Reprinted from TrustedPeer
Meet the Expert
CEO, SF Global Sourcing
- 20-plus years servicing clients in need of outsourced manufacturing worldwide, including from China, Taiwan, South Korea, Poland, Israel and the U.S.
- Past Chairman of the Electronic Retailing Association and board member of the Europe Electronic Retailing Association.
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Outsourcing of Manufactured Consumer Goods and Promotional Materials
CEO, SF Global Sourcing
- Companies put a rush on orders and wind up paying the price in terms of quality.
- You really need to follow particular procedures when outsourcing in order to minimize and mitigate risk and poor quality. If you cut corners because you're in a rush, it's highly likely that you will wind up with a product that isn't up to snuff, particularly if you are developing an entirely new product that requires original prototypes or molds.
Also, be prepared for certain things in China to take longer because of the culture. Sometimes you have to take the initiative to ensure that things happen more quickly. For example, a Chinese manufacturer might assume that you'll be happy to receive a sample weeks after they've completed and shipped it, and you need to tell them you're willing to pay $50 to receive it as soon as possible via FedEx.
- Companies wind up working with manufacturers with poor quality control.
- Controlling the quality of the materials used in the manufacturing of an item is always a challenge. Manufacturers often try to save money on their end by using thinner paper, plastic, or wool or cotton, for example, and then you will wind up with a container full of items that you don't want. You have to understand that while the first order might go fine, the quality may not be consistent with later orders. There's a lot of nuance to choosing a factory that is just right for the product you have in mind.
Also, it's important to plan for testing and certification of products that require it, like some electronic items. It's often the case that a manufacturer and a quality control team will think that a product meets specifications, and then a third-party testing group will find that it doesn't in fact meet specifications.
- Companies don't understand the cost of doing business in China.
- Flying back and forth to China or Asia to work directly with a manufacturer is really expensive, especially for small companies making relatively small orders. It really is worth hiring a company that can manage the outsourcing for you, even if it means paying a fee just for a quote. You really need someone who already knows the manufacturers and understands what a realistic timeline is. Otherwise you run the risk of tremendous frustration and disappointment, not to mention wasting a lot of money.
Also, particularly when it comes to packaging and promotional materials, experts in outsourcing are going to know a lot more about how to manufacture, say, a container for your candy than you do. Focus on your candy and let the outsourcing experts focus on the container.
- Companies don't anticipate the time, logistics and costs that go into testing.
- No matter what your product, it will demand a certain amount of testing during product development and sometimes even during production. Testing includes making sure that the product does in fact work the way you want it to, but in many cases it also means making sure that it meets various safety requirements. Plans for testing need to be made early in the process, and often it requires finding a third-party testing agency.
- Companies don't understand the gray market and the risk of counterfeiting.
- The gray market, which is basically a parallel market in which goods are distributed outside the company's official trade channels, is obviously a huge problem in China. It often happens that a foreign company orders a product with a Chinese manufacturer, and somehow, not every unit makes it back to them because they're being sold out the back door.
There are tricks, however, that help prevent that problem. Another big part of the gray market is, of course, counterfeit and bootlegged goods. Counterfeits and bootlegs can't be totally stopped, but someone with savvy about outsourcing can reduce the risks and come up with solutions.
Outsourcing of Manufactured Consumer Goods and Promotional Materials: Common Problems