5 Pitfalls To Avoid When Choosing A Manufacturer For Your Startup

It’s easy to make mistakes when selecting a manufacturer for your product.  Avoid these 5 Common Pitfalls.

When I launched my footwear line, I went through countless factories, agents and sourcing companies before finding the right fit.  After years of trial and error, there are some tricks that I picked up along the way.

  1. The right address is important:  There are pros and cons to using sourcing agents, but be clear as to what you are getting into from the start.  If your invoice has a Hong Kong address, it’s most likely a sourcing company who is outsourcing the production to a factory in China.  For the best price, you want to go directly to the manufacturer because an agent will mark up the quotes and leave you with an artificially inflated price.
  2. It’s Location Location Location.  Just like New York is known for Italian food and Texas is known for it’s BBQ different regions specialize in product types.  For example; when I was sourcing shoes, I wanted my factory to be in Guangzhou for the high-end models or Xiamen or more budget conscious lines.  The factories in those regions will be more adept at making your product and you will run into less of a learning curve.
  3. Beware of telephone Tag:  Everything takes longer than you think when working with Asia.  Their work day starts when you close your laptop for dinner and it can be up to 24 hours to have your questions answered.  Samples take 3 days to arrive via Fedex before the sampling process even begins.  In a situation where it’s already difficult to communicate (I said green, I made you green…then why is it blue?) make sure that the factory representative is responsive from the start. If they are slow with your inquiries from the beginning, keep looking.
  4. Stay Clear of Chinese New Year:  Most manufacturers are closed for at least two weeks during Chinese New Year and no production takes place during this time. Much like the holidays here, many employees go back to their hometowns and it takes time for everyone to come back to work.  CYN typically lands around the end of January, the dates change every year.  If you have a time sensitive order, make sure it’s placed by the end of December and on the boat before CYN.  Otherwise, you can expect to wait a month before production is back in full swing.
  5. Confirm the Quality Control: There will be a percentage of your order that arrives as seconds, it’s par for the course. I once received a whole box of left feet…not kidding.  Just agree upon the percentage up front.  While you should expect about 0.5 – 2% of your order to be defective, the rest is expected to be in compliance with your product specs.  Before the product ships, be sure to collect batch samples yourself to ensure quality standards are being met.
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5 key questions every startup should ask their factory before placing an order

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The light bulb went off and you designed an awesome “why didn’t I think of that?” product.  The samples, made locally, are perfect and maybe you even have pre-orders from buyers.  The hard part is done right?  It’s time to make a million? Well, translating that product into a full production run, is surprisingly challenging and it can make or break your business.  Before you place an order with any factory be sure to ask these question

  1. What is the Landed Price?  The price the factory quoted is typically FOB (freight on board) from the factory.  On top of that cost, you may have to pay transportation fees to the port, shipping fees to the US as well as duties, customs and trucking to your warehouse. Be sure you are aware where the FOB location is for this shipments.  All of this should be factored into your final “landed price” before you mark it up to the stores.  Otherwise, you will be cutting into your profit margin before it’s even hit the shelves.
  2. What’s the MOQ?  Always inquire about the minimum order quantity.  If the minimum you can order is 1,000 units per style/color/size that is very different than ordering 1,000 units total. Once you know the MOQ, you can determine what colors and sizes to show buyers.  You don’t want to offer blue if you can’t gather enough orders together to meet the MOQ.  The minimum for each style may be different.  For example, black is more readily available, so the MOQ may be lower than specific pink that requires a custom dye lot.
  1. Is this Negotiable?  Negotiate everything until it works for you and the factory.  Our first factory wanted an even split between sizes, but when we gave our store buyers the choice, most of them went heavy on mediums.  We ended up ordering 25% small, 50% medium, 25% large, but we stopped allowing our stores choose sizes and bundled the product in a matching breakdown 1 small, 3 medium, 2 larges. It worked for us and for the factory.

  1. What is the timeline for samples?  When you send your local samples to the factory for a counter-sample, make sure to send over specs too.  Engineering drawings and tech packs will save you a ton of time.  It could take several revisions before the supplier gets it right and each of those revisions are weeks to produce and money to ship. If you are as clear as possible from the start, it will help to expedite the process.  Remember, whatever the factory says is their sample timeline, pad that and then pad it again.  

  1. Can you produce a Factory Sample?  Your counter-sample may look great, but don’t forget that has typically been made by hand in a sample room.  Once the factory goes out to source the actual material there may be slight differences in the color, dye lot or materials available. To avoid getting backed into a corner and accepting lower quality standards or increased cost try to work with materials that are readily available. Also, know your deal breakers.  We would include the exact type of foam for our shoes, the thickness etc in our specs.  Without the right foam our product would not work.  If that could not be matched on the open market for a production run, we would not accept substitutions.