well, ranges from 20% to 125%. So again this is still a question until August 1st. What would be the final, what would be the final percent? And then there is the fen, the linked tariff which is actually applied in all products regardless of its relevance. It's the 25%. And then this was the tariff I mentioned earlier. It's the Section 301 tariff where based on product categories strategic sectors face different rates. So at from 7.5% to 100%. So in your entry summary, if you have that, please, if, if you have that, take time to, and take time to check and understand your tariff stack. What has been your freight forwarder charging you? If you don't have a copy of that, I highly suggest that you get a copy. Even if you are doing DTP or CIF or fob, it's very important you have this as a business owner. This is a document that you should have a copy all the time. So every shipment has entry summary document. So in there you'll see what percent in your HTS codes your freight forwarders are using and then what are the appropriate percent that they are using for that specific HTS codes. All right. Okay. So for the phase one of this workshop, let's first understand the impact of what's going to happen to our brands if the 125% reciprocal tariff will take place on August 1. So in this slide I wanted to explain the impact further the project. So we have an example of simulation product profile. It's actually I tried to create a very common example that is 100% cotton T shirt which this HTS codes and the pre tariff fob as an example is 2.5 dollars and then from 16.5 it will be up until 161.5% if the biggest reciprocal tariff will take place. Very good. So, so we have, we have, I have divided the product, the unit, the landed cost into its different cost elements. Wherein you have the FOB price or the X works price. We have the shipping, you have warehouse and fees, you have packaging and the tariff before any movement in tariff I have computed here what is the total or what is the specific fee for that. So a $2.5 shirt has an LCL cost of $1 and has a 0.83 PL cost and a packaging that is 0.4 per unit and a tariff, existing tariff or the old tariff at 0.6. The total import duty is 3.6 and the total landed cost before any tariff increase is 5.1. So given the increase in tariff it will be 8.7 dollars. So landed cost after the dive hike. So that's what it meant. So I wanted to discuss the first project which is the I think the first project with the biggest impact is project number one which is FOB price negotiation because this is where the tariff is computed from. The others will bring the cogs down. The other projects, two to five projects, second to fifth projects will bring the cost of goods down. But since this is outside the tire of computation, but those four is outside the tire of computation, the impact is not as high as compared to project number one. So project number one is negotiation with your supplier on with the actual savings on FOB price. So I will be explaining all of this. I will be just sharing with you how what the the impact of that. But later on we will be discussing the actual steps and the actual strategies how to achieve this. So these are assumptions that for, for project number one you have negotiated your FOB price from 2.$5 to 2 dollars and the rest remain the same. At the end of that you have a lower percent of 46.94 compared to 70.90% increase. Then project number two is in the shipping mode. So there are so many saving strategies we can do. One example that I'm going to share with you is how to co load to make it an FCL rate instead of LCL rate. So if you are a brand that is already in FCL rate then this is not much going to help you. But if you're a brand that doing LCL this is a huge help. It's a huge decrease from LCL from loose cargo to full cargo. There we go. So in Project 2 assuming that others will not change, we have an increase of 55.65%. And then project number three is in the warehouse and three PL. So there are multiple small projects that we can do here which I will explain later. All of this are going to be helpful if your partner, if your 3 PL partner is going to help you because we believe again in DTC and in E commerce businesses your location is not usually very near from your warehouse and you cannot unless you own the warehouse. So if you own the warehouse then there's limited projects that we can do. Or I'm expecting that if you own the warehouse, you have been optimizing it ever since. And if not, there are still small projects that we can do about it. Project number four is about the packaging. We are going to discuss later on how we can simplify, ensure that the packaging is not over spec so we're not spending more than what is required and what is needed. And then from there we will have a if we can launch that savings, we are, we are lowering it down to 68.95%. And last but not the least, it is the tariff engineering where we are doing different projects under tariff to ensure that we are using the right tariff and using the lowest possible the auditing of tariff which can lead to using a lower different HTS codes with lower percent. And there are also different projects aside from that wherein you are using a different price, you're going to use a different price for the computation. So some are easier projects, some are longer projects and more complicated projects where you need the support of customs lawyer, for example and some are very easy to start. So there you go. This is our summary and just to show you what if all of these projects are going to take effect, what could be the effect of all these five projects when computed together? So earlier I shared the impact if you'll do one or two. But if you do all of that, the tariff from 70.90 can go down to 27.5%. So we're looking at not just doing one strategy savings or counter movement. We are aiming to do a lot, all of them, whatever we can, whatever we can find to help us with our landed cost. So okay, so cost breakdown table before and after before dive it's 5.1 and now it's 8.7. And this is where more most brands freeze. This is why a lot of brands had had different panic actions a few months ago because they couldn't even bring their goods to us anymore. So most of them with with already produced products sitting in their warehouse in China, they, they opted not to send it or ship it in the US because of the uncertainties of what percent will be used for their products. And if the 125% additional tariff will be added, then their product will not survive or the brand will not survive the cost. So a lot of them left their goods behind China they waited in sea, they waited until it went down. And so those are just some of the examples we've experienced from our clients. So now let's simulate based on actual data. So I have a landed cost calculator that also I will be Sharing in the chat box, just making sure it's. And it's editable. There you go. So this is a very simple landed cost calculator. If you are aware of your PO numbers or if you have a team member, give it to them. So you can compute the total landed cost. A lot of DTC owners are not aware how the, the landed cost is computed. So in this tariff rate it's, it's all the, all the cells with yellow highlights are, should be an input from your end. So depending on your tariff, depending on your HTS codes that the, the, the tariff percentage would be different as well. So you can make a copy of this sheet and then you can start plugging in or checking how much is your landed cost or estimated landed cost. And if you're already sourcing, which could be the case because the type situation has been here for quite some time, then you can use this if you're getting product from Vietnam as an alternative. If you're getting product from Colombia from other countries, then you can use this as a computation. So as an example, I just wanted to quickly share this with you as an example. For $100 quantity with 600 pieces. Sorry, 100 pieces quantity with a $6 unit cost, your total cost is 600. Assuming that you're an LCL, your freight cost per unit could be around a dollar and your total freight cost is $100. Then adding all of those tariff rates you have a total of 158. So if this is not applicable then change it. But for this you have a tariff cost in USD of 945 plus the other small costs, the HMF and the MPF. Then your total landed cost from a six dollar unit cost is 16$16. Terrible. So that's what, that's how landed cost is computed. Moving to the next phase is offsetting the damage. These are the savings project that we've discussed earlier and we are going to deep dive on each five strategies that I've shared. So all right, so the five strategies are unit cost savings, credit savings, packaging tariff code and warehousing. So under unit cost savings we have negotiation, alternative vendor within the same country, alternative vendor globally with lower tariff, and then for freight consolidation, looking for a cheaper route via C first mentality. Then for packaging, it's the packaging redesigning master carton redesigning, even the actual product packaging. If it's over specs then we can also redesign that and then the tariff code finding alternative HTS code. There are so many projects under tariff engineering, but this one is the Easiest other projects will require a custom flyer. And then warehouse is optimizing palette reducing open beans Pick and pack. These are the projects that we can implement through our partner in warehouse. Right next is deeper dive on our supplier negotiation. So again this has the biggest impact because the tariff is computed multiplied to our fob. So whatever we can reduce in the price then we can usually affect our tariff value. So how to do this is it's a direct discount request. Again, if you have been partners with this, with, with this manufacturers, it is going to hurt their business as well if we change the vendor or if we change our resource. So some DTC owners are unsure how to do this. But my suggestion and my recommendation is to just try directly asking for a discounted unit value because they know exactly the situation so they, they know what's happening. And if there's like a padded or if there's like an option for them to lower the cost, they will give it to you so that you don't. They know that you're trying to look somewhere else. And so by working together and having a lower cost and them being supportive, if there's like, if there's like a padded unit cost that they can save, that can help you save you, that can help you save in the unit cost and they will definitely support you with that. There are also vendors that will not that doesn't have the capability to do this. So at least try directly negotiating some of the other products projects as well is if the, the vendors is saying that no, we don't have extra in our profit to give you a discount for. So what are the other options that we can do? We can partner with them to find to do a raw material audit or review. Because maybe especially if you have a formulated product or if your product has multiple raw materials in it, then this is something that we can definitely consider. Maybe a part of your product has a raw material, has an alternative raw materials that are cheaper. So having the BOM or the bill of material, if your product is as simple as apparel or for example a baseball cap as shared earlier, then what are the materials that you have? Like how, how the, how is the design printed? Is that embroidered? Do you have a direct transfer type of printing? Do you have a special buckle being used in your, in your or special hardware being used in your products, then definitely any raw material audit could, could help. So if you have other types of product like being formulated like, like shampoo conditioner or anything else like that, then there's a, there's a bigger chance because you have, we, we are talking about more than 10 raw materials in this and maybe one of those raw materials, chemicals or, or products is, is, has an, has an alternative product and then the next is. So for, for the raw material review, some of the verbiage that you can use is that high supplier name, high vendor, high partner. We're exploring ways to manage tariff related cost increases. Could we review potential alternative materials or sources that might lower our costs without impacting quality significantly. And your recommendations greatly appreciated. So that is a script that you can use or something around that they will definitely share with you if they wanted to support. If they, if your partner, if your vendor is not willing to help you in this then maybe they're protecting an IP or they're if it's there, if you're doing a white label type of partnership with them. But if that's the case then my next suggestion is to look for alternative vendor. And then next is the packaging, the packaging review. So it's not just main packaging. You have inner boxes, you have outer boxes, you have master cartons. We have to do an audit as well in this case. Maybe your overspecs, maybe we can lower down, we can find a cheaper type of packaging. Then it will have a huge impact as well because it's part of the unit costs. So packaging, any packaging savings that we can do will be deducted in unit cost just like, just like the direct discount request and then the volume commitment. This will be applicable for other products and might not be applicable for smaller or newer smaller brands. Volume commitment is giving your partner, your vendor like a year of forecast year forecast for your products. And that is and that one year forecast per month or per quarter there's a stated volume, estimated volume that you are going to get from them. The reason behind the help of this volume commitment is that we can, we can assure our clients that for a year or our vendors that for a year we're not going elsewhere, we're not going anywhere but we are going to give you this volume with staggered delivery and so they might give you a discount. This type of savings has been done multiple times by our team members and has been successful with some of our clients, with some of our vendors. So a sample script for this is that high partner, given our strong partnerships, we're open to committing to larger volumes if you can for the upcoming year. If we increase our annual order by x percent or commit to a quarterly volume guarantees, could you offer us a better pricing to help offset our tariff challenges? So that could be a sample skip for you, Open PO is very similar to this volume commitment. Open PO means it's the same concept where you share with your vendor your target target volume for the year but you don't commit when to deliver those those smaller delivery. So if you share that I will be ordering 10,000 pieces for in the next 12 months but I will be issuing pos staggered and so staggered delivery. What does it so it supports your vendor or it helps your vendor because they can't plan their raw materials ahead. They can buy, they can secure raw materials ahead of time. They can buy it during the lowest trend of the prices and at the same time it's giving confidence to your vendors that you have this X value plan ordering from them. So it's a huge one. Simplified design is only applicable if your product can be it's kind of overspecs or can be simplified. So some sample script for this is to help combat rising tariffs we're revisiting our product designs. Are there any features or production steps that if simplified or removed could significantly lower the cost? We'd love your input because they know if you haven't visited your vendor yet and you haven't seen the production in their plant, then maybe there were steps that could be simplified or removed. A simple example is how you print your designs. There are cheaper options, there are more expensive options. Examples how the design of your packaging do you have like all those extra extra specifications that could be removed. Lamination varnish. There are so many additional specifications that maybe you can review just to lower down the cost. And then there's payment terms adjustment with sample script for this is if you hey vendor, would you be open to providing us as a price discount if we pay upfront or reduce payment terms. So this is only applicable to clients or to DTC brands that their cash flow can support this change in payment terms. So if you're aiming to find a mutual beneficial arrangement to offset or tariff the tariff then this could be a solution. One solution for you Next is freight optimization. This is our second project. It's creating projects from LCL to FCL because again this is the most impactful project that we can do. So consolidating orders or TPO or adjusting ordering frequency. So how to do this? So consolidating orders or TTPO or Transit PO. We have been doing this for our DTC brands pre pandemic. So I wanted to take time to explain how this works because a lot of the DTC brands that I've worked with after post pandemic has was is not Aware or they don't know how to, they are aware but they don't know how to execute it. So TPO is planning shipment stuff schedules ahead of time usually and ideally in 12 months period. LCL is loose cargo where you ship your products with other brands and FCL is filling, filling the whole 20 foot container or the whole 40 foot container. So everything in that, everything in that container is yours. That's the full sel. And of course the reason why I'm, I'm, I'm teaching this to you because if you have a lower quantity then you will say to me then I don't have the capacity to do FCL because I cannot. I have a very limited products or a very small order. So that's why we're discussing this. How can you go from LCL to FCL without filling it using your own products? So going back to the TPO, so scheduling ahead of time, scheduling in a 12 month period and then making sure that all of your orders are tailored around that specific schedule. So this requires a very strong inventory demand forecasting game. And here's the reason why. As an example of tpo, I will schedule every other month shipment from China to US and let's say it's January, March, that every other month. So you've scheduled six shipments from January to December given that transit deal or that schedule. And so all of your products being forecasted early on should be, should have a PO that will support that schedule. So instead of, of just plainly sending everything that the PO that the completed PO or completely produced products, instead of doing that, your po, your forecast is adjusting to your shipment. And why? Because you can consolidate your orders in that transit schedule not just for your products, but the CO loading can work with this. So if you have a community in apparel for example, and I know that there are more closer community per dtc. So if you have other apparel companies that you know that you can co load with, then this is a perfect example for that. So all of you are issuing POS and your vendors are producing it. Anything that could be finished before the transit schedule will be delivered in a warehouse. So there are many third party warehouses that is supporting this. So there's a specific warehouse where all orders will be delivered before the schedule. So for example your schedule is on July 30th and you have products that have been, that has been completed by first week of July it will be delivered there. Second week of July it will be delivered there. If you finish a product right now, today, then it will be delivered there and all of those products will be consolidated. So either you can fill in the full container that is 20 foot for example, a smaller one or a 40 foot container or you can. You can consolidate it with other similar products. So Instead of paying $1 per unit, it's around 0.2 at this rate of the cost of the cost of shipment at this point. So it's a huge. It's a huge savings definitely. Especially if your products are very expensive expensive to ship go loading. How to do this is you have to identify your partners like use LinkedIn, industry forums or local business groups. Again slack groups join different slack groups related to your product or similar to your product. Engage your freight forwarder to recommend other importers which is very very easy for you to do. Like if you have your partner, just ask them to find me a partner. Find me another PPC brand that has similar products that is using your service so it's easier and then you can discuss how to collude and then look for businesses with complementary schedules and shipping needs. So sample script for this is that you regularly we regularly ship from China to us. Would you be interested in exploring a shared container to cut corporate cost for both our businesses? So it's important to step to align product compatibility. Ensure that products from different importers can safely and practically share containers. As an example, similar products like apparel, accessories and home goods compatible packaging dimensions and stocking capability and avoid mixing incompatible items like chemicals and textiles. It's not allowed. And as a checklist you can confirm if first your product is compatible and second if you agree on shipment handling like stackability and packaging standards. If those two are checks are checked then you can definitely call load. Step three is choosing a common freight forwarder. So aside from asking your freight forwarder to find you a similar product, you can start with finding someone to co load with you and then choose a common freight forwarder. Simplify coordination and shipment management by selecting one freight forwarder to handle consolidate shipment. Of course and then considerations is that your forwarder experience with consolidation and co loading. Not all freight forwarders have done this or is an expert doing this. So it's very important that if this is a project that you're going to do, you will have to double. You have to double check the experience of your forwarder. Next is the pricing, transparency and billing arrangements. How will you divide the cost? Is it based on weight? Based on number of cartons? It depends on the type of products that you have if it's by volumetric weight or by the actual weight. So it should Be finalized before any shipment so that it's clear for all the brands, what's the split of the delivery cost and then proven reliability of course of the freight forwarder and your partners. You have to make sure that you have very transparent and aligned communication. Yeah. Step four is establishing clear cost allocation which is by event, either by volume, by weight or hybrid. Then step five is coordinating shipping documentation. That's the last part for doing this is making sure that the customs releasing is smooth. So that's it for break optimization. Again, all of the scripts that I've been sharing in this presentation will be shared with you as well as part as after the. After the workshop. Right. Okay. So moving to the third savings. So packaging and 3 PL cut, what are the projects that we can do? So we can save. We can save from 0.4 to 0.3 for packaging redesign or downgrading a packaging. We can reduce from 0.8 to 0.6 for three PL projects. So it can be as high as 0.3 per unit. So how to do this? Packaging redesign is our first option. So the objective is to save up to 70% on material and deem weight fees. So this area is very much not optimized because what happens is usually you will just follow what your vendor is giving you. So if your vendor has Flute A but your requirement is just flute B, then they will be just using the flute A packaging which is thicker than flute B because that's what they have and most commonly you don't. This is missed out in communication because again this is very minor and I mean considered minor and not part of the development. But if you will audit your packaging, this is usually the very under optimized and so you can, you can ask your vendor to share with you what's the specs of your packaging. From the, from the packaging of your product up to the master carton. Ask them even if you're using like a plastic or if you're using a pouch. If you're using a box especially boxes are very like beautiful boxes are very expensive if you're using different kinds of products. Especially if your. Your product type is very giftable. When your products is giftable, then your products are very. Your packaging is very expensive for sure. Then ask your vendors to share with you the material so that we can redesign. So this is very important because heavy or bulky cartons drive up your freight bill. So switching to a linear pack format immediately cut cost, both packing cost and shipping weight. So the step by step actions for this packaging redesign is sq. Audit Ask for your SKUS dimensions, weight and fragility and the stocking height, the type of cartons that they use. And then brainstorm for soft goods. Or consider polyline craft cleaners, bubble envelopes or slim corrugated sleeves. That's for distribution, but for pre distribution then you can ask for redesigning all the packaging that you have. Then very important is prototyping and testing. Order 5. Like start shipping with your existing. So don't abruptly change using your existing. Like just try a box or two or one palette. One, one palette of new new products and then send it together with your existing products. So just in case it did not work because it's under specs, then the damage is just limited to one carton or specific products because testing is very important. So that's shipping test. There's also a run a drop and shake tests, drop and shake test. And then you should record damage rates because maybe you've, you've chosen a very thin or very under specs packaging. But there's like a meat mead. So A, for example for master cartons flute, A is the thickest. Next is C. C and the, and the next is B. So it's not like a blue C, it's C, it's acb. So you've tried, maybe you're at A flute, you've tried B flute and then B flute had had an issue. Then maybe you can try C. C is still cheaper than A but higher than B. So those are the kinds of example, those are the examples. And then cost analysis part of packaging redesign chart material cost versus damage rate. Of course we have to consider that and calculate the weight savings, especially if you've changed the packaging and then rollout. Again, do not. First is you need to finalize the spec sheets materials print dimension and train your packing team to follow an sop. And then don't abruptly again launch this. Do it simultaneously with your existing and trusted packaging. So next is master carton optimization. So the goal, our objective for master carton optimization Is to fit 10% more units per pallet and lower freight by 10%. So again fit additional 10% units per pallet and reduce or lower the freight by 10%. This is very important because oversized cartons wastes space. If you have a very huge ga or like space gaps in your master cartons, it will incur extra palette and freight charges. Again, sometimes it's a volumetric, most of the time sub volumetric weight that they're computing. So if you had a, if you have a huge headspace, then they're computing Based on your on the dimension length with height of your package weight. And then how to do this step by step is current analysis. Document your units per carton, cartons per pallet, and then your pallet height. So a lot of products doesn't have to follow the standard backing height because if it's lightweight and if it's not fragile, then you can increase your pallet height up to the maximum, up to the ceiling. Actually, a pallet height is commonly charged by freight forwarders because they know that the but because they know that they can charge it. So probably you're not aware that from 6 stacking height you can do 10. So it's a lot more boxes that can fit your palette instead of just the original. So ask your vendor, your freightful order, your partners, what is my backing height? Sorry, what is my palette height? What are you practicing for my product? You have to know that. Because if they say that the standard, which could be from 6 to 8 stacking height, and your product is apparel or lightweight caps like as an example, or a very lightweight type of product, then definitely we can maximize the palette height. And it's such a huge support. If your vendors have 3D modeling, then ask them to do it for you instead of you doing that. But we have clients that has the UNCAD or Excel to simulate alternative carton sizes and then order titles, request samples tested, as we've mentioned, load strength test, stop, stack five cartons high, six cartons high for 72 hours, inspect for bulge and then increase stacking height another 72 hours and then inspect. So as long as it's not changing its quality in 72 hours, then we can use that. Then standardize, choose the size and highest unit and safe loading rate. So if you have multiple SKUs, multiple type of products, if you have like hoodies that is quite heavier and bigger, then you have socks which is smaller. Most of the time your vendor is using different types of of master carton sizes. The question here is can we standardize our master cartons? Because again, it can help us save in our palette unit, number of units in our pallet, sorry for that. And then from this then we can help that can help increasing your units per pallet, cartons per pallet and freight cost per pallet. Next is stacking height tests. So being more specific about how we, how we are, how we want to go about this project, the objective is to increase pallet stack height by 14%, 14 to 15% safely. So many warehouses under stack pallets for safety, leaving capacity on the table. So not just warehouses, but shipments. So not just sailing but also in your warehouses. Since you're not able to see your warehouse on a daily basis. This partnership projects is very important with your warehouses because if you don't ask, if you're not proactive, then maybe they're not, they're not proactive to do this projects as well. Remember to do you remember that you have the power to negotiate and ask them to support you in your projects. Because without you DTC brands, they don't have business as well. So do not like think, don't think that they will support or you're shy or embarrassed to ask them for favor because you're not asking for favor, you are working with them to support you so that they get to keep their businesses as well. So the stacking height test, especially in warehouses is very under optimized. So define the step, step, step by step process. Here is define load specs. Note what is your full carton weight? Is it 25kg? 30kg? And based on this weight what is the, what is the standard stacking height? So incremental stacking is the next step. Stack cartons from 3, 4, 5, 6, 7, 8 and then hold it. The practice is 24 to 78 hours. Hold it and see if there are. If there's a quality issue, then measure deflection. Use a caliper or ask your partner to use a caliper to measure the side or the top bulge because it doesn't mean that you have side or top bulge. It doesn't mean that your product is already damaged because again some bulges are acceptable. So note any product damage or carton crash. There are acceptable bulges. And then set your threshold and then document and make sure that your warehouse is constantly following this. And how would you know? How would you know? If you're not inspecting your invoices from your TTL from your warehouse partner, then it's time to inspect. You will be seeing there the specifics of your inbound charges. Every time you deliver from from your vendor, they charge you an inbound char. Inbound cost outbound as well. If you're like if you have like warehouse or Amazon leaving your wholesale type of projects where multiple products is leaving the warehouse and there's an outbound cost, there's pick and pack, there's open bins. There are also like a stacking height. If you're paying per. Sorry, pallet. If you're paying per pallet then you should be. You should be seeing how much is the charge per pallet. So Audit your invoice. It's very, very important. Next is the 3 PL negotiation. It's more of the goal is to is cutting the peak pack and storage fees by 12 to 17%. So I wanted to give you a perfect sample because it's coming from an actual experience where it's a clothing company that I work with and what, what the warehouse is doing is they're opening multiple bins per SKU at the same time. So most of most of the warehouses or 3 PL is charging for bin open bin. So they will there for example, there are hats, 20 hats per box. They will open that box and then they will take the orders from there. And then without depleting the box they will open another. So they will charge you two open bins. But in reality it could just have been one open an open bin. But these are the things that you don't know. These are the things that you can see on a daily basis. That's why it's very important to do an audit. So what we've experienced there is that we have 500 plus SKUs and then multiple boxes or multiple bins are open per skus. So we were charged more than double in just the bins that are open. So we've saved around $4,000 in just one very simple product and that's 4,000 to $5,000 per per invoice. So make sure that you are aware of how you're being charged. I cannot emphasize that enough. Other related is the slotting, pick and pack optimization. Where are your products located? Are they optimized? Route optimized. It is the duty and responsibility of your warehouse provider to do optimized route for this. But just in case that you're not confident, if you're there doing that, just ask them how are my products kept? Or where are my products stored? Then others are zone skipping and cross docking which are also products of our warehouse partners. So in zone skipping, the goal is to save 20 to 25% on LTL cost and speed up delivery. LTL is loose transit. Similarly with loose cargo, this is loose transit in terms of delivery for vehicles. This is important because by shipping full pallets and trailers direct to a region, you bypass hub fees if it's applicable. And then for inbound cross docking, the objective is to eliminate storage fees and caulk handling by 30%. This is important because immediate transfer from inbound truck to outbound carrier avoids warehouse dwell. So even if it's less than 24 hours, some of warehouses are charging you with warehouse dwell, wherein it could have been waived. So inbound cross docking immediately transfer from an inbound truck to an outbound carrier. So how do you do this is of course you have to align schedule. Your warehouse partner should be responsible for this ETA notifications, reserve dock space, carrier sync and alignment Real time updates those are also your logistics talents and experts can help you with going on with the fourth project that we have. This is the tariff engineering. One of the projects under tariff engineering is expert exploring alternate HTs or for barrel fabric blend. So example is mixing materials may reduce the brackets so 100% cotton may be higher than 80% cotton and 20% polyester. So this requires a longer savings project because it might need you to change your raw materials or at the same or at the same time can be easier project because for example steel products can be under two HTS codes. So depending on your products if you can share in the chat box what kind of products you have then maybe I can share more information. But yes this is there's a quicker way, there's a longer way how to do this Tariff Engineering first is of course to map your product features. List every materials, construction detail features, fabric types, scenes, streams, hardware. Highlight anything that could sway an HCS classification, fiber content, decorative panels, cut and style. You can get this if you don't have this. If you don't have technical tech specs sheets or technical specification sheets or tech pack you can make one. You can ask your vendor to make one for you and then survey potential HDS codes. Pull the harmonized tire of scheduled chapters relevant to your category and read through it. It's very important example if you're a knitwear woven or any household articles, note that each subheadings, exact wording and duty rate so you can compare before and after. And of course if you can do or if you can identify design or material tweaks, you can brainstorm with your vendor or with your new product development team how to legally modify the products that you have. Some examples there's adding silk panel for or blending wool yarn. This is all applicable for apparel. There are so many ways to tweak your raw materials and choose a lower HJS codes, lower percent HJS codes and then validate. Of course you need to help to update your text box grading specs and then you need to obtain lab or meal certificates if you need to and then consult a custom breaker to review this review and then track implement and then iterate for different SKUs that you have. And lastly last but not the least project that I'll be Sharing with you is diversified sourcing trials where there are so many options in Asia aside from China because China has the biggest tariff. Although the increase in tariff is not just China. Mexico, sorry, Vietnam is also affected but lower than China. So you can save up to 5 to 15% in tariff just by sourcing away from China because China is the biggest right now. So how to do this is to alternative sourcing using landed cost comparison. Make sure that you are using the calculator I shared earlier so that you can see if it makes sense to transfer from China to other countries. As an example of this is tailored fit in apparel industries. If your products is not apparel then maybe I can help if you email us your products and maybe I can share with you what countries are experts in the type of products that we have. So share with me in this chat or email or join our Slack channel to ask the experts questions. So this is just sourcing trials that we've done because this is the biggest project that we've had in the past months. Like apparels changing from China to other Asian countries. So Vietnam, Bangladesh, India, Mexico, Turkey, there are Colombia, other other countries that has strength and then they have their major apparel categories and then they have their top five products as well. So different countries has different expertise and different cities or states in each countries have different expertise as well. So make sure that we that you explore sourcing trials to identify which source is beneficial for you. So again, combined results, no action. Your landed cost is 8.74 all combined it's down to 6.5. It may seem small for each products but for each projects. But if we combine everything then that would really help. And then there's interactive activity that you can use or brainstorm with your employees or your talents in supply chain. This is a savings plan calculator which is also part of the sheet that I will be sharing with you. So it's the same sheet that I shared for earlier. It's just different tab. Let me just reshare that again. It's the Savings Initiative Plan 2025. It's very easy to start. Just start with initiatives like Brainstorm. How can we do what are what are three initiatives that we can do to reduce unit cost? Brainstorm with your partners. Brainstorm with your talents. This is very important. Just list everything down. There's no big, there's no small initiatives in the beginning. What's important is that we list everything down with your team members and you'll be surprised how your team members can help you with this. So list Everything down from initiatives 1 to 3, 3 initiatives per project and then after that execute like, what sourcing requirements do you need? Like can you assign one of your team members to do sourcing? Can you assign one of your team members to connect with your warehouse, connect with your vendor? Can you assign your, your designer to design for you a simpler product or a simpler packaging? So this is the execution is of course the most important part. Without this, without us doing the actual work, then this workshop is not going to be, not going to help you. So this will automatically compute your savings based on your initiatives. You just have to add the information here. So again, this is in the sheet that I've shared. All right, going back. So just in case I had issues sharing that, this is the tab that I've shared earlier. Savings initiatives plan, write initiatives here, add the value here and then your savings part will automatically complete. So going back to my presentation, right. Diversifying sourcing phase three, I took project number five into, I did a deeper analysis on and presentation for project number five, which is diversifying resource because this is one of the easiest project that you can ask your sourcing specialist to do for you. Again, I've mentioned this earlier. In the past six to seven years that I've been working, I've experienced three major supply chain disruptions. One being the first tariff 2019, then pandemic and then this one. Then there are minor disruptions in between. But not very hard to, not very challenging, not like this. So we cannot put our ads in one basket. We all know that. So unless we, we explore this issue will keep happening. If a certain issue arise in one country, even if you're coming from, if you, even if your production is from the US locally, if you don't have an alternative, then same thing may happen if US experience a disruption similar to this. So again, alternative option is not optional for me as a, as, as a supply chain expert, it is a requirement for me regardless if there's destruction or not. So I just wanted to give you a quick country comparison table because you may I wanted to explain that maybe there are higher unit costs that you can get from Mexico and Vietnam and then you discontinue the source because it's higher. But right now the importance of computing landed cost is a must. It's, it's the step that you cannot skip anymore because a $3 unit cost, even if it's higher than the 2.5 from China, your landed cost is a lot lower than China. So especially if the tariff will not go down, if it's the 125 reciprocal plus the 2010 tariff. Then it's 145. There are some 15 Mexico and 0 in Mexico and 15% in Vietnam. So it depends. So it may be higher in unit cost but lower landed cost. So you have to really use the landed cost calculator to identify this. We have so many global sources and I'll be sharing this also with you. We have global sources, we have ThomasNet in us. Thomas Net is U.S. focus Directory of industrial suppliers and manufacturers. India Mart one of the biggest, largest B2B marketplaces in India. Dhgate is shown China based platform made in China, also China based trade. India is India's comprehensive supplier directory. Compass is global B2B database. Europe is Pan European sourcing Directory. HKTDC is Hong Kong Trade Development Council that is curated supplier list for Hong Kong and China. And then Kinect is a US focused platform for food service, packaging, industrial materials. Global Spec is also an engineering centric sourcing site for electronics, mechanical and process control components. All of this will be shared with you as well after this workshop. So beat different countries and research suppliers from there. Again, we're not just limited to Alibaba and Google sources anymore. So as a final recap, as a final recap we have to simulate, gather our data and then identify our initiatives, then save and then start sourcing. So what's your next move? We have multiple options. The easiest one is join our Slack channel. We've created created a supply chain lounge where you can ask experts. So I am there. Experts in my team are also there. We have logistics expert, inventory planning, demand forecasting experts. We have new product development experts. We have sourcing experts. You can ask them for free. So it's very helpful. Instead of email, you can also email me. You can also email our team members. But Slack is very, very easy. Paul, if you're there and if you can share in the chat box our Slack link, that could be helpful so they can join right away. Let me check if I can get it for you. I don't have the link. Paul, if you have the link, if you can share it in the chat box or if not I can email it to you as well. Let me see. Yeah, all right. We'll just share it with you. There we go. There you go. I'll be sharing with you this. So join. Join our supply chain lounge. It's the easiest. If you have questions from this presentation, you can also confirm it there. Ask me there. You can ask me now. Thank you so much for staying for 1.5 hours with me. I know this is a lot of information. I want to make it as specific as possible, but I know and I am aware that it's too much to handle in just one go. So we'll be sharing with you a lot of resource resources, calculator templates, folder freight and price audit sheets, vendor checklist and the most important is the replay link of this workshop. Ask your team members to watch it. Ask your friends who's in the business who wasn't able to join to watch it and join our Slack community and ask for free. You can also find me in Twitter as Supply chain Lara to see what are the recommendations and advices that I give there. And then we have unboxed weekly newsletter as well if you can if you wanted to receive a weekly newsletter that is very supply chain focused spot if you can share with me the sign up link for Unbox weekly as well, I can share it to the participants. So there are now so many options for you to There are so many options for you to work on projects. You're not alone in this situations. We've we've helped this is the unbox weekly newsletter link. So we've helped a lot of DTC owners navigate tariff. We can definitely help you. You can you can ask me question now or later on in Slack or in email or sign up in our newsletter. Follow me on Twitter. We're here to help and help you digest supply chain easier than heavy serious feel and supply chain is really it's complicated when not done properly or when not executed properly. So we're here to help you digest and each projects, each categories and supply chain.