The good news? You have the perfect partner to manufacture your product. The bad news? You might need to start looking for your next one nonetheless.
Chances are that your business or your vendor’s business will change, and you’ll need to at least consider a new partner—or adding a partner—that can scale faster, hit harder deadlines, tighten cost profiles, or improve quality. Nobody is immune to supply-chain risk, which can cause people to question their partners. Even Apple has it, according to a Reuters article on delays around the iPhone 6 not too long ago.
Sometimes the best path is to deepen the relationship you already have and work with your existing partner to address required changes. But, if business needs are making you restless for change, here are four questions to ask yourself to avoid the pitfalls of manufacturing challenges.
1. Why Do You Think It’s Time for a Change? Is your company looking for flexibility? Lower labor costs? More control over your process? Something else? Because depending on the combination, it can be difficult to get more than one or two at a time.
Consider lower labor costs: Typically, vendors with the lowest labor costs want to see the highest volumes, which means, once you turn it on, you can’t turn it off. So if your product is seasonal, or experiences peaks and valleys in demand that require production flexibility, lower labor costs might not be your real requirement. It might be flexibility.
“Think through to the end state,” says Mike Bucci, CEO of K & M of Virginia, manufacturer of the Painter’s Pyramid. “At the end of the day, my products are cheap plastic. They are innovative and do things other products don’t do. But to be successful, I need to be where cheap plastic is made.”
Bucci, who works with two manufacturing partners in China, never wants to change vendors. “I know what my product is and what it isn’t, and I worked hard to pick the right partners the first time through because ultimately, the costs of starting over again at a new factory can be a significant burden on a growing business.”
That said, if you think through to that end state and see that product is still developing, needs continuous tweaking, or adds value through rapid customization, an option to consider is skipping the partner search altogether and taking it in-house. Should you be doing the manufacturing yourself? Making it local? A recent article in Forbes highlighted San Francisco companies that are doing just that. Products that thrive on small batches, customization, and rapid design changes are well suited to manufacturing in-house. Consider San Francisco–based messenger bag company Timbuk2, which, according to Forbes, embeds its design into the manufacturing process by having “the product design team [sit] approximately 17 steps from the factory floor.”
2. Have You Budgeted for Change, Including Supporting Aspects? “It will hit the fan,” says Rachel Frey, founder and CEO of InYo, a yogawear company that emphasizes fun and color in its products. “Something you never dreamed could happen will happen. Plan for it.”
When InYo’s Kickstarter campaign took off and her original vendor could not meet quality specs for the additional fabric she required, she found herself scrambling to find a new vendor who could—and fast. She found a partner in Los Angeles that provided the opportunity to onshore the entire process, including fabric production and cut and sew. But, even with multiple trips onsite for the new production, hiccups happened.
“The original problem was that the factory couldn’t produce fabric to the quality of the sample. The second batch was sheer. And nobody wants sheer yoga tights. Then, my new factory’s first run was too thick. Nobody wants fleece yoga pants either.” Although experienced in the fashion-production world—Frey is a seasoned pattern designer in her off-InYo time —when it was time to shepherd her product, things still wandered off course. Frey’s advice? “Budget more time and more money than you think is needed. You’ll need it.”
3. Have You Read the Fine Print in Your Vendor Agreement? Understand the costs of breaking up. Have you signed away any exclusivity? Are there noninvoiced items that could suddenly get invoiced upon taking your business elsewhere? Who owns any special equipment required to make your product?
InYo had documented quality-control problems when Frey decided to seek a new supplier and the transition away went smoothly. “We had outside testing done on every aspect of the fabric we could think of. Technically, the fabric was in spec but different from the initial sample yardage. Our factory couldn’t dispute that the batch-to-batch variances meant we were producing see-through pants.” Because of her efforts, the factory took back remaining yardage and released InYo from any additional obligations.
Even clearly defined contracts may not get you there according to Bucci, who also consults with many startups on their retail readiness. Beyond the legal and logistical challenges of getting tooling or other equipment from a manufacturer, you may end up with something that cannot be used at your new manufacturer.
“Molds aren’t like Legos,” he says. “You don’t just take your old Lego and snap it into the new factory. You often can’t even snap the same tool on another production line in your same manufacturer, never mind bring it to a new company and get it to work.”
4. Do You Have Time, Money, and Gumption to Build Multiple Vendor Relationships Simultaneously? Admittedly difficult for startups or small companies, making this upfront investment could yield meaningful dividends for the life of your product or company.
“When you are working on something innovative, having a close relationship with one manufacturing source can be really helpful in the beginning because everyone can be involved in the process of building the product, “ says Gaston MacMillan, a technical-apparel engineer presently working with Athos Wearables as its head Philosovisor. “However, the challenge down the road is that you can find yourself captured within the structure you set up with that first partner. You may find you don’t have as much control or understanding of the cost structure, and if you want to try something radically different, your partner might not want to go along with you.”
MacMillan, who has vast experience bringing complex, technical soft goods through the design stage to market, advocates at least two sources whenever possible because without multiple sources, information and control of the cost structure is almost impossible. These relationships also provide insight into alternative manufacturing methods and emerging technologies that wouldn’t otherwise be possible.
“Even if you don’t go with one of your alternate sources, this other person becomes your friend. At some point you will grow and need a second factory. Already knowing a place that can come with you will shave time off the transition.”