Share on FacebookShare on LinkedInTweet about this on TwitterShare on Google+Email this to someone

Balancing-Your-Business’s-Local-and-Overseas-Manufacturing

You often hear people talk about balance. There are many books and websites dedicated to helping you balance your work life and your home life. Others focus on balance in your relationships and with your hobbies. When it comes to running your own business, balance is also important. If you’re considering overseas manufacturing, you do have to make certain that you’re keeping your business balanced in terms of local versus overseas work. Expanding or moving too much overseas too quickly can be a problem. A number of businesses have failed or have put themselves in a precarious situation simply because they didn’t remain.

What Does “Balanced” Mean in this Case?

In this situation, being balanced means you want to be able to react quickly if something unexpected were to happen regarding your outsourced manufacturing partner. If a person is standing off-balanced with one foot on a rug and that rug is pulled away, they will likely fall. If they’re in a more balanced stance, they usually don’t. Your business needs to have its weight equally distributed so that it doesn’t fall. That means if you were to lose your overseas partner suddenly, you’d be able to recover quickly enough that it wouldn’t severely impact your bottom line. If you don’t outsource enough, though, you may miss out on a good amount of savings.

Moving All of Your Manufacturing Overseas

You might take that to mean that you shouldn’t move all of your manufacturing overseas, which isn’t necessarily the case. Outsourcing your manufacturing can save you a large amount of money, even when you factor in shipping costs. That saving is often too great to pass up. However, don’t outsource all of your manufacturing right away. Work with a partner company on one product or product line first, then scale your outsourcing once you’ve determined that the product quality, shipping time, and other factors fit your needs.

Even after you’ve determined that your overseas manufacturing partner can handle everything you need, it’s always a good idea to have a local backup. You should have a number of disaster scenarios written that cover how to deal with emergencies. One of these should cover how you would handle the sudden loss of your overseas partner. Include local manufacturers you could reach out to, especially those you’ve worked before. If you’re the man standing on the rug, these backup manufacturers are a handle on the wall you can grab when that rug is pulled.

Financial Balance

You also need to make sure you’re financially balanced. This is another reason why you may not want to fully commit to overseas manufacturing right away. First, determine that all of your needs will be met by outsourcing. This way, if it does fail, you haven’t tied up a large amount of money in the venture. You’ll be able to recover and redirect your finances towards another manufacturing option.

What Does Balance Mean for You?

Every business is different, and each situation presents new challenges. While you may determine that your business is in balance at one point in time, several months later you may realize it’s not. Balance is something you need to evaluate regularly to determine if you can still quickly react to changes. If you see that your business can’t, it’s time to make some changes.

Want to learn more about Manufacturing in China? 

  • Download the Beginners Guide to Outsource Manufacturing today!

    PDF Brochure
Voices-of-Importing

Podcast Highlights – Voices of Importing with David Alexander, CEO of Baysource Global

The First Step Towards Outsourcing Your Manufacturing

The First Step Towards Outsourcing Your Manufacturing

For new product developers who have identified the need to outsource their manufacturing, there are some key steps to take to ensure success.

The First Step Towards Outsourcing Your Manufacturing

Outsourcing Manufacturing

1. Do a Market Study Analysis

It is essential to do thorough product research to be sure your innovation hasn’t already been patented or produced by another party in the past several years. Be prepared, as if you were speaking to investors, to support why your product fulfills an unmet need, at a better price than anything that is on the market today.  You must demonstrate you understand the distribution channels where the product will be sold, why retailers will carry your product and that you completely understand and have proficiency in penetrating these markets.

2. Design for Manufacturability

Developing a MVP or Minimal Viable Product is essential for your proof of concept phase. Granted, there may be several revisions after the first generation of product, it is essential to design with the lowest manufacturing costs in mind.  There are professional design firms who can assist with the mechanical fit and function of your product as well as identify the right materials.

3. Prepare a Professional RFP

The first is to prepare a professional RFP otherwise known as a Request for Proposal.  This will immediately convey credibility and earn the respect of the firms quoting in your project. It also separates you from the hundreds of others who are asking for quotations. A well planned and prepared RFQ will speed up the quotation process, provide a much more accurate cost and be better received by a reputable manufacturer.

4. Do Your Research

There are hundreds of resources on the internet for finding competent outsourcing direction.  A simple Google search of “Outsourcing Manufacturing” yields tens of thousands of results.  You will want to select a firm who demonstrates an interest in your project, competency with your products and has a good track record. Spend the time and compile a checklist list of these companies, their websites, contact information, the date you reached out and date they responded, whether you have sent your RFP. Follow these  Six Steps to Finding a Manufacturer as a guide to take you through the process.

5. Develop a Budget

It is critical to understand how much capital will be required not only to launch your product but also to finance the first and ongoing orders.  Product cost is not Project Cost. Marketing a product and getting it to market requires detailed forecast and an understanding of the required funding.  Here is what you’ll need to know about financing your project as well as supporting your brand’s growth.  The real question is how many widgets will you need to sell to break even on your investment.

 

Are you a product developer looking to outsource your manufacturing to China?

Let us know about your product and we can help you get it made:

Contact Us

 

Essential Things to Prepare for Your Startup if Outsourcing Manufacturing

If you are developing a new product and plan on investing your valuable time and capital to bring it to market there are a few key things you should put together if outsourcing your manufacturing.

A professional RFP (Request for Proposal) or RFQ (quotation) will immediately convey credibility and earn the respect of the firms quoting in your project. It also separates you from the hundreds of others who are asking for quotations. A well planned and prepared RFQ will speed up the quotation process, provide a much more accurate cost and be better received by a reputable manufacturer. In this. You should be able to include:

1. Write an introductory narrative

An introductory narrative about the product; perhaps some background or genesis info on what new innovation, function or unmet need your product delivers I.e. “Our product will be the first of its kind to _____”

2. Create professional 3D drawings

Professional 3D drawings call out dimensions, materials (type and brand or equivalent of resin or other), colors, specifications. This is essential for manufacturing most things and even applies to soft goods such as backpacks and apparel and not just plastics and metals.

3. Product and Safety Certifications 

Depending on the product and industry there may be mandatory certification requirements. Most retailers will ask for prof and documentation. You’ll want to be sure the factory has produced products bound for similar markets and thus purchased and worked with similar materials, been audited for compliance and understands cGMP).

4. Testing

Fit and function and other testing requirements the production quantities will have to pass under inspection are crucial and should be well defined and documented for go/no-go for sub assemblies and pass/fail for finished goods

5. Accurate Quantities

Accurate quantities you intend to purchase. Include first six months, years 1–3 etc and she me supporting detail will also convey to the factories how you plan to scale up your business. These should be conservative and not “pie in the sky” forecasts to try and leverage better costs. In fact, you should really be looking for solid volume or tiered price consideration.

6. Request tooling costs

Request separate detail for tooling cost (molds) and whether you’d like this separately or amortized over the volume. Also, request cavitation of the tool (the number of pieces each mold will produce)

7. Indicate Incoterms

Incoterms refers to whether you’d like costs quoted Ex-Works (the price right at the factory and before it’s even delivered to a port)or FOB your city or distribution point.

These are just the basics but if you are serious about actually launching a product and have raised the capital to do so, you will be perceived much more professionally and obtain a much more credible response by suppliers. Otherwise just use the QAP (quote and pray) method which is only as valuable as the paper on which it’s printed.