Part 2 of our “Beginning a Manufacturing Relationship” blog post by Erin Wilson, President and Chief Mama at Lots to Say Baby, a manufacturer and designer of funny pacifiers.
Bringing your idea to reality – Part II Finding a Manufacturer
Our last post talked about ways to research the manufacturing process. Once you are armed with some information about production methods, materials you want to use and government regulations that may apply it is time to start narrowing your search to find a factory that can help you bring your product to reality.
This step is a big one – full of important decisions and many questions. To navigate some of these questions I asked for Kevin Zanardelli from Innovative Development’s professional feedback. The Innovative Development team has been ingrained in the Juvenile Products business for over 20 years and have been working with companies (including Lots to Say Baby) to develop their products for 20 years with factories in the US, Europe and Asia.
What is the best way to find a manufacturer abroad?
Networking. The best resource you may have is from another business owner who is happy with their current overseas supplier. Someone who has gone through the new product development (NPD) process already and has successfully been producing and shipping goods with the supplier for some time is an invaluable resource. There are many, many overseas Factories that are trying to get your business. An internet search for “China manufacturers” will yield thousands (millions, actually) of links. Factories can vary widely in size, quality, and manufacturing technology. If you do not have a fellow business owner that can point you in the right direction, there are some other options and questions you can ask to get a better feeling on how a factory measures up. More on that to follow.
Do you recommend working with companies abroad directly or through a sourcing company?
There are success stories (and horror stories) with both scenarios. There are also different benefits and challenges with each. If you are a small company or entrepreneur just starting out, I would recommend working with a sourcing company. Again, your best bet for finding a reputable sourcing company is from a fellow business owner who has used them. Like the manufacturers, there are good and bad sourcing companies. Make sure the sourcing company is very open with you about their experience, capabilities, and policies. References are also a good tool and it is highly recommended that you contact some if they are made available to you by the sourcing company.
What is a sourcing company?
A sourcing company is a resource to help you connect with, and manage, an overseas manufacturing Factory. Some companies are willing to buy from China but they are not familiar with China market and worried about the product quality. Or, the company has tried buying from China but they met many problems like communication, quality, delivery delay etc.. Successful China sourcing requires strategic planning, systematic management, and a close connection & relationship with the manufacturers. A good sourcing company can provide all of these.
What services do sourcing companies provide? Does the relationship end after the first order or continue during the life of the product?
There are different levels of service with sourcing companies. I can only speak on how Innovative Development operates. In addition to sourcing and managing the Factories, some full service sourcing companies , like Innovative Development, are able to also provide engineering, design, and quality assurance support. It is also very important that the sourcing company have offices in the vicinity of the Factories. This enables them to closely monitor and meet with the Factories when necessary. A good sourcing company should have considerable experience in the product field you are looking for. For example, one of Innovative Development’s main product areas is infant and juvenile products. Innovative Development has been in-grained in the baby industry for well over 20 years. If you have walked the aisles of any major retail baby department, you have seen many of our products. This experience allows us to provide valuable and detailed insight on your product based on past projects and knowledge base.
There are some Sourcing companies that only offer the introduction to the Factory. Once a product ships, they wipe their hands and move on. Our business model is different than this. We are in it for the long haul and view every customer as a business partner. We want you to succeed. We continue to be involved for the life of the product. In many cases we can also help a product to evolve as necessary and diversify into additional product ideas.
What are some things you should do to make sure you are working with a reputable manufacturer or sourcing company?
A reputable manufacturer or sourcing company should have available references and examples of products they have produced in the past. Some additional things I would look for:
– in house engineering capabilities
– in house Quality Assurance testing capabilities
– that they have offices located near the Factories
– willingness to let you visit the actual factory should you want/need to
– proof that they adhere to all current labor laws and code of conduct requirements (Companies like Wal-Mart, Target, Disney, etc., have strict requirements that all of our factories meet)
– ask them if they have ever been involved with any product recalls. If they have, it is not an automatic deal breaker – it will depend on the circumstances! (as a result of new legislation, etc.)
What are some common costs associated with starting with a new company? Should you pay for samples? Shipping of samples etc
How samples are handled sometimes is dealt with on a product by product basis and depends on many factors. In all cases you should discuss how samples are going to be handled BEFORE starting on the project so that it is clear to all parties. In general, development approval samples, such as 1st shots off the tooling or final production approval sample, may be provided at no cost to you. These are considered part of the normal cost of doing business. Normally the Factory or Sourcing Company will pay for these samples & shipping. In cases where additional or multiple samples are requested by the customer (for testing, color studies, sales samples, etc.), the customer is usually responsible for the sample cost and for shipping them. After all, making of these additional samples requires operator labor, material costs, and machine time from the manufacturer.
You will also want to discuss with the Sourcing Company or the Factory what set up costs (molds, printing etc) that will be needed. This information is typically provided in the quote process but you want to be prepared for the costs. This is also important when comparing quotes from other factories.
How do Sourcing companies get paid?
Sourcing companies are paid in a number of ways. Some companies will provide full service including project management, design and engineering and will ask for extra fees for each component. Some will include their fee in the unit cost in the form of a commission, and some will stand between the factory and the customer and create a separate PO to the factory after a customer opens a PO to them. Each of these has its advantages and disadvantages. The key is for the customer and sourcing company to be able to discuss these options openly and honestly and to understand what they are paying for and how much.
What are some of the common mistakes you have seen new companies make during the product development phase?
There are a few mistakes we see from time to time.
– PRODUCT EVALUATION & TESTING: Too many times the Customer is in a rush to get the product to market and does not take the necessary time to fully evaluate the product. This is probably the number one issue we see. There are several stages to this and can even include evaluation by outside 3rd party testing labs. There are services that can review the design drawing or actual product for recommended durability testing and regulatory review to be sure you are in compliance to sell the product. Another valuable testing stage is consumer testing. Ideally, before proceeding with full production, the Customer should arrange with us to produce a limited run of product to test with real people that would be the actual end user. This helps flush out any unforeseen issues or unintended uses for the product that may cause issues. Larger companies have a Customer base that can act as resources for this. They provide the consumer testers with the product and a questionnaire to fill out after using the product. Smaller companies usually end up asking friends and family to try the product and provide feedback. In house QA labs for extensive physical testing are important, but this is no substitute for real world use.
– INSUFFICIENT DEVELOPMENT TIME: all too often a project is started with an unrealistic deadline already in place. No matter how simple the product may appear, always allow ample time for revisions, unexpected changes, and unforeseen circumstances. Product development is often an iterative process. You will almost inevitably come across bumps in the road. However, time is one thing that we just cannot control!
– TOO LITTLE ATTENTION GIVEN TO PACKAGING: you can have a great breakthrough product, but if you cannot convey this to the Consumer on the retail shelf, your product will not sell.
As you can see, there are a lot of questions to review during the manufacturing selection process. Whether you decide to use a sourcer or work with the factory directly make sure you spend time doing your due diligence. It will be well worth the time spent! If you have any further questions feel free to email me at firstname.lastname@example.org. If you have a product you would like to discuss with Kevin you may email him at Kevin@innovative-development.net.
CONTRIBUTED TO BY:
Innovative, Development, Inc.
153 Washington Street
East Walpole. MA 02032