Outsourcing manufacturing is a trend that has seen numerous brands profits’ soar over the last few decades. While there is much to gain, it’s vital that companies understand the specifics when choosing this option rather than manufacturing on their own soil. Outsourcing manufacturing to China has many benefits, but be sure to avoid making costly mistakes.
For a product to be a success, it begins with a vision transferred into a drawing, detailing all its specifics. Producing a prototype will prove it true to its design, appearance, and its final cost. A well-designed prototype, as well as other vital details, will avoid missing important deadlines, and will help determine its manufacturing costs and any complexities that may arise when taking it to production. When investigating the details, and considering the “what can possibly go wrong,” a company can avoid any unpleasant and expensive surprises from arising.
Clearly describe the details of the product, its design, and all precise information to better determine costs. Define the materials to be used in the manufacturing of the particular product, ensuring all its parts are considered. The cost breakdown may not always be done by the factory partner. As such, numerous important decisions will have to be made by the company, which could lead to some changes in the prototype, so that it’s more realistic in the competitive market.
The minimum order quantity quote from the factory will help determine the overall cost of each unit, and as China is a leader in manufacturing goods, the number can often be in the thousands. Companies must also factor in the factory set up time, labor costs, tooling, material resources, and the profit margin. The purchase order will determine the upfront initial cost of manufacturing these goods. Companies can expect to pay anywhere from one-third to half the cost of the total order before proceeding. The balance of the order will be due at the time of shipment. It may still be months before any sales are made against the investment, so it’s imperative to thoroughly calculate costs to ensure the company is prepared to await the product’s entry into the market.
Understanding the way a factory operates will minimize errors and avoid costly mistakes. Quality is a priority, and it may be challenged when a product is produced in larger quantities and at a great distance from the factory. Packaging the goods will protect them and ensure they reach retail shelves intact. Packaging mistakes can lead to huge losses, so it’s important to think of the packaging almost as a separate product. Shipping is another consideration, which requires a separate budget that’s worked into the overall cost of each unit. No matter the type of shipping, it may logically cost between $1,000 and $5,000. Once the products are received, they may need to be stored pending delivery to the retail stores.
Customers are yet another consideration, as they must be satisfied by the product before making the purchase. A quality product, where all has been determined in advance, leaving little or no room for error, will have the opportunity to sell according to plan.
Before you feel overwhelmed by these details, know that there are professionals who can help. ITI Manufacturing has seen many products from specs to shelves, and we can smooth the process out so you can focus on other aspects of your business. Contact us today with any questions about manufacturing in China.