December 21, 2020 Antonio Aguirre, Jr. ALL ABOUT WORKING WITH FACTORIES

Continuing from the last article about working with manufacturers, we talk about the types of factory services, challenges and the difference between local and overseas suppliers to work with for your fashion business.

Here are the 2 types of factory services:

1. Full Package Service (FP) – It’s the simplest and straightforward choice for designers to start out with. Using a vertical factory which includes both trim sourcing services and fabric which makes communication easier. It also has fewer chances of the manufacturing process being delayed due to transferring of materials in production.

2. Cut Make Trim (CMT) Service – This is for designers who need a special fabric from a specific mill, a sewer or a fabric cutter that uses a special equipment, thus lowering prices. When the mills and factories are separated, it requires more communication and have a higher chance of the manufacturing process to be delayed due to transfers.

LOCAL PRODUCTION VS OVERSEAS PRODUCTION

OVERSEAS PRODUCTION is usually used because of either cost or specialty needs. Taxes and other international costs will be added to your production cost because of this. It’s good to know that producing in countries where there is an FTA (Free Trade Agreement) with the country in which your company is based, so there’s a fixed cost for everything.

DOMESTIC PRODUCTION is often the first option and has a shorter production time and delivery date, depending on the workload of the manufacturer. You could oversee the entire process and have a lot of control by being able to communicate and visit directly with your factory of choice. I highly recommend this for all start-ups. Look for the lowest MOQ you can produce, typically 36 is the lowest MOQ per SKU/Design that these local manufacturers accept. Do note that the lower the quantity, the higher the production costs and vice versa.

USUAL PROBLEMS AND SOLUTIONS OF MANUFACTURING

1. THE MOQ IS TOO HIGH – 3 suggested solutions:

– Use the same patterns again with different colors, fabrics and trims. Most factories will still consider them one style as long as the pattern and sewing steps are the same. For printing, the print screen guide used can be repeatedly used again, making it worth the cost of each print screen guide.

– Offer to pay higher for each piece at a lower MOQ in return as long as you can still afford the cost given to you. Example: Php 250 cost for a printed shirt at 100 MOQ vs Php 275 cost for 36 MOQ. Compute if your margins are still ok.

– Make a promise to the manufacturer that you want to work with them for lareger productions in the future, that you’re just starting. Most of the time, they’re ok with it, as long as they have continuous production. You can ask for their factory capacity to imply that you have future plans for larger production. Make sure you can make promises that you can keep too. Think WIN/WIN always.

2. YOU DON’T LIKE THE OUTCOME OR IT’S NOT WHAT YOU EXPECTED – 2 suggested solutions:

– Ensure that your pre-production sample is accurate before your manufacturer even begins.

– Do an on-line inspections and have someone oversee the production process (it would be better if it’s you yourself). It’s a good practice to ensure that the workers are making it correct.

3. FACTORY IS PAST YOUR DEADLINE – 2 suggested solutions

– Add buffer time to your expected schedule in case there are delays. I suggest adding a buffer time of 7-14 days at most.

– Agree on your terms clearly about certain penalties if factory is late in deliveries through a “COST PENALTY” where the final cost will have a payment reduction, since you are possibly losing money with the delay caused by your manufacturer.

Question of the day: Have you had any of your products produced overseas? What went right and wrong if any?

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