Small Business Selecting a Good Manufacturer
Using a manufacturer from China is saving you how much? The most recent barrage of manufacturing snafus coming out of China ( i.e. contaminated pet foods, use of lead paint in children's toys, orders mislabeled or poor quality items) is a universal problem for all manufacturers, no matter where they are located.
These mistakes are costing your business a major premium. It started out you were saving 50-40% on manufacturing vs. using someone else. Many times unit cost does not include the landed costs to the USA. Landed cost include shipping, tariffs and any taxes. The lowest cost is based on shipment by sea which takes about 6 to 8 weeks, not the 1 week or express by air. Don’t have the right docs, your merchandise is frozen in customs limbo for as long a they deem necessary.
If you have a major problem, you might have to travel there to resolve it, which means your paying the highest price airline ticket ( can’t wait 3 weeks for a fare to drop a few thousand dollars, it could cost you millions). Now you have merchandise you can’t use and will be waiting 8 weeks for the next shipment.
Now you really have limited options. 1. Don’t sale any merchandise for 2 months, layoff employees if this is your only product? 2. Pay extra to ship by air and pay the premium for deviating the pre=arrange schedule ( these extra cost might wipe out all your profits ).
So you have fixed the problems quickly but your customer base is spooked and your getting flooded with returns. Now you are pulling your hair out and thankful that your contract agreement covered these contingencies in your favor [ You did get a valid enforceable contract?].
Careful preparation and due diligence should avoid or mitigate these problems with any manufacturing vendor.
Check List for Success
1. Do your research. Do not short change the process it could easily cost you millions. Visit the manufacturing site, the production floor, meet the workers, managers and decision makers. Face to face still goes a very long way in the communication process.
2. Check with their references and clients who have a long history with your proposed manufacturing vendor. If your using a broker to negotiate for you compile a list and check out their track record.
3. Quality controls should be agreed to and followed ( i.e. like a periodic inspection on site and when the product is received for distribution ).
4. Clause in contract that the process used to create the qualified product can not be changed without being re-qualified and the results being signed off by you. Acquiring parts from a different vendor or changing process steps to lower cost may effect the quality and performance of your product. Be wary because you supplier is looking to drop his costs to increase profit.
5. Check your quality frequently and randomly with your own quality control office or trusted third party.
6. Know all your possible cost scenarios in regard to shipping by sea, air or land (truck or train). You should send a small quantity of prototypes by all your possible shipping methods to confirm time frame of transport and documentation process. { piggyback real world packaging test too }.
7. Best to have at least two suppliers shipping you product. But if this is impossible have one pre-qualified in the wings ready to produce if necessary. Qualifications should include:
a. Ability to make product to specifications
b. Ability to deliver on time
c. Ability to turn over changes quickly.
d. Communicate effectively and timely
Other factors to consider, who are their other customers. You don’t want to be ignored because you’re a small client and you may not want to be a pioneer as the only client. Financial exchange rates long term and short will critically affect low margin products.
These mistakes are costing your business a major premium. It started out you were saving 50-40% on manufacturing vs. using someone else. Many times unit cost does not include the landed costs to the USA. Landed cost include shipping, tariffs and any taxes. The lowest cost is based on shipment by sea which takes about 6 to 8 weeks, not the 1 week or express by air. Don’t have the right docs, your merchandise is frozen in customs limbo for as long a they deem necessary.
If you have a major problem, you might have to travel there to resolve it, which means your paying the highest price airline ticket ( can’t wait 3 weeks for a fare to drop a few thousand dollars, it could cost you millions). Now you have merchandise you can’t use and will be waiting 8 weeks for the next shipment.
Now you really have limited options. 1. Don’t sale any merchandise for 2 months, layoff employees if this is your only product? 2. Pay extra to ship by air and pay the premium for deviating the pre=arrange schedule ( these extra cost might wipe out all your profits ).
So you have fixed the problems quickly but your customer base is spooked and your getting flooded with returns. Now you are pulling your hair out and thankful that your contract agreement covered these contingencies in your favor [ You did get a valid enforceable contract?].
Careful preparation and due diligence should avoid or mitigate these problems with any manufacturing vendor.
Check List for Success
1. Do your research. Do not short change the process it could easily cost you millions. Visit the manufacturing site, the production floor, meet the workers, managers and decision makers. Face to face still goes a very long way in the communication process.
2. Check with their references and clients who have a long history with your proposed manufacturing vendor. If your using a broker to negotiate for you compile a list and check out their track record.
3. Quality controls should be agreed to and followed ( i.e. like a periodic inspection on site and when the product is received for distribution ).
4. Clause in contract that the process used to create the qualified product can not be changed without being re-qualified and the results being signed off by you. Acquiring parts from a different vendor or changing process steps to lower cost may effect the quality and performance of your product. Be wary because you supplier is looking to drop his costs to increase profit.
5. Check your quality frequently and randomly with your own quality control office or trusted third party.
6. Know all your possible cost scenarios in regard to shipping by sea, air or land (truck or train). You should send a small quantity of prototypes by all your possible shipping methods to confirm time frame of transport and documentation process. { piggyback real world packaging test too }.
7. Best to have at least two suppliers shipping you product. But if this is impossible have one pre-qualified in the wings ready to produce if necessary. Qualifications should include:
a. Ability to make product to specifications
b. Ability to deliver on time
c. Ability to turn over changes quickly.
d. Communicate effectively and timely
Other factors to consider, who are their other customers. You don’t want to be ignored because you’re a small client and you may not want to be a pioneer as the only client. Financial exchange rates long term and short will critically affect low margin products.
Using a manufacturer from China is saving you how much? The most recent barrage of manufacturing snafus coming out of China ( i.e. contaminated pet foods, use of lead paint in children's toys, orders mislabeled or poor quality items) is a universal problem for all manufacturers, no matter where they are located.
These mistakes are costing your business a major premium. It started out you were saving 50-40% on manufacturing vs. using someone else. Many times unit cost does not include the landed costs to the USA. Landed cost include shipping, tariffs and any taxes. The lowest cost is based on shipment by sea which takes about 6 to 8 weeks, not the 1 week or express by air. Don’t have the right docs, your merchandise is frozen in customs limbo for as long a they deem necessary.
If you have a major problem, you might have to travel there to resolve it, which means your paying the highest price airline ticket ( can’t wait 3 weeks for a fare to drop a few thousand dollars, it could cost you millions). Now you have merchandise you can’t use and will be waiting 8 weeks for the next shipment.
Now you really have limited options. 1. Don’t sale any merchandise for 2 months, layoff employees if this is your only product? 2. Pay extra to ship by air and pay the premium for deviating the pre=arrange schedule ( these extra cost might wipe out all your profits ).
So you have fixed the problems quickly but your customer base is spooked and your getting flooded with returns. Now you are pulling your hair out and thankful that your contract agreement covered these contingencies in your favor [ You did get a valid enforceable contract?].
Careful preparation and due diligence should avoid or mitigate these problems with any manufacturing vendor.
Check List for Success
1. Do your research. Do not short change the process it could easily cost you millions. Visit the manufacturing site, the production floor, meet the workers, managers and decision makers. Face to face still goes a very long way in the communication process.
2. Check with their references and clients who have a long history with your proposed manufacturing vendor. If your using a broker to negotiate for you compile a list and check out their track record.
3. Quality controls should be agreed to and followed ( i.e. like a periodic inspection on site and when the product is received for distribution ).
4. Clause in contract that the process used to create the qualified product can not be changed without being re-qualified and the results being signed off by you. Acquiring parts from a different vendor or changing process steps to lower cost may effect the quality and performance of your product. Be wary because you supplier is looking to drop his costs to increase profit.
5. Check your quality frequently and randomly with your own quality control office or trusted third party.
6. Know all your possible cost scenarios in regard to shipping by sea, air or land (truck or train). You should send a small quantity of prototypes by all your possible shipping methods to confirm time frame of transport and documentation process. { piggyback real world packaging test too }.
7. Best to have at least two suppliers shipping you product. But if this is impossible have one pre-qualified in the wings ready to produce if necessary. Qualifications should include:
a. Ability to make product to specifications
b. Ability to deliver on time
c. Ability to turn over changes quickly.
d. Communicate effectively and timely
Other factors to consider, who are their other customers. You don’t want to be ignored because you’re a small client and you may not want to be a pioneer as the only client. Financial exchange rates long term and short will critically affect low margin products.
These mistakes are costing your business a major premium. It started out you were saving 50-40% on manufacturing vs. using someone else. Many times unit cost does not include the landed costs to the USA. Landed cost include shipping, tariffs and any taxes. The lowest cost is based on shipment by sea which takes about 6 to 8 weeks, not the 1 week or express by air. Don’t have the right docs, your merchandise is frozen in customs limbo for as long a they deem necessary.
If you have a major problem, you might have to travel there to resolve it, which means your paying the highest price airline ticket ( can’t wait 3 weeks for a fare to drop a few thousand dollars, it could cost you millions). Now you have merchandise you can’t use and will be waiting 8 weeks for the next shipment.
Now you really have limited options. 1. Don’t sale any merchandise for 2 months, layoff employees if this is your only product? 2. Pay extra to ship by air and pay the premium for deviating the pre=arrange schedule ( these extra cost might wipe out all your profits ).
So you have fixed the problems quickly but your customer base is spooked and your getting flooded with returns. Now you are pulling your hair out and thankful that your contract agreement covered these contingencies in your favor [ You did get a valid enforceable contract?].
Careful preparation and due diligence should avoid or mitigate these problems with any manufacturing vendor.
Check List for Success
1. Do your research. Do not short change the process it could easily cost you millions. Visit the manufacturing site, the production floor, meet the workers, managers and decision makers. Face to face still goes a very long way in the communication process.
2. Check with their references and clients who have a long history with your proposed manufacturing vendor. If your using a broker to negotiate for you compile a list and check out their track record.
3. Quality controls should be agreed to and followed ( i.e. like a periodic inspection on site and when the product is received for distribution ).
4. Clause in contract that the process used to create the qualified product can not be changed without being re-qualified and the results being signed off by you. Acquiring parts from a different vendor or changing process steps to lower cost may effect the quality and performance of your product. Be wary because you supplier is looking to drop his costs to increase profit.
5. Check your quality frequently and randomly with your own quality control office or trusted third party.
6. Know all your possible cost scenarios in regard to shipping by sea, air or land (truck or train). You should send a small quantity of prototypes by all your possible shipping methods to confirm time frame of transport and documentation process. { piggyback real world packaging test too }.
7. Best to have at least two suppliers shipping you product. But if this is impossible have one pre-qualified in the wings ready to produce if necessary. Qualifications should include:
a. Ability to make product to specifications
b. Ability to deliver on time
c. Ability to turn over changes quickly.
d. Communicate effectively and timely
Other factors to consider, who are their other customers. You don’t want to be ignored because you’re a small client and you may not want to be a pioneer as the only client. Financial exchange rates long term and short will critically affect low margin products.
posted by zzzzzzzzzzz at
4:43 AM
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