July 2014

Overseas manufacturing can be very rewarding—yet risky. On one hand, you can leverage the expertise and resources of factories abroad to quickly expand your business. On the other hand, you can have terrible experiences that could potentially cause great damage to your business. As someone with extensive experience in overseas manufacturing, allow me to share some helpful tips to consider:
1) Risk Averse? It goes without saying that if you own your own business, you’re somewhat of a risk-taker. However, having your products made overseas takes riskiness to the next level! When dealing with factories overseas, it’s crucial to understand that your products will occasionally be produced outside of specification and will sometimes be late. Unless you spend an outrageous amount of money to ensure the product is perfect and on time, plan for potential setbacks—realizing that the extra cost may price you out of the market.
2) Traveling:  It is imperative that you (often!) visit the people you are partnering with at the factories where your product is being produced. Encourage them to visit you, too! Spend quality time with them, apart from talking about business.  Go golfing, hiking, ice-skating, or—as I have done—to a monster truck rally! If your relationships are seen as a long-term partnership, things are more likely to go smoothly and you’ll be better able to determine your actions within the relationship.
3) Understanding the Country: All countries have their specialties, so find the right fit! We all know that when it comes to computer software, furniture, or cars, we think of Silicon Valley, North Carolina, or Michigan, respectively.  Each place has its forte. But whatever country you choose to produce your product, make sure that country is stable. At one time, I considered having LazyOne pajamas made in Egypt, as they are known for their fine cotton. However, because the country’s government is so unstable, I decided against it.
4) Hiring an Agent: I highly recommend finding an agent—or quality control manager—in the country you are looking to source from. The best way to find a good agent is by a referral from someone you know and trust. As someone who lives in that country, your agent will know the lay of the land, so to speak, and can help you find and screen new factories. This agent speaks the language and knows the many nuances of the culture you’re working with. Their help, from the “inside,” is invaluable!
5) A Product’s Worth: For months, I was impressed by my great negotiating skills in determining the price for one of our nightshirts—until the product arrived and was a lower quality than what I wanted! It was impossible for the factory to make this nightshirt at the price I had negotiated without cutting corners. My earlier bargain was, in fact, too good to be true. You get what you pay for, so pay what the product is worth.
6) Start Small!  Even if the factory you’re working with seems to have all of their ducks in a row, I’d advise starting with a small order and building from there. It’s less costly to work the bugs out of small orders than with large ones!
7) Monitor Production: Again, hiring an agent or quality control manager who can visit the factory often is essential! This agent can check the various stages of production and keep tabs on the schedule to make sure things are rolling along the way you need them to. Having someone monitor production will encourage the factory to deliver on time and not cut corners. Depending on the product, how competent the factory is, how honest you feel they are and how important it is to you to make sure the product is made exactly right will determine how many times you need to have someone check in with the factory.
8) QC Checklists: It’s helpful if you create your own quality control checklist that your agent and factory can use in determining the quality of production. The factory will have important input for this list, but you should be the final judge. A preapproved sample is an excellent “checklist,” all by itself—ordering products to be just like the sample can be hassle-free and more effective than the most detailed checklist you could make.
9) Reconciliation Agreements: Again, mistakes will be made! So make sure you have an agreement for when (not if!) these mistakes happen. Who will pay for the product to be remade? Who will pay to have it air-shipped to make up for lost time? What will happen to the irregulars and overruns, and how much will be paid for them? These are all important issues that need to be carefully thought—and communicated—about as you have your products made overseas.
 All of these issues can be tough—especially at the beginning. But with careful planning and preparation, your experience in overseas manufacturing can be positive and the impact on your business excellent!