Ready to take your business to the next level with a product manufacturer partnership? Choosing the right manufacturer can make all the difference in the success of your product. But how do you know you're making the right choice? In this article, we'll cover the key questions to ask your potential manufacturer to ensure they're the right fit for your business.
From understanding their production capacity to aligning with their values, we'll help you navigate the process of finding a manufacturer who will help propel your business to success.
Plus, we'll give you a crash course on the production process and the industry players you need to be aware of. So let's get started on finding the perfect manufacturer for your business!
What Is A Product Manufacturer?
A product manufacturer is a company or individual that produces goods for sale. The manufacturing process typically involves converting raw materials or components into finished products through various processes, such as assembly, fabrication, or processing. Product manufacturers can produce a wide range of goods, including consumer products, industrial products, and agricultural products.
Product manufacturers may be involved in every step of the production process, from sourcing raw materials to assembling and packaging the finished product. They may also work with suppliers and distributors to bring their products to market.
They can also vary in size, from small, locally-owned businesses to large, multinational corporations. They may specialize in a particular type of product or industry, or they may produce a wide range of goods.
Choosing the right product manufacturer is an important decision for businesses, as it can impact the quality and cost of the finished product, as well as the company's reputation and bottom line.
How To Manufacture A Product
Manufacturing a new product takes a lot of time, energy, and resources. Proper knowledge of these processes makes achieving your business goals attainable. Here’s a quick overview of the manufacturing process:
1. Developing the Product Concept
The first step in product manufacturing involves developing a product idea. You illustrate the product’s unique features, how it will appeal to customers, and the final product's name. Some questions to address include: Is there a need for this product? What is your target audience? How will you produce it, and do you have the capacity(funds) to do so?
You collect information on the current market trends and viability of the product concept. Are there any similar or competing products on the market? What are your target audience's spending habits? How much are the production costs? Reach out to existing manufacturers, read online reviews/reports or hire a consultant if your budget allows.
3. Creating Your Designs/Prototypes
You create your product designs in line with your product concept and what you have gathered from the research. You can either use the manufacturer’s design team or source for freelance designers.
Check out our article on where to find free mockups. Product development is a back-and-forth process between you, the designer, and the manufacturer before arriving at the final product.
4. Order Samples
With your prototypes ready, request physical samples to assess their design, quality, and suitability to your product's concept. It informs you on how much it will cost to produce a unit of the product, the materials to use, and the turnaround time.
5. Negotiate Terms
After being satisfied with the samples, you negotiate the payment terms, order quantities, and logistics with the product manufacturer. The agreements should be mutually profitable to help build a long-term working relationship with the supplier. Make provisions to review the terms after some time.
6. Place your order
Finally, with all pieces in place, request the first batch of products from the manufacturer and wait for your products to arrive. Have an open line of connection with the supplier to be kept abreast of any changes or delays in the production or delivery schedules.
Domestic vs. Overseas Suppliers
For any startup, the decision to work with a domestic or a foreign supplier will profoundly impact your business. There are pros and cons to each, which you need to evaluate before determining which option best suits your business goals and culture.
Domestic suppliers make communication easier, have a faster turnaround, offer flexible payment terms, and lower shipping costs.
While domestic production has higher product costs, it stems from higher labor standards and strict intellectual property rights protections.
Most businesses seek overseas suppliers primarily because of their lower production costs translating to higher revenue margins.
They also offer high-volume capacity and a wide variety of products from a massive pool of potential suppliers. However, you have to contend with the language divide, shipping costs, and limited oversight of the production process.
Manufacturer vs. Supplier
It is essential to know that not all suppliers are manufacturers. A manufacturer is a company or individual that produces goods for sale, while a supplier is a company or individual that provides goods or services to another company.
In the production process, a manufacturer typically converts raw materials or components into finished products through various processes, such as assembly, fabrication, or processing. A supplier, on the other hand, may provide raw materials, components, or finished products to a manufacturer or other business.
Manufacturers and suppliers may work together in the production process. For example, a manufacturer may rely on a supplier to provide certain raw materials or components, while the supplier may rely on the manufacturer to purchase these goods in large quantities.
It is important for businesses to carefully consider their relationships with both manufacturers and suppliers, as they can impact the quality, cost, and availability of the goods and services they rely on.
17 Key Questions To Ask Your Product Manufacturer
Now that you have a better understanding of the manufacturing process, let us now look at the vital questions to ask your product manufacturer:
Question 1: "Are You A Trading Company Or A Factory?"
When choosing a product manufacturer or supplier, it is important to understand whether they are a trading company or a factory. This distinction can impact the quality, cost, and reliability of the goods and services you receive.
A trading company is a business that acts as an intermediary between buyers and sellers. Trading companies do not typically produce goods themselves, but instead purchase products from manufacturers or other suppliers and sell them to customers. Trading companies may also offer value-added services, such as sourcing, quality control, and logistics.
A factory, on the other hand, is a company that produces goods through the manufacturing process. Factories may produce goods from raw materials or from components sourced from other suppliers.
There are pros and cons to working with both trading companies and factories. Trading companies may offer a wider range of products and services, and may be able to provide more flexibility and customization. However, they may not have as much control over the production process, and may not be able to offer the same level of quality assurance as a factory. Factories, on the other hand, may offer more control over the production process and may be able to offer more consistent quality, but they may be less flexible and may not offer as many value-added services as a trading company.
Question 2: "What Is Your Turnaround Time?"
Turnaround time (TAT) refers to the time a manufacturer requires to meet your order requirements successfully.
With high TATs, you risk running out of inventory and losing out on customers. Your product manufacturer should provide a workable window depending on your order frequency and proximity (domestic or foreign supplier).
It also helps you forecast how soon you will place orders, especially during the peak seasons.
Question 3: "Do You Source Your Own Materials?"
Asking a product manufacturer or supplier whether they source their own materials can be an important factor to consider when choosing a partner for your business. Here are a few reasons why:
- Quality control: If a manufacturer sources their own materials, they may have more control over the quality of the materials they use. This can be especially important if you have specific quality standards that need to be met.
- Consistency: If a manufacturer sources their own materials, they may be able to ensure more consistency in the quality and quantity of the materials they use. This can be important for ensuring that your finished products meet your quality standards and can be produced consistently.
Cost: Sourcing materials directly from suppliers can often result in cost savings for the manufacturer, which may be passed on to you as the customer.
- Lead time: If a manufacturer sources their own materials, they may be able to reduce lead times by eliminating the need to wait for materials to be sourced from other suppliers. This can be important for meeting tight deadlines or for reducing inventory costs.
Question 4: "What Other Companies Have You Worked With?"
Asking this question gives you an insight into the manufacturer’s work and the overall partnership experience.
Do they supply any renowned retailers or eCommerce businesses? You'll have a better sense of the manufacturer’s product qualities, efficiency, and reliability as a partner through the companies they work with.
Moreover, you can find out if they have adequate experience and goodwill in the market.
Question 5: "What Quality Assurance Practices Do You Have in Place?"
Quality assurance is critical to customer satisfaction and brand development. You need to know how their products are inspected.
Do they use internal or independent third-party inspectors? Are there any quality control stages and standards in place? Can they provide recent proof of inspections or third-party audits? Do they have an ISO 9001 certification?
Question 6: "What Is Your Production Capacity?"
This helps you determine their technical capacity. It is important to know things such as:
- Are they capable of fulfilling your bulk quantity demands?
- Do they have adequate resources and machines?
- What's your production capacity during the high vs. low season?
- How do you manage staff and maintain quality during the high season?
It would be best if you were wary, as some companies overstate their capacity to woo you. Ask for detailed authentic reports over a period of years to estimate their production capacity.
Question 7: "Do You Have Value-Added Services?"
Value-added services increase the quality of products and the efficiency of the supply chain. Can they develop prototypes and product designs for you? Do they offer logistical support (repackaging, quality control, shipment tracking, customs handling)? VAS lowers shipping costs and reduces lead times, stimulating brand loyalty and return purchases.
Question 8: "What Is The Cost Of The Quantities of My Product?"
Different quantities have different costs depending on the pricing strategy used by the manufacturer. Ideally, the more you order, the lower the prices. Ask for quotes on the cost for different quantities to determine how to take advantage of economies of scale and negotiate the best deals at the lowest prices possible. For example, what will be the cost of a batch of 1000, 1500, or 2000 items?
Question 9: "Which Port Do You Use for Shipment?"
The manufacturer's port helps you plan shipment schedules and determine which delivery incoterms to use, Ex Works (EXW) or Free on Board (FOB).
EXW means you are responsible for picking up the shipment from the manufacturer after they prep it.
Alternatively, with FOB, the manufacturer is responsible for delivering the product to your agreed shipping port. While FOB quotes are higher, they are ideal when transacting with foreign manufacturers.
Question 10: "Which Type Of Audits Have Been Carried Out At The Factory?"
Asking for audit reports helps you determine the efficiency and compliance of the manufacturer with industry regulations. You don't want a manufacturer partner who is non-compliant since production disruptions will affect the business's ability to satisfy customer orders.
Question 11: "What New Products Have You Been Working On?"
This helps evaluate the manufacturer’s ability to respond to changes in market trends or customer demands. A flexible production system ensures that the manufacturer will quickly incorporate changes to keep your products competitive.
Question 12: "Do You Have a Range Of Different Qualities/Materials Used To Make This Product?"
This question helps you establish the quality of the final product. It is quite common to have different qualities for products with multiple raw materials or close substitutes used for production.
Occasionally, a manufacturer will make the same product but use lower-quality materials to increase their bottom line. They can also do this if you only care about making the product at the lowest price available.
Question 13: "What Are Your Payment Terms?"
Payment structures help specify how and when you will provide payment for the products. Do they require a deposit/ advance payment? Can you make partial payments, or is it Cash on Delivery (COD)? Are there any discounts for bulk quantities?
As inventory is often the biggest cash flow-related issue, payment terms that allow you to pay later or at least a portion of the amount later go a long way to improving your cash flow.
Question 14: "What's The Best Time To Visit Your Factory?"
Site visits are essential before contracting with a product manufacturer. It gives you a better understanding of the manufacturer’s production processes and if it has adequate facilities to fulfill your quantity demand. Since site visits can be costly, you need to maximize your visit by covering as many aspects of the production process as possible.
Question 15: "How Many Workers Do You Have?"
Even with automation, human resource is an integral part of production. The number of workers determines the factory's capacity to handle orders, especially during peak seasons.
How long are the working shifts? Does each department have enough staff? Are the majority of the workers employed on a permanent or casual basis? Ask HR for the number of workers and departments attached.
Question 16: "What Is Your MOQ (minimum order quantity)?"
The minimum order quantity is the least amount of units in an order a manufacturer would require you to place. Supplies to small eCommerce businesses usually have meager profitability margins, and they set up high MOQs to break even and realize some profit. MOQ limits will vary with the manufacturer’s scale of operations and the frequency of your orders. If the MOQ is unsustainable, opt for another producer.
Question 17: "What Is Your Sample Pricing?"
Product samples ensure the quality and design of the products are exactly what you want. It helps correct defects before ordering a whole batch for sale. Sample pricing will also give you an estimate of the product pricing. Product samples are often free or come at a small cost. However, you are usually responsible for paying for their shipping.
There are many ways to determine if a manufacturer is a good fit. However, they do share some common traits: honesty, responsiveness to market changes, ease of communication, sustainable production capability, and compliance with regulatory authorities.
Clearly define what the manufacturer needs to bring on board by asking all the right questions. They should be able to answer your questions clearly and be upfront if there's a shortcoming or limitation to what they can do.
After all, like any relationship, the one you share with your manufacturer should be based on trust and mutual respect. Besides, you must also do thorough market research and due diligence on the manufacturer's operations to find if they are the right partnership.
Ready to bring your product to life? Check out our free eCommerce tips to learn anything from packaging to building a remote team.