A manufacturing partner can make or break your product’s success. It’s critical that entrepreneurs take the necessary steps to vet a manufacturing partner, even when working with a sourcing agent. Unfortunately, sourcing agents can take advantage of naive new business owners – and it’s important to educate yourself on some of the signs your production partners might not have the best intentions. When vetting an overseas factory or manufacturing partner, make sure they can provide satisfactory answers to these questions.
1. What types of companies do you typically work with?
It’s helpful to have a manufacturing partner that has expertise in your particular product category. “For instance, just because a factory works with electronics, doesn’t mean they have the capability to manufacture your electronic product – there is a wide range of needs here, so make sure the manufacturers you are interested in meet your needs,” recommends one expert.
A factory should already be manufacturing the products you’re seeking for other clients. Ask the manufacturing partner to provide references and get in touch with those clients to make sure they’re happy with the relationship. Are they satisfied with the product quality from the manufacturing partner? Does the factory meet deadlines? The last thing you want is to be treated like a guinea pig for a factory trying something for the first time.
2. What are your payment terms?
Many suppliers will ask for new businesses to make full payment upfront. This is something you must know ahead of time so there are no surprises. There are two core parts to getting a price quote: the MOQ and the sample pricing. MOQ stands for minimum order quantity, i.e. the minimum number of products you can purchase in one order. It’s important to know how many units are in a minimum order so you can adjust your profit margin accordingly. Sample pricing also plays a role: some factories will provide free samples as long as you pay for the shipping and customs fees, but this varies from partner to partner.
3. How much of the process happens in-house?
Specifically, find out how vertically integrated a manufacturing partner is. For instance, do they provide the final packaging and logistics? Do they have the capability to produce your specifications? Be clear on your end exactly what you’re looking for, as far as materials, colors, dimensions, and details are concerned. “For example, if you were creating a handbag, you’d want dimensions for inside and outside, the strap, any buckles … don’t leave things out. The last thing you want to do is get far down the road with a manufacturer and then find out that they don’t have the capabilities for what you’re trying to make,” writes another expert.
Evaluate whether or not the manufacturing partner can provide all the services you need – including procuring materials, manufacturing, storing and shipping – in a streamlined, organized way. Lastly, make sure the factory you’re vetting is the one who will actually be creating your product. None of the answers to these questions will be relevant if the manufacturing partner is simply farming out your contract to an unknown entity.
4. What are your quality controls?
Quality is everything: to make a sale, your product must meet the expectations of your customers. As part of the process, make sure the manufacturing partner will send you a sample before moving to full production so you can be sure the quality is to your customers’ standards. During contract negotiations, a manufacturing partner will likely include sample pricing in their overall price quote. In addition, the manufacturer should have some quality standards – for example, ISO 9000 – that set forth guidelines specific to your industry and ensure the product is meeting customer standards. “Ask the contract manufacturer to show you records demonstrating their program’s ability to provide accurate documentation, high-level reports, and detailed test data,” recommends a manufacturing blog.
5. How will you protect my IP?
Your company’s intellectual property is one of its most valuable assets. A manufacturing partner is going to be working with other businesses – and it’s likely one of your competitors may also contract with the same factory. As a result, your IP may be exposed, unless the manufacturing partner has the proper protocols in place to keep your information safe. Even if the manufacturer doesn’t work with a competitor, they can still leak your IP and put you at risk of knock-off, counterfeit, or black market products that undermine your brand’s value. Find out what security they have in their data systems to keep your patented information under wrap and out of the hands of your competition.
Outsource with confidence by working with a partner like Gembah. Gembah can get your product made from its global network of select manufacturing partners. Learn more and get in touch to get started.