COURSE WORKBOOK

with Gretta Van Riel, Rob Ward, Chase Dimond

Richard Li, Nick Shackelford
 ACTION ITEMS
MODULE: Welcome to Manufacturing & Operations at Scale!

MANUFACTURING & I’m Rich Li and I’m the co-founder of Brosa, an

online furniture retailer, and the luggage brand,

OPERATIONS AT SCALE
❏❏ Download the Module workbook.
July. Within the first nine months of July, I helped it
secure $10.5 million in funding. Meanwhile Brosa has
become Australia’s largest online furniture retailer
worth over $60M AUD with over 3,000 different
products and 10,000 different SKUs.

LESSON: Before BROSA and July, I built my experience in

ecommerce as the largest seller to Groupon Group

MODULE INTRO globally, sourcing and creating products from China

for retail sale in the US, Australia, Canada and New
Zealand.

In this module, I’ll teach you how I’ve set up the

entire supply chain operations for my businesses
from the ground up from product sourcing,
manufacturing, logistics all the way to the end
“Scaling means producing more high quality products consumer.
more efficiently.”

TOOLS & RESOURCES

• Brosa Furniture
• July Luggage

COURSE WORKBOOK
Notes:

COURSE WORKBOOK
 ACTION ITEMS
MODULE: In this lesson, I’m going to give you an overview of
the supply chain operations for ecommerce. Even
MANUFACTURING & at this stage in your company, many founders still
consider this process complicated and difficult. I’ll

OPERATIONS AT SCALE
❏❏ Download the Supply Chain Flow Chart.
show you how every topic covered in this module fits
in the grand scheme of things. I hope to demystify ❏❏ Fill out the workbook exercise to see if your
the process so you realize that specialized skills business is ready to scale manufacturing and
aren’t necessary to run tight supply chain operations. operations.

The Three Main Supply Chain Components

LESSON:
Sourcing
THE SUPPLY CHAIN PUZZLE • Finding quality suppliers

(PRIMER)
• Setting up a good working relationship
• Negotiating and collaborating with suppliers

Production
• Placing an order
“You want to produce your own brand, product and • Locking in a production slot
packaging to control your own margin.”
• Sourcing raw material
• Nailing down a delivery date

Logistics
• Freight forwarding (Supplier to warehouse)
• Warehousing (3PL or yourself)
• Last Mile Delivery (Warehouse to customer)

COURSE WORKBOOK
Contribution Margin

Use the space below to work out your Contribution Margin.

COURSE WORKBOOK
Notes:

TOOLS & RESOURCES

• P&L Template (Foundr)
• Contribution Margin Calculator (Omni
Calculator)

COURSE WORKBOOK
 ACTION ITEMS
MODULE: In this lesson, I’ll teach you how to calculate your
Contribution Margin from an example P&L sheet.
MANUFACTURING & This will help you understand how much you can
pay your supply chain partners. Ultimately, aim for

OPERATIONS AT SCALE
❏❏ Download the P&L template.
a Contribution Margin of 10%. That usually means
you’re set up to scale and put more money into your ❏❏ Use the space below to work out your Contribution
supply chain, marketing or whatever else you think Margin.
needs a boost.

Contribution Margin
LESSON: The sales amount left over to pay your fixed costs
(i.e., rent, utilities)

THE FIRST STEP TO SCALING Contribution Margin = Gross Margin - Variable Costs

(CONTRIBUTION MARGIN)
Variable Costs

Merchant facility costs

Credit card fees
“Your contribution margin will help you understand how Last Mile Delivery
much you can pay your supplier.” Marketing costs
Raw materials

Contribution Margin helps you decide:

If variable costs for a product need to be REDUCED

If the price of the product needs to be INCREASED
If costs and product should REMAIN THE SAME

How to Calculate Contribution Margin

Step 1: Calculate Gross Profit

Gross Revenue - Discount = Net Revenue - Variable
Costs = Gross Profit

Step 2: Calculate Marketing Costs

Gross Profit - Marketing (CPC x Visitor Sessions) =
Contribution Margin

Step 3: Calculate Contribution Margin Percentage

Contribution Margin ÷ Gross Profit = Contribution
Margin (%)

COURSE WORKBOOK
“To Scale or Not To Scale” Questionnaire
Use the questions below to determine whether your business is
ready to scale manufacturing and operations.
Circle YES or NO for each.

Is your product/brand proven? Do you have enough demand to be producing at large Have you surpassed your revenue targets? Do you have repeatable sales?
quantities?

YES NO YES NO

Are you in the market for global manufacturers? Is there minimal risk in scaling your business right now? Do you have enough cash
reserves to scale at low risk?

YES NO YES NO

COURSE WORKBOOK
Notes:

TOOLS & RESOURCES

• Supply Chain Flow Chart (Foundr)
• 125+ Startups Disrupting the Supply
Chain and Logistics Industry (CB
Insights)
• Supply Chain Flows in Other Industries
(Rutgers)

COURSE WORKBOOK
 ACTION ITEMS
MODULE: In this lesson, I’ll teach you my tried and tested
method for finding quality suppliers. As I mentioned
MANUFACTURING & earlier, scaling manufacturing not only involves
making larger quantities of product but also

OPERATIONS AT SCALE
❏❏ Identify your direct competitors.
producing at a higher quality. And at the end of the
day quality products mean more positive feedback ❏❏ Find your top competitors’ suppliers.
and a higher Customer Lifetime Value (CLV). ❏❏ Cold call those suppliers using my scripts.

The Best Suppliers:

• Scale with your business
LESSON:
• Match your quality standards

SOURCING QUALITY • Help you grow your business

SUPPLIERS Product Sourcing

Method #1: Sourcing In-House

The FBI Method

Investigating your competitors’ suppliers
Step 1: Identify your competitor.
Step 2: Go on their website and check for their
company name.
Step 3: Plug in the company name on JungleScout.
Step 3: Choose a manufacturer under “Top
Suppliers.”

Method #2: External Sourcing Agent

Pros
• Available to visit many suppliers
Cons
• Limited supplier relationships
• May take a cut of the supplier’s fee (5-10%)

COURSE WORKBOOK
Direct Competitors List Cold Calling Scripts

Write down your brand’s top five competitors and their suppliers in the spaces provided. Use the cold call script templates below to call your competitor’s suppliers.

Brand:
The Business Card Approach:
Website: Hi, my name is [Name] and I’m from an [Company, Description]. I met you guys at [Event/
Date] and someone gave me a business card of yours. I’d like to speak to someone who
Supplier/s: looks after the [Your Country] market.

Supplier Contact Info:

The Network Connection:
Hi, my name is [Name] and I’m from an [Company, Description]. I met you guys at [Event/
Date] and [Make Up a Name] recommended we reach out to you. I’d like to speak to
Brand: someone who looks after the [Your Country] market.

Website:

Supplier/s:

Supplier Contact Info:

Brand:

Website:

Supplier/s:

Supplier Contact Info:

Brand:

Website:

Supplier/s:

Supplier Contact Info:

COURSE WORKBOOK
Notes:

TOOLS & RESOURCES

• Supplier Cold-Calling Scripts (Foundr)
• JungleScout (Product Finder & Research
Tool)
• How to Reach Out to Manufacturing
Companies (CloudCart)

COURSE WORKBOOK
 ACTION ITEMS
MODULE: In this lesson, you’ll learn how to negotiate with
suppliers to get the best possible quotes. Many
MANUFACTURING & founders don’t know the extent to which you can
bargain for your product. Just implementing one of

OPERATIONS AT SCALE
❏❏ Use my Double Spy Framework to find a quality
the techniques I’m about to show you can save you supplier with the best price.
hundreds if not thousands of dollars.
❏❏ Craft or update your own QC Agreement to give to
The Double Spy Framework your supplier.
❏❏ Approach two suppliers of a similar product.
❏❏ Get a quote from one you don’t intend to work
LESSON:
with.

NEGOTIATING WITH ❏❏ Drop it by 10%.

❏❏ Give the price to your dream supplier.
SUPPLIERS Pro Tips

1. Negotiate the down payment.

“Suppliers like to hear that you’re in it for the long haul.” 2. Meet your supplier in person.
3. Maintain a good relationship with your supplier.
4. Ask for a better payment term from the second
order on.
5. Include a quality policy in your contract.
6. Conduct quality control yourself of go with your
quality control team.

Standard Penalties

• Include 1% of hardware in the shipment in case

of damaged parts.
• Replenish the stock in the next shipment.
• Compensate 3x the cost.

COURSE WORKBOOK
The Double Spy Framework Checklist

• Approach two suppliers of a similar product.

• Supplier 1:

• Website:

• Contact Info:

• Supplier 2:

• Website:

• Contact Info:

• Get a quote from the supplier you don’t intend to work with.

• Quote:

• Drop it by 10%.

• Quote -10% =

• Give the price to your dream supplier.

COURSE WORKBOOK
Notes:

TOOLS & RESOURCES

• Quality Control Agreement Template
(Foundr)
• 7 Tips to Negotiating the Best Deals with
Your Suppliers (Intuit)

COURSE WORKBOOK
 ACTION ITEMS
MODULE: In this lesson, I’ll teach you about all the ways in
which you could lose unprecedented amounts of
MANUFACTURING & money in 3PL. It’s important to be aware of all of the
fees (often hidden fees) and factor them into your

OPERATIONS AT SCALE
❏❏ Decide on the best warehousing solution for your
P&L so you have accounted for as many as possible. business.
Warehousing ❏❏ Use the 3PL Checklist provided if you’re working
with a 3PL.
Pros ❏❏ Download my 3PL Pricing Template in the
• Take stock anytime Resources.
LESSON:
• Ship anytime

PREVENTING 3PL BLEEDING •

•
Potential for fast delivery time
Control the consumer experience

Cons
• Pay lease
• Hire people

3PL

Pros
• No fixed costs

Cons
• Delivery dependent on external factors
• Fees
• Hidden fees

The Big Four 3PL Fees

TOOLS & RESOURCES
• Inward freight
• Outward freight • 3PL Pricing Template (Foundr)
• Storage • 3PL Checklist (Cerasis)
• Manual labor • 3PL Questionnaire (EasyPost)

COURSE WORKBOOK
Notes:

COURSE WORKBOOK
MODULE: In this lesson, I’ll teach you about the shipping terms
you need to know in order to avoid costly mistakes in
MANUFACTURING & the process of getting your product to the consumer.

OPERATIONS AT SCALE How to Avoid Unplanned Shipping Costs COGs Per Shipping Method

Step 1: Understand COGS • EXW

• Cost of Goods Sold • Purchase cost
• Direct costs attributable to the production of • Origin transportation/Customs clearance
goods (can include inward freight and duty, if
LESSON: • Destination transportation/customs clearance
applicable)

INTERNATIONAL SHIPPING
• FOB
Step 2: Nail down the trading terms • Purchase cost
• Ex-Works (EXW): You (not the supplier are • International freight
responsible for the costs/liabilities for the entire
shipping process • Destination transportation/customs clearance

• Free on Board (FOB): Supplier is responsible • CIF or CNF

until origin port and you’re responsible from • Purchase cost
origin port to the customer
• Destination transportation/customs clearance
• Cost, Insurance and Freight (CIF or CNF):
Supplier is responsible for the costs/liabilities of
the entire shipping process

Step 3: Calculate your COGS

• Manufacturing Costs + Freight Forwarding +
Duty

Step 4: Track how price changes in each component

affect your P&L margins

ACTION ITEMS
❏❏ Download my trading terms workshop document in
the Resources.
❏❏ Make sure your quotes are in FOB.

COURSE WORKBOOK
Notes:

TOOLS & RESOURCES

• Brosa Supply Chain Workshop (Foundr)
• Trade Terms Dictionary (DHL)

COURSE WORKBOOK
MODULE: In this lesson, I’m going to give you the exact
questions you need to ask your Last Mile Delivery
MANUFACTURING & provider to make sure you don’t get charged extra
fees.

OPERATIONS AT SCALE
Last Mile Delivery Costing Structure

[Consignment Charge + Weight Charge] x Fuel

Surcharge
LESSON:

LAST MILE DELIVERY (LMD)

ACTION ITEMS
❏❏ Re-evaluate the carriers your brand uses.
❏❏ Go through the questionnaire in the workbook.

Last Mile Delivery Questions

Ask your LMD provider the following questions prior

to initiating a partnership.

❏❏ What is your costing structure?

❏❏ Do you charge a re-delivery fee?
❏❏ Is ATL an option?
❏❏ Do you charge a storage fee?
❏❏ Do you charge a residential surcharge?

COURSE WORKBOOK
Notes:

TOOLS & RESOURCES

• Volume Weight Calculator (ParcelHero)
• Breaking Down the LMD Challenges and
Solutions (JungleWorks)

COURSE WORKBOOK
 ACTION ITEMS
MODULE: In this lesson, I’ll teach you how to use Shippit and
similar apps to automate orders in your Shopify
MANUFACTURING & store. Apps like these claim to reduce fulfillment
times by up to 80%. One caveat: apps like Shippit

OPERATIONS AT SCALE
❏❏ Use the links in the resources to compare and
are good if you’re processing up to 500 orders a day. contrast applications.
Anything more and you should look into a WMS or
Warehouse Management System. ❏❏ Narrow your pick to one and join the app.

App Features
• Order fulfillment and delivery automation
LESSON:
• Different carrier options depending on rates

AUTOMATING YOUR • Live shipping status updates

DELIVERY (SHIPPIT)

TOOLS & RESOURCES

• Shippit (Order Fulfillment)
• Shippit Alternatives and Competitors

COURSE WORKBOOK
Notes:

COURSE WORKBOOK
 ACTION ITEMS
MODULE: In this lesson, I’ll teach you the exact process of how
July does supply chain. You’ll get to see how each
MANUFACTURING & of the strategies and methods I taught you in this
module ultimately come together.

OPERATIONS AT SCALE
❏❏ Go out and apply all of the lessons you’ve learned
in this module to your supply chain process.

LESSON:

JULY: A CASE STUDY

TOOLS & RESOURCES

• The Ins and Outs of Manufacturing Any
Product (BigCommerce)
• 10 Supply Chain Strategies for
Ecommerce Businesses (FCBCO)

COURSE WORKBOOK
Notes:

COURSE WORKBOOK