Finding Suppliers in China

If you're making a product for sale, then the specific cost of manufacturing of that product will make all the difference to your bottom line. It's no secret that Chinese manufacturing can deliver a wide variety of products are very competitive rates.

If this is your first foray into the world of outsourcing manufacturing to China, you need a smart approach. Sourcing from China comes with its own set of challenges that need to be overcome. Here's how to not make it a problem.

Determine Your Needs

 

Sure, you know what you want to make but in China there are different approaches to each manufacturing contract. Basically there are big corporations that will take on the job or farm it out to a 3^rd party vendor. As a small business owner, you might want to seek out the smaller family owned business for the startup. This type of company will probably be in a better position to provide you with direct access and support. You will avoid the markup when a larger manufacturer subcontracts out your job.

Research All Angles

Before you book your first flight to China, you'll want to do a lot of research. Build up a database of potential manufacturers by searching trade directories, chamber of commerce listings in China, Export Development Corporations or business associations. This can happen when you research comparable products to yours online. You'll start seeing some of the same company names popping up. Clearly these are the dependable factories. They should be your first stop.

Pick Your Top 15 Suppliers

Once you've put a list together, start making calls or sending out emails to set up relationships. You'll want to find out all the costs associated in hiring this company from raw materials to transportation. Make a list of questions that you'll be asking of all of your suppliers and then you'll be able to narrow down the list to your top 15. These you might want to visit in person to make sure they can handle the job. It's going to take time to find the best fit for your company's needs but you're better off exhausting all the possibilities before firing up the assembly lines. Do not put your entire manufacturing assembly line on one company. Spread the work between two or three companies depending on your volume of work.

Get a Local Guide

If you are traveling to China you'll definitely want to find a local business representative to help show you around. Hopefully, this will be someone who comes highly recommended and who you've set up arrangements with before landing. The best guides are usually the government trade representatives between your country and China. You don't want to ask around at the airport for a guide!

How to get a Distributor to Represent your New Product

You could have the most amazing product on the planet but without proper distribution to get that item out into the marketplace, you're going to end up with a warehouse full of inventory wasting away. The right distributor will get your product to as many potential customers as possible but how can you find that partner?

The following steps should provide an informative road map for picking a distributor for your new product.

Step 1: Do Your Research

Find out who is distributing similar types of products in your area. The big brand name players handle their own distribution, but as a small business start-up you should be able to find many options in your neck of the woods. You can also ask for recommendations from other business owners. Another great resource is an industry trade show. You're sure to make many contacts there for potential distributors.

Step 2: Set Up Interviews

Once you've narrowed down your list to the top picks, you'll want to set up meetings to pitch your product. Keep in mind that you're looking for a viable partner not someone who is just going through the motions of shipping your product from one outlet to another. You want them to be excited about the product that you're offering. If you don't get a strong sense of their dedication then they're not going to be the right partner for you. 

Step 3: Get the Stats

As you get down to the top candidates, you'll want them to "sell" you on their abilities. Ask for previous sales figures, marketing campaigns and how much reach they'll have across the country. Can this distributor roll out a product nationwide or are they restricted to a single coast region?

Step 4: Crunch the Numbers

A distribution fee will be factored in as a percentage of your production costs. The key is to keep those costs down in order to improve your profit margins. You might find that the distributors you are considering are all offering the same rates. However, a one or two percentage point difference can add up to substantial savings.

Step 5: Work Out the Process

You want to clear about expectations on both sides. How will you get your product to the distributor? What will the payment structures be? Who will be handling quality control and tracking? 

Step 6: Check References

Finally, you'll want to follow up on the references provided by your distributor candidates. Call up those businesses and find out how effective those distributors have been. Make sure to ask about any problems they might have had.

The best decision to make is an informed one!

Key Components of a Manufacturing Production Plan

If you’re in the business of manufacturing a product then you need to develop a thorough production plan. That applies to everything from making “widgets” to sandwiches. The type of effective production plan depends on your business model. It will help if you can hone in on what type of manufacturing production will be most beneficial to your business. Based on that answer, you’ll be able to make informed decisions about inventory, material purchases and transportation. Consider which of these production plan strategies apply to your business:

The Demand Matching Strategy

This type of manufacturing applies to a company who is only making a product to exactly match the demand for that product. A restaurant only makes a single meal when a customer orders that meal. They have all the ingredients on hand for the meal but don’t go into “production” until the order is placed.

The Level Production Strategy

In this plan, a company will make an average number of products to match a projected demand for those projects. This is a consistent approach based on tangible order numbers. If that restaurant sells an average of two dozen chicken dinners every night then it makes sense for them to prep two dozen chicken dinners every night in anticipation of the orders.

The Stock Making Strategy

This strategy involves making product before a customer would place an order. The benefit of this plan is the ability to make a master production schedule that will determine a specific set of goals per manufacturing run. You’re going to make 100 widgets every day to meet any anticipated demand over the year.

Once you have settled on the type of manufacturing strategy you’ll be adopting, you should plan out a production schedule. Don’t guess as how much time or labor would be involved in making a product. You should conduct test runs of the manufacturing process to get a baseline for those facts. That will help you estimate what a typical run of a product will cost in terms of time and work force.

The test run can also help you develop a schedule for ordering supplies. If it takes a single day to create a product and you plan on having a consistent five day run then you can figure out how much materials you need on hand to complete an order. It all comes down to a matter of organization and scheduling. Don’t leave anything to guesswork.