Most product businesses don't lose money inside any one stage of their supply chain. The factory is usually fine. The freight forwarder is usually fine. The ad agency is usually fine.
The money goes missing in the handovers between them. Each specialist does their job well, then passes the problem to the next person, who never sees the decision that caused it.
I set up Solarc Works because nobody is paid to watch those gaps. Here are five of the most common ones.
1. Between the design and the factory
A vague spec gets filled in by the factory, their way. Then you go round in circles with samples shipped back and forth, each round costing weeks. Worse, you often commit to a minimum order before you've properly tested the product in anyone's hands.
This is exactly why I've added UK prototyping. Through my UK print partner, I can get prototypes 3D printed here, so you can hold it, test it and change it before you pay for tooling or sign up to factory minimums overseas.
2. Between the factory and the freight
A cheap factory quote isn't always cheap. An ex works price leaves you paying origin charges you didn't budget for, while a delivered price hides margin you can't see. And factories pick carton sizes to suit their packing line, not your pallet or container, so you end up paying to ship fresh air.
3. Between the port and the warehouse
One wrong commodity code can mean overpaying duty on every shipment for years, or a penalty when it's picked up. Stock arriving without the barcodes or labels your warehouse needs gets relabelled at their rates, not yours.
4. Between the warehouse and the customer
Couriers charge by size as well as weight. A box a couple of centimetres too big can push every parcel into the next price band. Nobody notices, because the packaging was designed by someone who never sees the courier invoice.
5. Between the store and the marketing
Most marketing is judged on return on ad spend, which is based on revenue. But revenue isn't profit. A campaign can look brilliant on paper while every order it brings in barely breaks even once fulfilment is paid for.
What this looks like in numbers
Here's an illustrative example. A factory quotes $10 a unit, which is roughly £7.50 at an exchange rate of $1 to £0.75. It sells in the UK for £40.
| Cost per unit | £ |
|---|---|
| Factory price ($10) | 7.50 |
| Freight and port charges | 1.10 |
| Import duty (12% example) | 1.03 |
| Customs clearance | 0.15 |
| Warehouse receiving and storage | 0.30 |
| Pick, pack and packaging | 1.40 |
| Courier delivery | 3.50 |
| Payment fees | 0.88 |
| Total cost per order | 15.86 |
The $10 product costs you nearly £16 by the time it reaches your customer. Take VAT off the £40 sale and you're left with £33.33. That leaves £17.47 before marketing. If it costs £14 in ads to win each customer, you make £3.47 an order.
Now fix just one gap. Resize the box so it drops a courier band, from £3.50 to £2.80. That's 70p saved, and your profit per order goes from £3.47 to £4.17. That's a fifth more profit, without selling a single extra unit.
Do that across three or four gaps and the business looks completely different. None of those fixes is dramatic on its own. They just need someone looking at the whole picture.
That's the job
Solarc Works exists to be the one person watching the gaps. I look at how each decision affects everything downstream, so a fix in one place doesn't quietly create a cost somewhere else.
If you'd like to know where your gaps are, start with an audit and I'll hand you a prioritised list. Or book a 20 minute call and tell me where it hurts.