3 Tips for Getting Started with Contract Manufacturing
We often get approached by smaller brands looking to scale their manufacturing to the next level. Whether you’re making products in your kitchen with help from family and friends or bought some filling equipment off eBay and realize your brand is growing to the point you need some help.
Here are a few tips to consider when speaking with a contract manufacturer:
1. Speak the MOQ
MOQ stands for Minimum Order Quantity. It is often the highest asked question to anyone in contract manufacturing or packaging. What’s your MOQ? This is the minimum quantity of products a manufacturer will make for you on a single order. It is often defined by the factory’s equipment setup and efficiencies. For example, in product mixing, a small factory that has only a single 1,000-gallon mixing tank cannot cost effectively make 10 gallons of your product. For about the same amount of time and effort, they can make a 1,000-gallon batch for another customer and make a lot more money. For filling product, if the factory has a high-speed line, there is setup time involved and change parts that take the same time for a small run as a large run with the same cleaning process. For this reason, they will either deny a small order or quote a very high price. As a rule of thumb, many contract manufacturers will run as low as 5,000-unit orders but prefer 10,000-unit orders. Smaller than 5,000 units per order can be difficult to find. If you find yourself in this category, reach out to us and we can help
2. Understand Lead Times
Often when making product yourself, there are few variables that stop you from making product when you want. When working with a contract manufacturer, you’ll want to be aware of lead times. This is especially important when your brand is growing quickly.
Packaging Lead Times: If you’re running under 5,000 units you’ve probably already found US suppliers of stock packaging they have in their warehouse. In this case you may only be waiting about a week or so for delivery. If you plan on controlling when to purchase packaging and send it to your contract manufacturer, keep in mind most contract manufacturer’s put you on the manufacturing schedule well all of your components arrive. As your brand grows, packaging from China often takes 8-12 weeks to arrive into the US. You’ll want to be conscious of that as your brand grows.
Manufacturing Lead Times: On average, 3-4 weeks is typically the lead time to get finished products turned around from a factory. While factories may only need a day or less to run your product, they are typically juggling may customers and need this buffer time to make sure you’ve allowed them enough time before you run out of inventory. There is also testing on the product itself to make sure the finished product is free of bacteria, mold, and the nasty stuff you’re most likely to get complaints about.
3. Know your Product Details
When speaking to a factory for the first time, they have no idea what you’ve got. It’s important to paint the picture very clearly so they can provide accurate costs and don’t miss anything. If you have the inventory a finished product sample can answer many of the upfront questions. Below are some common things you’ll want to feed your factory:
Don’t forget to speak about a Non-Disclosure Agreement (NDA) before disclosing confidential information that may be the secret sauce to your brand. Protect your brand!
Product Volume & Viscosity – This will help determine how fast the product can be ran on equipment. You might not know the exact viscosity and in that case describe what the product is similar to (i.e. similar to how honey pours out). Products like shampoo are large and take a little longer to fill.
Packaging Type – The key here is details, details, and details. If a product sample cannot be sent, a picture will suffice. You’ll want to also describe any particular features like tamper-proof seals or long pumps that need to be screwed on a bottle. If there is secondary packaging like a unit carton, it’s helpful to see what this looks like. Some unit cartons are easier to erect than others and the finishes on some can be prone to scratching when shipping.
Labels – If you are having labels applied. It’s important to list if they are on a roll or individuals. If it’s a roll, what is the roll orientation. The label manufacturer will ask this question when you order most likely. For wrap-around labels, did you design a gap or does the label wrap over. In this case label alignment needs to be more precise and more labor is involved.
Case Packs – If you don’t specify this, contract manufacturer’s use whatever they have that best fits your product. While this is okay for some, keep in mind distributors often want to know your case pack quantities and marketing strategies can play into this. For example, if you have a product that sells to boutique shops, you may not want your case packs to be 500 units+ as a boutique may not want to carry that much inventory. In this example your fulfillment house will most likely charge you to split a partial box.
There are quite a few details any contract manufacturer needs to understand to properly quote your products and some limitations involved in how much they’ll run at a time. Smaller emerging brands often find difficulty in maneuvering though outsourcing strategies so they can manage their cash flow. This is especially true when launching a new product on an existing line that you’re unsure will fly off the shelf.
Talara Marketing specializes in smaller run manufacturing and we’re here to help your brand. Whether you’re piloting a small run on a larger company or getting started with your brand. Contact us and we’ll be happy to help guide you on your journey to success. Our goal is to help brand flourish and provide the right resources for this to happen.