How to set up your first supply chain

The four handoffs, and the one decision inside each

A supply chain is not a department. For a first product it is four handoffs, and each one has a single decision that sets its cost for the year.

Most first supply chains are designed backwards, from the storefront toward the supplier. Design them the way the freight moves and the decisions get simpler, because each handoff only has to answer one question. The table is the whole guide in four rows. The sections below are the four rows in detail.

Step 1: Source it. Set the terms before you set the price

The supplier price is not the landed price. Terms of sale decide who books the freight, who owns the goods in transit, and who pays when a pallet arrives crushed.

Three terms belong in the first purchase order. The FOB point sets where ownership and risk pass from the supplier to you. Prepaid or collect sets who the carrier invoices, and prepaid and add is the version where the supplier books a carrier you did not choose and bills you for it. If the goods are made overseas, the Incoterm covers the ocean or air leg, and the domestic supply chain begins the day the goods clear customs at a US port or airport.

Then get the five freight numbers, per SKU, in writing: pallet count, length, width, height, and weight per pallet. Every freight quote you will ever request runs on those five numbers, and a supplier who cannot give them has not palletized before. Ask for 48 by 40 inch pallets, shrink wrapped to the deck, no overhang. The standard pallet is standard because every dock, forklift, and trailer in the country is sized to it.

Minimum order quantity and lead time round out the terms. The MOQ sets how much cash sits in inventory. Lead time plus transit time sets how early you reorder. Write both next to the unit price, because a low unit price with a 90 day lead time is a working capital problem wearing a discount.

Step 2: Ship it in. Your first inbound shipment

Anything over 150 lb moves as freight. One LTL pallet on Warp averages $582 all inclusive, quoted in 10 seconds from origin ZIP, destination ZIP, pallet count, and weight.

Parcel carriers handle individual boxes up to 150 lb. Above that, and well below it once an order runs to several boxes, the freight moves on a pallet. Less than truckload carries 1 to about 10 pallets and shares the trailer with other shippers, so you pay per pallet. A full truckload dedicates a 53 foot dry van to you, up to 26 pallets or 44,000 lb, and goes direct. The first inbound shipment from a domestic supplier is almost always LTL; the first container from a port is usually a truckload or a set of them.

Two pricing systems exist for LTL and the difference shows up on the invoice. Legacy carriers rate by freight class, a density code, and rebill you when they measure something different at the terminal. Per pallet pricing quotes the pallet you describe, folds fuel and the usual accessorials into one number, and stays the number you booked. On Warp the LTL tariff lists liftgate, residential, and delivery appointment as charge waived, and driver detention starts at 30 free minutes. The tariff is public.

The paperwork is one document. The bill of lading is generated at booking, the driver signs it at pickup, and the proof of delivery your receiver signs at the dock is the only thing that protects a damage claim. Count, inspect, then sign. The full walkthrough, from the supplier dock to your receiving door, is in your first shipment from manufacturer to warehouse.

Price your inbound lane now for 1 pallet at 500 lb, or run the freight shipping calculator across LTL, box truck, and truckload before the purchase order is signed.

Step 3: Store it. Garage, 3PL, or a fulfillment center inside a freight network

Where inventory lives is decided by two numbers, orders per day and SKU count, and by one question: can the inbound pallets and the outbound orders ride the same network?

In-house works while one person can receive, pick, pack, and ship every order before the carrier cutoff, and the inventory fits the space you already pay for. It stops working the week a pallet arrives and there is nowhere to put it. A 3PL takes receiving, storage, pick and pack, and outbound off your hands and bills each one. The shape of the bill is the same everywhere: receiving per pallet or per unit, storage per pallet or bin per month, a pick fee per order plus a per unit add on, packaging, returns handling, and the inbound and outbound freight, usually arranged by the 3PL and marked up on the way through.

The third option is a fulfillment center that sits inside a freight network. Warp runs four, in Los Angeles, Dallas, Chicago, and New Jersey, with receiving, pallet and case storage, pick and pack, same day delivery within 30 miles of each building, and 60 supporting cross dock partners for pallet sort and consolidation. Storage bills by the pallet by the day with no minimum stay, and the inbound and outbound pallets ride the Warp network at the network rate instead of a marked up pass through. Warp fulfillment is scoped on a call rather than a signup, because the fee schedule depends on your SKUs.

Whichever model you pick, price it per order before signing. The 3PL cost calculator takes any fee schedule and returns all in cost per order and per month, split into the lines you can renegotiate and the lines you cannot. The decision itself, with thresholds and the questions to ask, is in your first 3PL or in-house fulfillment.

Step 4: Deliver it. Outbound is where the unit economics live

Inbound is a few pallets a month. Outbound is every order, so a $2 mistake here is a $2 mistake times your volume.

Direct to consumer orders under 150 lb ride parcel: FedEx, UPS, and USPS for ground and express, or a same day courier from a metro pickup. Wholesale and retail orders ride LTL pallets, and a retailer's routing guide will tell you the appointment, labeling, and pallet rules before the first purchase order lands. The walkthrough for that first purchase order is your first wholesale order. The big box compliance guide covers Walmart, Target, and Costco.

Two structural moves change outbound cost once volume clusters. Fulfilling from a center within 30 miles of your densest customers turns a two day parcel into a same day delivery. Zone skippingconsolidates a region's parcels onto one pallet, moves the pallet as freight to a cross dock near the customers, and inducts the parcels there, so each box pays a local zone instead of a cross country one. Neither move needs your own trucks. Both need a network that already has the cross docks, which is why the store decision and the deliver decision are made together.

Step 5: Run it. Spreadsheet first, then a free TMS

On day one the supply chain fits in a spreadsheet: lane, carrier, pickup date, PRO number, delivered. It stops fitting the day you add a second carrier.

A transportation management system quotes, books, tracks, and audits every shipment in one place. The signal that you need one is not volume, it is time: when someone spends an hour a day asking carriers where things are, the tool pays for itself in the first week. The thresholds are in do I need a TMS. Warp TMSis free, with no seat limits and no load caps, and quotes LTL and FTL in seconds with Warp's bookable rate beside marketplace carriers and your own contracted rate cards.

If the product is software, or the team already lives in code, the same network is reachable through the Freight API: quote, book, track, and settle from your own system, with a keyless quote endpoint to test before you integrate.

What a first supply chain costs

The line items below are published numbers, not estimates. The freight line is a live average across 2,255 rated lanes; the accessorial lines are the LTL tariff.

What is not on the table: the supplier's unit price, parcel postage, and 3PL fees, because those are yours to negotiate and no published number would be honest. The 3PL cost calculator and the freight shipping calculator turn your own numbers into a cost per order and a cost per pallet.

Seven mistakes first supply chains make

1. Paying parcel rates on freight weight. The crossover is 70 to 300 lb. A 200 lb order split into four boxes costs more than one pallet, arrives in worse shape, and teaches the customer to expect boxes.
2. Letting the supplier book the freight. Prepaid and add means the supplier picks the carrier and adds a margin you never see. Take the freight on your side of the FOB point so the quote is yours.
3. A pallet built for the forklift, not the truck. Overhang past 48 by 40, shrink wrap that stops at the top deck, and one label on one side are the three defects that turn a clean shipment into a damage claim.
4. Signing a clean proof of delivery. Count the pallets and note any damage on the POD before the driver leaves. A clean signature closes the claim window on the spot.
5. Signing 3PL minimums before you know orders per day. Every fee line in a fulfillment contract is priced against a volume you have not shipped yet. Run the fee schedule through a cost per order model first, and start with storage that bills by the pallet by the day.
6. Discovering freight class after the invoice. Legacy LTL rates on density and rebills when the class is wrong. Per pallet pricing quotes the pallet you describe and stays the price you booked.
7. Running the chain by asking for updates. If the first sign of a late pallet is an angry customer, there is no supply chain, only a chain of emails. Every shipment needs a tracking status you did not have to request.

The 30 day setup checklist

Thirty days is enough to go from a supplier quote to a running order flow if the decisions are made in freight order.

• Supplier terms in writing: FOB point, who books freight, MOQ, lead time, palletization to 48 by 40
• The five freight numbers for every SKU: pallet count, length, width, height, weight per pallet
• One inbound lane quoted three ways: LTL, box truck, full truckload
• Fulfillment model chosen on orders per day and SKU count, with every fee line priced per order
• Bill of lading template ready, receiving checklist at the dock, POD exceptions procedure written
• Tracking in one place: spreadsheet on day one, TMS before the second carrier

The full version, 32 items across the four handoffs with progress you can save and print, is the supply chain setup checklist.