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From Factory to Marketplace: The Hidden Logistics Behind Every Product Launch · Pitch to Product

• pete/sander: you choose the wrong one and customs doesn't agree with your choice. Now that's a delay on this harbor. There's a negotiation with customs. And if they feel like you were trying to get away with something, you know, then it's even worse. Then you have penalties and fines. If it was you were just an idiot and you chose the wrong one, okay. You just gotta pay the difference. But if they thought that you chose that because it was a lower rate and it didn't qualify for that rate, then yeah, they can get they can get nasty. Hey, welcome to another edition of Pitch the Product Podcast. I'm Peter Drakolich and this is Sander Reynolds. Sander, why don't you tell everybody what you do here? I'll give you the pretty much everything that makes projects get done and show up here, correct? Yeah, I do the product development, sourcing, work with the factories on making all the products high quality. I'm in charge of the quality, the logistics, shipping, operations and Good. Well, look at this is the this is the first edition of what I'm gonna call just another Tuesday. this is where, you know, there's things that go on every day that are not great news all the time or that are frustrating, or that what you know, we have to overcome another obstacle. And for us it's just another Tuesday. what triggered this conversation is I saw this really cool post that you put into our Slack general, which was notifying the team that the Panama Canal was busy. And you did it with a pretty cool graphic. Yeah, it was a picture of all the containers with a box around our container ship if it's the ships on the ocean and the fact that there was a twelve to fourteen day delay due to the Panama Canal becoming one way at that time. so that has since resolved itself and now it's only a two, three day delay. But yeah, they just didn't have enough water, so they were had to restrict the number of boats that could go through at any one time. And so how controllable is that for us? Not controllable at all. Right. So that's just one of the things you have to accept that this is part of the process. Right. Does anybody that's been doing this the first time aware that that's possible? No. Probably not. Do should they be? Probably not. Right. It's it's it's not necessarily something I would worry about, but it is something that when you do this for how many years you've been doing this? 30 or so. 30 or years or so. so I'm sure it's happened a couple of times. It has. And so for you, that's just a normal Tuesday. Yep. And that's the whole purpose of this podcast. So I I want to Just kind of enlighten everybody a little bit on the process from the moment that a product is being finalized in in the production cycle, meaning so we're about everything's boxed up. So FQC is where you start to like what I consider logistics, right? Like planning on getting it over here from over there. you mentioned earlier to me that there's like obviously FQC, and then there's customs, then there's obviously arranging shipment. So why don't we just start with the FQC conversation? What what is that? How important is that in our world for our clients? So very important. So, you know, we do a final quality check, which is what FQC stands for. that where we check, you know, a percentage of the goods to make sure that you know they are as we expect them to be and are functioning as they should be and that the packaging is printed correctly and you know, all those little details. and so we either send in a third party or one of our own people. Lately it's been mostly one of our people because we have more people. around in China now that are doing the inspections for us. And these are the same people that are involved in the process of developing the product. So they've been involved since the first prototype was made all the way to the final quality check. So they are intimately aware of what that product is and and you know how it should be and what we expect and all the conversations that went on about it as it went through the process. So well that's that's a huge key improvement. And again, most people would be happy just to have a factory do the inspection. Why doesn't the factory do the inspection? Why is it not a good idea to have the factory do the inspection? Well, factories do the inspection also, even on our products. So the fact is they have their own internal QC teams and they have their own acute internal QC documents, which frankly we write a lot of them for them. So we give them specific things that they need to be looking for that they're going to train their QC people on. But to your question, yeah, I mean you always want to double check them to make sure that, you know, a fresh set of eyes, not the ones that have been looking at these products every day, you know, as they were putting them together, that are coming in there saying, Okay, this is the list, these are the things I know it needs to be. They're checking you know, checking the work. Not to mention, you know, somebody's obviously less harsh on their own stuff than they might be on. Yeah. Somebody else product. Look at you you didn't use the word trust. So that that's not a question of trust. It's like you said, it's a human element. Like, you know, you're gonna it's your factory, you're gonna inspect it, everything's gonna look great. The FQC team, the third party team that we used to send in from the onset of the company, that's was a very good policy, but you've improved that to actually having someone that's been developing the product from the get go. Right. So they can be more intimate, like you said, in that process. And that is a huge improvement to speeding this process up. So let's talk about a normal Tuesday situation where something doesn't match up to what the FQC team was expecting. Yeah, so there's a variety of things. I mean the reason we do it is because we, you know, we're looking for things. And so we are extra harsh on the product. so, you know, comes from simple things like a loose thread here and there on a product that just needs to be snipped off all the way up to, you know what, this isn't quite the right color. and so therefore, you know, depending on the type of issue we have. it'll either be reworked, remade. if it's a specific issue that, you know, is like threads and I'm seeing those threads more often than I'd like to see them, okay. Guess what? Your internal QC team is going the internal factory internal QC team is gonna do a hundred percent inspection and make sure that all those are snipped and my guy's gonna come back, you know, as soon as you let him know that that's done and we'll do the inspection again after you have done your your hundred percent inspection of these goods and done any rework that need to be done or improvement on that particular point. that we were seeing too regularly on our inspection. So that's a t that's a normal Tuesday that I think we need to just kind of stick on to for a minute because how frustrating is that to a client on a time basis, right? Yeah. Because they don't understand of the consequences. Why is it so important that we do that overseas versus on this side of the of the equator or in this side of the hemisphere? Well, first of all, it happens much faster over there because they have a production line to do it on. but also, you know, they are people that built it are also the experts in the product. So therefore there's no training that goes involved. It's like they the my our guy goes in, says this is a problem. I need you to check them all and I need to fix all of them. Yeah. And then, you know, their own internal team takes it from there. Whereas if we were trying to do it here, I'd have to hire bodies to do it. Not to mention, you know, it's like that's a huge delay on this side too for us. Right. It's actually a better delay on that side. One hundred percent cost wise shorter delay. Once you have it shipped. Yeah. Then we then it's you know then it's it costs us a ton of money. You know, and I'd rather have the factory pay for it because it was their mistake. Right. So it's money and time. Yeah. But if we're gonna fix it, let's fix it over there. So I agree. So again, you FQC gets done, you guys already make some transport arrangements, and what happens next? So the FQC is done, then we you know, we sign it off, the client signs it off, and then we we let the factory know it's passed FQC at that point. They're arranging it in the building to make sure that it's ready for pickup. I contact for orders and get multiple quotes for every shipment for a variety of things for, you know, if some of them or if a couple of them, two, three, ten boxes are being air freighted, you know, how much is that going to be? Because you wanna give it to influencers or you want to break like subprime and the s the the sales pump. And then fast boat. In other words, if there's faster boats that go through Long Beach to the east coast, so that you would land them in Long Beach and you'd either train them or truck across the country and that saves about twenty days, but also is about twenty percent more expensive. and then the normal slow boat way is what how we refer to it is through the Panama Canal, and that's you know, that's the slowest. So we'll get multiple quotes from multiple freight forwarders and multiple carriers to, you know, figure out the best price. Also, during all that time I'm filling out customs paperwork, both for the internal Chinese outbound customs and the internal US customs, making sure that all that documentation is correct. We're under the right HDS number, we're not paying duty on something we shouldn't be paying duty on. so we review all those documents and then we choose the best quote and then we present it to the client. And you know, the client makes the choice on speed. Right. And then I arrange pickup. Perfect. And you're not actually going through the yellow pages or the Google search to find carriers. You you have a we have a vetted group of people that we rely on consistently. Yeah. We've got about five, two of which get much more business than the other three, but we've got about five that we get regular quotes from. Okay. Yeah, and and so if you're just an individual trying to process the or navigate that process, how difficult is that? Yeah, finding a reliable forwarder, is tough. You know, I think the US ones, some of them are are nice, but they're also really expensive, you know. So yeah, and then frankly, you know, you're paying for I think actually worse service in some cases because you know, some of the some of them are, you know, expens fat and happy and they're used to clients that have been porting the same thing for ten years. Yeah. So there's no work there. you know. Us. It's a new factory, new location, new product every time. so that's harder for a forwarder on the first run. And so the biggest step in that that I think you can shed some light on is the HST conversation. How important is that to be right HTS? I'm sorry, HC. That's why you have to educate me too. The HTS process, how important is getting that right? very important because you can end up paying way too much duty, or if you choose the wrong one, You know, you choose the wrong one and customs doesn't agree with your choice. Now that's a delay on this harbor. There's a negotiation with customs. And if they feel like you were trying to get away with something, you know, then it's even worse. Then you have penalties and fines. If it was you were just an idiot and you chose the wrong one, okay. You just gotta pay the difference. But if they thought that you chose that because it was a lower rate and it didn't qualify for that rate, then yeah, they can get they can get nasty. Yeah, that's And again, I think a lot of people that are navigating themselves don't understand that it's easy to make the wrong choice there. Yeah. Right. It's it sounds logical. It sounds easy. this one's the least amount. That's the one I should be going with. Right. It's and again, for the first time coming through, how hard is that? Because this isn't like a product that you've been shipping repeatedly. This is the first time that customs are seeing this project, this name, this product. So you gotta make sure you're right. That's the key. It's that you gotta make sure you're right. And you know, it isn't just me, I also We'll do a full description to our forwarders and have them double check my work and say, look, if this is what I think the HDS code is based on my research of it. Now you guys, here's the description of the picture of the product, here's what it is. Tell me if you agree. as people who do this every day. I you know, I guess I do this a lot of days, but not every day. Not yeah, not to the volume. Yeah. So they have they're more experts in it than I am. So I always have them double check my work. Yeah. And so in a normal Tuesday situation through customs. what could happen. I mean I I know you mentioned something about that there's a randomization, one out of how many could get flagged. So I would say historically of all the containers I've imported over my career, about one in twenty, one in twenty five get grabbed for some reason. most of them are for documentation checks, which those are pretty short and quick. So, you know, two, three day delay with customs 'cause they're just checking to make sure that they agree with your documents and you They agree with the value of the product you put on, they agree with the HDS code. And if everything looks good at a glance, then they'll let it go. The ones that are a little more invasive, that are more rare also are container inspections. Well, they'll pull it, they'll t open up the container, they'll take a look at the goods in the container, decide whether or not you described it correctly, the value of those things are right. This is the HDS code, you know, they'll also check it for harmful chemicals like lead and those kind of things that are a violation of any any laws in the United States. So they'll do an They'll do those kind of chemical checks on products. and those take month, 45 days, and they're out of my control. You know, it's like I there's nothing I can I was gonna say, how much control do you have over that? None. You don't have a hotline that you can pick up and call and say, say someone expedite this. No. yeah. look at even when you're even when we're shipping things in for samples, I I've just like I know from history there's a route for some reason, whatever accidentally or purposefully ends up in Alaska. has to go through customs in Ohio and that for a sample that would normally take five or ten days now takes three to four weeks. Rare still. It's still very rare, but it's so frustrating. It's it's never let's put this way for in my world, it's a normal Tuesday because it's never on the one that I have the most patient customer for. That's true. It always happens. That's always true. On the most you know the the one that is absolutely I need this right away. It's contingent on a deadline. those seem to always get diverted to Alaska and that's not in our control. Yeah. Yeah, I don't know, that's Alaska, but yeah, any port that they come into, but you know, there is a chance that any of our small apostles will get nabbed up in the nabbed up and to be checked too. and usually that goes pretty quickly, but there are times when that could be a week, two weeks. You know, they have questions, we go back and forth. That's never a fast process, no matter how quickly I respond. you know, because they're you know, they'll ask a question, I'll respond that same day. Two days more will go by. we have another question, another follow up. We need this other document. Okay, here's this document. Okay, two days. I can hear back from them again. And by you, next thing you it's 10 days down gone by and nothing's moved, and you've answered every question they've asked. And in the end, you know, they're like, okay, great. There was no problem here. Okay, well, thanks for delaying me for taking up that time. in that whole process, how important is it to understand the entire cycle or obstacles? Like, tell me the natural obstacles that you already have in production dealing with Asian or Chinese manufacturers. Chinese New Year being the biggest one. What are the others? Chinese New Year is a big one just because there's a month where basically the port shut down. you know, so there's nothing coming out. even Air Freight and FedEx and those guys are shut down for a couple of weeks. so yeah, I mean, and and all the workers are home. so the fact is is that really nothing's happening. So we need to make sure that we plan around that. And we're Chinese New Year, roughly about a month, right? About a month, and it's usually starts late January, early February and goes to the end. End February. What's the one in October that always catches me by surprise? that's the the golden week with the national holiday. Okay. And that's about a week week. That's about a week, but now this year it happens to bump up against the lunar or the the autumn festival. So there's like three days off, two days on, seven days off. Okay. I bet you those two in the middle aren't particularly productive. No, I I would say yeah, I I mean I think that's so we we have those and then there's there's a probably about a s I don't know, half dozen others that are smaller here and there that are usually one or two days. Yeah. add that calendar now to our calendar. What are the major holidays that we have that like traditionally slow things down? Wait, I don't have to travel to China when it's during a holiday. Yeah, exactly. Well, yeah. Well that's a I'm not making that guarantee here, Sandra. You're you're gonna have to travel anytime you need to go. but Look at how many times like automatically to Thanksgiving, right? You might as well call that whole week off. That's the biggest travel week here. That might delay, and that's fine, we can work around that. But when there's that much movement of people around the country, that does delay shipments. That does delay like air freight. So if you're talking about like, you know, the sample shipments and stuff like that, that you know, those tend to although because we are a regular a frequent flyer on FedEx and UPS. It generally doesn't do much. Okay. but the bigger thing is is this time of year for getting ocean containers shipping out of China because right now everything that's going to be here for Christmas has to be leaving right this second. So right now there is a you know shortage of containers. So for me to get a container, I have to make sure that I book it out a couple weeks in advance, even prior to the FQC. Be talking to the forward or say, Yeah, we're gonna have a shipment. I need a container on this date. I can't tell you exactly what it's gonna be, but you need to make sure that this container is ready so we don't lose. weeks looking for a container. so you know that's not uncontrollable. It's just you got a plan for it. And and that's look at I think that's where I think anybody going through this for the first time hiring us doesn't they really I don't think really anybody grasps the sense of urgency of like how so you know you just said Christmas and I know the way some people would think it's like well that's like that's a long time away. When you say anything that arrives that wants to be here for Christmas has to be on a boat right now. That's why because there's A 30, 60, 90 day process just in that part, depending on how you're getting in here. So that puts you right up against November. Right. And even then I would say you're probably a little bit late because Black Friday is when the Christmas shopping really starts, which means you have to have your ducks in a row sometime mid September, early October. Yeah. By the end of this month, you gotta have it out. And and so the sense of urgency and the sense of patience to me is the most common sensical thing to try and rush what happens when you rush. Yeah, you know, you could make a mistake on paperwork or you could pay too much for something, or you know, there's a bunch of things that could happen when you rush. you know, a box wasn't checked that needed to be checked. so yeah, you gotta make sure that you're doing everything correctly or else it'll end up costing you more time in the end. If I'm an if I'm a Fortune one hundred, five hundred, one thousand company and my whole year is going to be ten dependent on the Christmas market or the holiday market, it is super important to have all your stuff here now and pre-planned. If I have a thousand units that's launching, am I really smart to go into launching in the most expensive time of season or am I better off waiting until January? Yeah. I mean, it's it's hard to compete with the big boys when the amount of money they're spending on marketing and everything else. You know, so the fact is is that trying to make any sound during that noise is hard. It it is. And and so I you know, I bring this up because sometimes that like it's not a go no go line. There's a sense of urgency to constantly move forward, but there's also patience to say this is the right time. Let's move forward and give ourselves the ability to breathe to move forward. So I always tell people like that is in our control. You know, we want to be there as quick as we can and that's our our whole goal. But there's just natural delays. We started off with the Panama Canal. So before it even got to customs, you mentioned how how difficult is getting stuff out of China? You mentioned there's a customs to get stuff out of China. Yeah, I mean it depends on the goods. So things that are controlled by China, that's certain metal categories and certain electronics they want to check. weird ones like maps. you have to get you have to get certification on those before they depart and they want to take a look at them before they go. but and for the most part most of our products don't really have any issue going through and there's still checkpoint, but generally that doesn't cause a delay. You just gotta be aware of it, make sure the paperwork's filled out properly and make sure that you're not giving them a reason to to slow it down. Yeah. So Panama Canal, we got the announcement it's funny this morning I saw you, I saw it posted. I said to Steve, I'm like, Hey, let's get let's get a just ever a normal Tuesday conversation with Sander about the Panama Canal. And he came back to report to me, goes, It rained last night, I think problems solved. But you know, again, if the rain didn't come in or somehow they didn't transport water into the that could have been a longer delay. Yeah, and it has been in the past. Yeah. So, you know, there's a certain amount of like uncontrollable and fort good fortune that goes into that process. Is the Panama Canal ever going away? You know, you the they've been talking about this water situation for a lot of years. So the fact is is there is a chance that, you know, with climate change and everything else, that there isn't enough water to let container sized ships go through. So there is that chance. I mean Well you and you and I looked it up. Panama Canal was built in the nineteen. Yeah, and it fit it finished in nineteen fourteen. So like how big were the ships then versus how big are the ships now? Yeah. And well, and it's two way normally. So the ships going both directions at the same time. Right. So that that's a like it's a it's a miracle that we have the Panama Canal. I think we should appreciate. We should understand that if we didn't have it, what we do every day and take for granted every day is you know, it just it's it's part of it. It is fifteen days and a bunch of diesel fuel because they have to go around the south. And it happens. You know, frankly, I'm sure the con I'm sure the container lines were looking at the peak of the delay at Panama Canal. The shipping lines were looking at Should we go around the bottom of South America or should we wait? you know, which is gonna be faster. And there was a period of time there where I'm pretty sure that date was about the same for both. Yeah. now it's back to not making sense to go around the south. But in the past, when there has been longer delays with the Panama Canal, they were going around the end. Yeah, 'cause I'm sure there's someone there's a crew cost, there's diesel fuel that's burning while they're waiting. There like there's all those things. Is it better just to go around and is it gonna be the same cost to wait? So Look at I I'm gonna, you know, wrap this up to just kind of say there's a lot of things that are gonna happen in this process. And this was just the small conversational logistics on one center focus, which was the Panama Canal being a little bit under the water, so to speak. it gets resolved or it doesn't get resolved. It's just a normal Tuesday for us, and there's a lot of normal Tuesday stuff that happens. I encourage you, this is what you hired us for, is to let us handle that part, go back to bed. relax. That's what you know, it's our job to figure this out. We will let you know when we have to absolutely ever or change course or overcome an obstacle. And there's times where you just have to be patient. But I think that's what we do a very good job of just navigating things that we know to be true. I'm sure it takes years off your life. That's why, you know, we look pretty good for thirty six years old. that's again, look at I'm just gonna say, like, follow us, like us. If you know someone that's trying to navigate this process on their own, I highly recommend you look at talking to us. The consultations are free. the advice that you can get off these podcasts are, you know, gonna help you enormously get through the process if you're doing this your on your own. Sander, anybody doing this on their own, any advice you can give Yeah, I mean, bring in help. That's it, 'cause it's there's so many things that you don't know what you don't know. And you know, AI can tell you you know it, but frankly, it can't predict. You can't predict any of these kinds of things. So, you know, I think that making sure that you know you you you know you you you talk to people that have done it before. And whether that's us or somebody else, definitely get somebody on your side that's done it before. Well we have a team of people and it's still hard. I know. Like, you know, sometimes even I say, Well, can I just have a normal Tuesday? Yeah. True. Anyway, thank you guys for watching. If you could like us, share us, follow us, reach out to us if you have any questions. enjoy the podcast and look forward to having more.