China 3PL Implementation

• To support the strategic expansion of our business in the China region, this project aims to establish a scalable and efficient distribution center (DC) infrastructure that can accommodate projected growth, mitigate operational risks, and maintain service excellence. The initiative is anchored in four key success criteria:

  • Scalable Growth Enablement: With annual volume expected to triple by Year 8, the DC design incorporates a long-range fulfillment model that supports both North and South China operations.

  • Labor Risk Mitigation: As labor costs rise and workforce availability fluctuates, the project includes a comprehensive labor risk mitigation plan. This involves evaluating automation ROI against projected labor costs and integrating scalable automation solutions to reduce dependency on manual labor.

  • Service Quality Assurance: To ensure consistent service levels as volume increases, the project will define and implement robust KPIs and SLAs. These metrics will be embedded into vendor contracts and operational workflows to maintain high standards of order accuracy, lead time, and customer satisfaction.

  • Cost Efficiency: Operational costs are targeted to remain flat as a percentage of revenue. This will be achieved through optimized facility design, strategic vendor selection, and continuous process improvement. Cost assessments have been completed for both Shanghai and Shenzhen, with Shanghai emerging as the more cost-effective hub by approximately 30%.

Upon review and bid award, project will manifest itself in one of two ways:

• Creation of a new inventory org. for China DC & integration with new 3PL partner.

• Continuous Improvement "Enhancement" with incumbent 3PL, including integration of automation within 3PL's WMS.