Medical devices generally have specific requirements on storage temperature (low or ultra-low conditions), humidity, light and cleanness especially implanted devices, and certain medical devices could be classified as hazardous goods under local laws and regulations. As a result, the warehousing of medical devices require specialized and compliant handling, high level of precision and constant monitoring. In addition, different from pharmaceuticals with limited SKUs per product, medical devices often have various SKUs based on size, shape or material to accommodate different patients’ conditions, physicians’ preferences and operation needs, and frequent toolkits or sets selling by packaging multiple configurations further increase the complexity. Managing such a large scale of SKUs is also challenging especially for accurate information recording and tracking ensure the customers receive the correct products.

• Storage zoning. We divide each warehouse into different zones to accommodate different products’ storage conditions and properties as well as major warehousing functional areas in comply with applicable regulations, including storage zones such as standard storage areas, temperature controlled rooms, specialty zones for repackaging and relabeling, and loading and unloading areas, receiving areas, picking areas and dispatch areas.
• Multi-brand warehousing solution. We have developed a multi-brand warehousing solutions to allow multiple brand partners to share a facility and generally allow each brand to dynamically adjust their tenancy based on actual needs instead of fixed space allocation. As a result, brand partners could always achieve high space utilization and flexible workforce solutions to accommodate their demand fluctuation without sacrificing service quality, as well as overhead sharing.
• High-density storage system. Our high-density storage system consists of (i) hardware equipment such as hoists and forklifts, which improve storage utilization, efficiency and safety. In certain warehouses, we also place mobile racking systems to improve access to high-density inventories without occupying extra space among shelves; and (ii) our proprietary WMS which synchronizes with our ERP system to monitor the movement of the entire flow of inventory and personnel in and out of our warehouse networks, enabling us to improve our operational efficiency by having real-time inventory visibility, which is also available to our brand partners via our ERP connection to their ERP systems. Our WMS is capable of supporting a large volume of inventory turnover. For the five months ended May 31, 2021, the maximum inbound piece number we handled reached approximately 2.2 million per day and the maximum outbound piece number reached approximately 3.3 million per day.
• Comprehensive and increasingly digitalized SOPs. We set detailed and well-defined SOPs to guide warehousing workforce to handle all goods from arrival at to departure from warehouses, such as inbound product inspection, inventory information recording and updates (including SKUs), product sorting and shelving, defective product segregation, “First Expiry, First Out” outbound rules, and product replenishment. In addition, with knowledge about their products and needs accumulated through years of serving our brand partners, we formulate a customized warehousing SOP for each brand partner to address its specific product characteristics and storage demands.
• Constantly optimizing warehousing layout. We are always in pursuit of optimizing our warehousing layout to improve space utilization, reduce the handling lead-time in product sorting, putting away and picking inside warehouses, increase traceability and turnover speed of stored products. In addition, we manage product sorting, tracking and labeling information by bin location, the smallest storage unit in our warehouses, which enables us to closely trace any inventory changes and make timely adjustment or replenishment if needed. Based on our records, from 2019 to the five months ended May 31, 2021, the number of orders we fulfilled per square meter increased by approximately 32%.
• Lean operation. We build up our agile lean operation system integrated with the six sigma methodology. Through constant improvement in warehouse system structure, workforce organization, and operation practices, we further increase output with optimized resources—lean our operations. In this process, we constantly obtain better practices for warehousing, and then to solidify these practices into the system by means of information technology and digitalization, so as to obtain a stable and sustainable high-quality output, which provides a solid foundation for continuous improvement in the future and ultimately maximizes the effectiveness of warehousing operation.
• Relabeling and repackaging. Most imported medical devices require relabeling in Chinese and demand repackaging in China’s market. On an as-needed basis, we can provide specialized and compliant relabeling and repackaging services within the same warehouse facility in one go, thus reducing extra outsourcing and shipping costs for brand partners. We can also offer other value-added services such as anti-counterfeit code protection.