DUH? Guide to Manufacture Outsourcing

 

Outsourcing your manufacturing is a big leap for any size of business.
It can be a bit like having a stranger drive your favourite car while you sit in the back seat.

Any business can contract their manufacturing to a foreign manufacturer; and any business who tries this alone is risking their product reputation, their business reputation, and a bunch of money.
But when managed correctly it is the proven recipe for small-budget start-ups, low-risk diversification and inexpensive expansion.

Outsourcing Benefits (you kow this bit): Save on your labour costs Save on your component supply costs Save on your utilities costs Save on your insurance costs Free up OR liquidate your plant & equipment Free up OR liquidate your factory floor space Outsourcing Dangers (you need to be aware of this bit): You need uncompromising and comprehensive specifications for Quality Control management Will your product meet importing country's product laws and regulations? Delays in shipping to import destination Delays caused by manufacturing country's public holidays & festivals Product quality may be unseen until final delivery Risk of manufacturer increasing production costs during manufacture Intellectual Property Rights infringement Back-door sales of your product by manufacturer Quality Fade (this is the killer that burns most people)

Hiring an outsourcing agent should be like hiring an employee, yet many companies go about selecting an outsourcing agent as if it is a purchasing process, seeking the lowest price possible for the service.

Think of the outsourcing team as your own team, one that you must carefully choose, and build a relationship with to get excellent results .

You must have good communication with your agents. Just because they are working as a virtual partner doesn't mean they should be out of sight and out of mind. You need to have regular contact. And you need to set firm deadlines and clear criteria.

Do your due diligence. This involves checking with other clients of the outsourcing agents, and possibly a visit to the manufacturing source. The visit needs to provide an understanding of production, quality control, suppliers and manufacturing conditions. You need to know if your product was produced in a safe manner, and if child labour was used.

Don't think that just because the sample is okay that the shipment will be okay. Your outsourcing agent must oversee all manufacturing to enforce your Quality Control specifications during all production. Order your outsourcing agent to send sealed samples from the production run before they complete and ship the whole order; ask for the 10th item and maybe the 500th item from the run.

The facts are:

• Thousands of big name brands and leading retailers outsource their product manufacturing
• Outsourcing makes your business more flexible and more profitable
• Outsourcing allows you to concentrate on your core business and focus on marketing
• Outsourcing means that you can have a great idea for a product and bring it to market without the hassle and expense building, equipping, or staffing a factory

How can you make outsourcing work for your business?

1. Is your product or product idea protected against copying? If not, seek advice or at the very least have the people you are contracting manufacturing to sign a confidentiality agreement. [see: DUH? Guide to Protecting your Designs]
2. Engage a reputable outsourcing agency with a successful track record who will:

• Act as an extension of your business
• Source the best manufacturing options for your product
• Oversee the production of your prototypes and get these delivered to you for quick approval/disapproval
• Negotiate prices and deadlines in your best interests
• Ruthlessly enforce your Quality Control specifications
• Enforce Confidentiality Agreements and Intellectual Property Protection on your behalf
• Advise you immediately of any issues or potential delays
• Keep in regular contact with your office
• Ensure packing and shipping meet your required specifications
• Check that all shipping paperwork is correct and documents dispatched in good time

 

There are hundreds of outsourcing agencies to choose from; so how do you choose the right one for you? Remember that there is a big difference between getting the cheapest service, and getting the best value service.

Checking through their company website will tell you everything they want to tell you, forget self-praise, you must do your research:

• Do they have any previous customers willing to recommend them, and are these previous customers authentic?
• Do they have any experience in the type of products you wish to have manufactured?
• Do they work to the same standards that you work to?
• Is their first language also your first language?
• If you engage them to act on your behalf what priority will your business be given?

We see other agents with pockets bulging with MBAs and business diplomas from the University of Good Intentions, but no practical working knowledge of how to get things done in China :

• They are unaware of the thousand ways a factory will try to screw you over, (screwing over the Western businessman is a game to many Chinese managers).
• They will use translators who do not understand the terms and technicalities specific to manufacturing your product.
• They are in business with the sole purpose to make money.

 

We at DUH have learned this business the hard way.

• The partners at DUHSourcingSolutions are two American and one British, naturally bringing first-hand Western standards to every aspect of our business.
• We bring our clients a combined 40 years experience living in, and working within Chinese industry.
• 40 years experience has taught us just about every dodge and sneaky scheme that unscrupulous factory managers will try in an effort to cheat us – at their ultimate cost.
• Between us we are available to our clients ANYTIME by telephone, email or Skype.
• We pride ourselves on the long-term and personal relationship we have with our clients.
• We are in business because we love what we do. We love seeing a concept progressing from rough sketch through to the finished article, and the satisfaction that we have delivered a job well done when we receive the repeat orders.

 

If you have a project which you would like to discuss with us, please get in touch DUH has a policy that keeps our client numbers at an optimum level which guarantees a high level of personal service

 

DUH Home Page Our Product Portfolio DUH? guide to Protecting your Designs DUH? guide to Outsourcing your Manufacturing DUH? guide to Visiting China Email this page to a friend

DUH partner Brian Bailie has written many articles about working in, and visiting China. He also acts as a business advisor to many Chinese business managers, and much of his advice is also available in Mandarin through affiliated website: www.88dianz.cn

The above information is copyright property of Thomas Brian Bailie 2010
All information is written in good faith and the writer cannot accept liability for loss or injury which might result from the use of the information.

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