In the startup community, most of the focus is on market research and the search for financing opportunities. However, once momentum is gained, many startups do not have a manufacturing-ready plan. This creates problems when the demand for new products thrives, but the startup is not ready to comply with what the market dictates. Some startups will try to make themselves, but without the necessary capital or operating efficiency, companies hinder their own growth by keeping production at home. Other startups choose to partner with the manufacturer and outsource the business. This is usually the most profitable solution since the company does not have to raise funds to buy a manufacturing plant and employees. Companies avoid this option due to a lack of experience or fear of losing control over the quality of their products. Misconceptions about the costs and reliability of outsourcing companies lead many new companies in the wrong direction.
Foreign manufacturers, especially in countries like China, have advanced manufacturing industries, in part due to technology transfer and quality control practices in the United States. They can offer the same quality as American manufacturers without the cost of American labor. Regardless of the cost benefits, it’s easy to find foreign manufacturers and welcome new businesses from emerging American companies. Raw material costs are generally fixed worldwide, but labor costs are not. To find the right manufacturer, companies must look for partners, as the cost of labor is 25% of the final price of basic products. This should be to find a contract manufacturing partner with the right balance of cost and quality. Other factors to consider include the plant schedule, production capacity, communication systems, and quality control. Here are the three things you need to consider about contract manufacturing China companies.
Every aspect of the supply chain should be managed daily by the customer or the sourcing agent, not the manufacturer. Maintaining consistent communications and tracking shipments, as well as implementing a quality assurance audit system across the board are essential steps to secure the supply chain and reduce errors, and with these considerations, startups should have all the necessary tools to establish long-lasting relationships with manufacturers abroad, while meeting market requirements Within budget. Start-ups looking for an outsourcing partner should look for a sourcing agent in China to help find the right partner and navigate the waters of overseas product development and production. For more information on outsourcing manufacturing best practices, read this Beginner’s Guide to doing business in China.
Cost of Outsourcing in China
Manufacturing costs are not simply equivalent to raw materials and labor costs. You should also consider shipping, shipping, and quality. Startups can choose a cheaper manufacturing company, only to fail the market with lower-than-expected quality. The cost of poor quality hurts more than the upfront costs of hiring the right manufacturer. When considering other factors in the total cost of land, companies must establish a fixed budget. For example, shipping and shipping should not exceed 10% of the total cost of the merchandise.
Startups must choose a factory with its own quality control department; It is reliable and provides data to customers to ensure they meet production quality standards. In the request for proposals, companies must request examples of quality control processes and controls. Customers should also schedule audits with the manufacturer to ensure that the information they receive is accurate and meets the expected standard.