The Fundamentals of Efficient FTZ Warehouse Operations
One of the biggest benefits of having the FTZ (foreign trade zone) status is that you’re able to lease a general warehouse space or building to store your foreign-sourced products, raw materials, and more. Unlike bonded warehouses or temporary importing under bond programs, there are no restrictions on the length of time that merchandise can stay within the zone, whether there is duty owed or not.
This privilege comes with an important caveat. With no time constraints on your inventory, you also have a greater responsibility than ever before to track and trace the merchandise within the physical space of your warehouse. Just because you can hold on to merchandise for longer doesn’t mean that you should.
In the warehousing business, TIME IS MONEY.
In other words, you must optimize your warehouse to ensure premium warehouse space allocation, optimal goods flow, and high employee productivity.
Consider this scenario for a moment:
You have an unrestricted warehouse that allows you to store products and merchandise for as long as you’d like. You plan to take advantage of this option since you’re eager to avoid threats of tariff increase. You continue to ship product to your FTZ warehouse. Then it happens. You realize, all too quickly, that you’re out of physical space in the warehouse. Your operations come to a halt.
Without the right customs compliance software to track your inventory, optimize the flow of goods, and trace your imports and exports, there is no effective way for you to know when you’re running the risk of overstocking your warehouse.
To run a successful FTZ program, you need to understand every step of the merchandise flow to keep your inventory accurate. In the FTZ world, mismatched inventory and documentation is a costly mistake. Not only is it a harmful short-term mistake, but you can even run the risk of having CBP shut down your operation entirely.
You need the right tools and processes in place to ensure:
· Warehouse workers are sent on the most efficient path to get the job done, consolidating trips instead of visiting the same location many times during one day
· Frequently picked items are stored in the most easily accessed locations
· High volume inventory is regularly replenished in picking locations
· Employees know where to put items without having to walk to a terminal or ask a manager
By improving these processes with the right supporting ABI software, an FTZ warehouse will quickly see cost reductions, error reductions, and an increase in efficiency.
Download the Foreign Trade Zones white paper!
Learn more about how to obtain FTZ status and operate an efficient FTZ in this free white paper.