Finally, you are done with the product development stages and are ready to produce your product for selling. As an entrepreneur, you know that it is absolutely critical to get your product right before launching it to avoid killing your brand with bad customer reviews and high returns. What are the things you need to consider for cost-effective and efficient materials sourcing, finding the right factory for manufacturing, and in making all other major decisions in the production process? If you are clueless as to how or where to start on product production planning, here is a general framework you can work with: building a relationship with your manufacturers, having strong documentation, and consistent follow-up. It can be a daunting process because there is no set flow chart for going about things since it is all really product-specific– but with decades of combined multi-industry experience, Product Launch Hazzards will guide you on how to best produce and launch your product for maximum profit.
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We’re going to talk about producing. Producing is the fun part. We’re finally making it. You’ve gone that far, you’re out of that testing stage, you’re out of figuring out how to make it or what to make. You’re in the actual making it part, so it’s satisfying, but it’s also daunting because there are so many things to try to get something made. Do I make it in the US? Do I make it in China? Do I make it in India? Where do I make it? If I make it overseas, do I need a trading partner? Do I need a consultant? How do we manage that? It raises all these questions. Hopefully, we’re going to knock off a whole bunch of them. This is the biggest place because some of these things are so product-specific for you that we can’t address them in this general class. That’s why the membership site is there for you. That’s why you want to go to Product Launch Hazzards and you want to participate in the weekly Office Hours. They’re there for people who have been through this before, people who do this everyday to advise you and give you guidance.
Let’s talk a little bit about US versus China, or Asia in general. I get this question all the time. Every time I go to inventor groups all over the country, they’re like, “Why aren’t we making it in the US?” I’m going to answer it the same way that I do. I have absolutely nothing against making something in the US. In fact, I want more business local. It is part of why we love 3D printing so much because we’re bringing manufacturing local again, but we’re also making it cost-effective when we do that. When there is a cost effectiveness involved, we have to do a full evaluation of where you’re making it, how far you have to transport it, and does it make sense to make it there.
The second thing we do is we seriously consider material sourcing. If we want some specialized woods, if we’re making wood furniture, like rubber wood or something like that, it is not native here in most of the US, so it’s not the best place to make it. There are exceptions to that. There are some great wood products that are made out of North Carolina and other areas because the woods are plentiful there. We have to consider the material source. If I were going to make something of premium leather, I’d go for Italian leather and I’d go to Italy to have it made because you’re closer to the source. Thinking about that source and where those materials should come from can also give you guidance on where to make something.
I want to remind you my story about picking a manufacturer that happened to be close to home, but they didn’t have core competence in the particular product category, so you want to make sure that whoever you pick to make it understands what you need to make and have done it, been there, done it before. The reason why we do that is because they’re not making rookie errors and learning on your dime. One of the costliest parts of product launching is having to do redos, remakes or having it get all the way to you, shipped to you, and then shipped to a customer and then be returns and reflect badly on your brand. We want to circumvent those if we’re going for speed to market accuracy and we want to be sure that we’re not wasting our time or our money in the process. That’s my big pitch on where it decides to make it, but it’s up to you at the end of the day. If you feel strongly you want to make it in your backdoor and you want to build a local business, then go for it. Just keep in mind that you may have to sacrifice some of your profit margins, you may have to look at alternative ways to produce things like 3D printing and be creative in the process and/or handhold if you’re learning on the job by building our own manufacturing facility or building up manufacturing with someone who it’s not a core competence of theirs.
The next big question is how do you place an order? Are you ready to go? Do you have everything in place? What I want to walk you through is our general process of order placing because we don’t go in willy-nilly and start placing orders. We get excited about it, we want to go, the design is all done, the sample is signed off on, and we’re good to go there, but there’s a lot of documents and control factors we like to put in place prior to it. When we have a client who is going to go to the next step of starting to place an order, we require two to three weeks ahead of time to prepare all the proper documents, to prepare a specifications package. In that spec package might be tooling instructions, documentation required on all the details that are in the sign off sample. It might be quality control limits. If we’re making a blue color, it can go as light as sky blue but not as dark as navy blue. We put visuals and percentages and examples of good versus bad, and so it takes time to prepare these documents. We need documents that are in compliance. Maybe we need time for testing, so we have to allow all of those things.
Compliance covers things like warning labels. You see them all the time on products all over the place. We’ve got to make sure that we specify those. Otherwise, yours won’t come with them. We make sure all of that is in one specification package along with the purchase order, along with a contract that is translated, if it’s in a different language, and is also of course in English, in our case. We do that, and we put the whole thing together and we have all parties sign off on it. It’s not because we expect this to be a legal document because it’s hard to enforce a legal document and this contract overseas, but it’s almost like a memorandum of understanding. It’s an understanding that these are the specifications we expect, everyone understands them, everyone signed off on them, and there is no misunderstanding in that process. It’s all documented in the process, but it also is there as a followup. Did we ask for that? “It was a mistake in the documentation,” so it holds every part of the party accountable for reviewing those.
A couple of other things that we put in those are instruction sheets, package designs. Everything has a detailed specification. From there, we always put in a team on the ground. Part of the reason that we do that is because we want to build a long-term relationship with our suppliers, our vendors, our factories. We want to build a relationship in which they know that we want more business with them, that we want to grow our business with them, that we trust them, but we also have to put in place the systems to verify them. With that we put in third party quality control experts, people we’ve used at various times in regions and we reallocate them to a different factory to review everything. For the most part, the cost of those things should be less than 10% of the overall order that you place. We don’t worry because that 10% is way worth it compared to waiting the length of time it is to have it fully produced, shipped to you, received by you, and then find out that there’s an error. You’ve lost way too much time in that process so that 10% is worth the speed to market time of being able to catch things sooner.
In that quality control, they are supposed to review products in whatever way we specify, so if we want them 100% inspection on a product, which we rarely do because of the amount of time it takes and how much it annoys a factory, we like to do spot inspections and then if there are problems, then we’ll do 100% inspection. We like to do incoming material inspections or anytime there’s a circuit board or something electronic to test them before they go into the product and before they go through the whole production system and come out too late and find out they don’t even work. We like to have various checks in the process. This is something that is established with each different product and with each product specification package.
Controlling the quality, the shipping, the warehousing, all of those things are also a part of it. We also set up our warehouse, our logistics and all of those things, and so if it’s not someone you’ve used, again there’s a whole specification in the process of how it works and/or working with partners who have a very standardized system and process that they use so that they’ll share it with us so we know very clearly who is responsible for making sure that the labels are right or who’s responsible for making sure of organizing the transport. Is it the factory? Is it our logistics people? We have to be clear in the whole process because that’s where delays happen. We also have to make sure who’s responsible for duty documents, customs, that kind thing. By controlling all the documentation in the process and clearly laying it out and making sure all parties are very clear on it, we have a much more streamlined, much smoother production process and we save money and time in the process.[Tweet “Make sure that your manufacturer understands what you need and have done it before.”]
I want to talk a little bit about how we handle sourcing and relationships with factories and what we do that’s a little bit different. We handle the sourcing of products, so how we find factories is in three ways. Number one, we go out there like you do and we check Alibaba and we check around and we find competitive products. We make sure that we’re comping so that we know, “We’re going to buy a microphone” and that microphone is going to cost us $5 a unit, so average amount of features we want, we should expect that. We should expect $5 a unit, and so that’s great. It gives us a benchmark to go on, but it also gives us an indication because in China, things are set up in an economic zone. If you want bamboo products, there’s a very specific zone that produces everything related to bamboo from floors to towels all in one region or one province, so it’s great. Because it’s such a big country, it makes it easy for you to know where to go to shop for these things.
Sometimes if we don’t have a contact in a particular product area, it’s great for us to be able to use the directories like Alibaba and search for that and come up and find where those are, but here’s the trap. If you use Alibaba exclusively, what happens is that you get stuck into what is likely to be a sales rep or a trading partner and not necessarily the factory, and so we like to check that before we go and place any orders except for buying samples. Sometimes we buy samples that way to be fast about it. When we’re ready to go and place significantly sized orders, things beyond the very minimum of 500 units or less and we’re serious about bringing something in and continuing with it for a year to eighteen months to longer, then we want to make sure we have a source that we can rely on, especially one that we might be able to grow with to do an original product. We start with that private label product, that A product, and then we move onto the B product of our original product.
We want to make sure this is a great factory that we can grow all the way through to mass market retail with or at least make it through the initial phase of that and then maybe second source. We want to make sure they’re reliable and they’re cooperative. We have a whole process that we go along the way and part of it is asking for quotes, finding out what their scalability is in terms of like how much does the price drop as we get up to 100,000 units, making phone calls, having people on the ground who go and see the factory at some point, us making trips so that we can build a relationship with the factory owner and their quality engineers and the people in their design and development or might be making samples for us. We want to put a face to that because when you’re not an email address, when you’re a voice or a picture on Skype, if you’re video chatting or video, or if you’re there in person, you have a higher likelihood for a lot more cooperation and a lot better pricing and a lot better quality. They want to perform for you because they know you.
This is critically important in our process of doing it and we start early on in making connections with these factories and building relationships and heading that all the way into this production model, so when we go to production, they feel like they’re producing something, for someone they know, for someone they want to be proud of what they’re producing for you. It makes the quality better. It makes the system better. It makes the flow better. It makes you a priority. Even if you don’t have a very large initial order, it makes you a priority in their production schedule better as well. That’s another reason why we want to have an additional three weeks on the front of any first order because production schedules get established that way.
While you may have gotten a quote before, sometimes you have to get a final quote with a lead time assessed to it around the time that you’re placing that purchase order because production schedules change at different times of year. If you’ve got a quote in September but you don’t place the order until November, you could be in a lot of trouble or difficulty with people getting production towards the end of the year. Your schedule might go out or your lead time might extend out. Same thing happens around Chinese New Year.
You want to make sure that you have a little buffer in your launch schedule and your launch timing to plan for that and that’s why we start because we want to find that out especially if your product is timely. If you were planning something that needed to come out in the spring because it absolutely was a spring-related product and you place the order after Chinese New Year, if it slipped by even a week, you might not get it in time. We want to be careful with that. I would rather kill a product and make it go out to the next year than miss the window of opportunity by a week or two and miss a holiday or miss a seasonal opportunity. We want to build that relationship, we want to have strong documentation, and we want to have great followup.
On the flip side of that is making sure that you are checking things yourself. Get a unit shipped to you from your logistics warehouse, ship it in from Amazon, makes sure you’re checking everything yourself because no one’s better to judge whether or not it turned out the way you expected it than you. I find too often that people are very hands off about their product altogether and the warehouse touches it and the warehouse brings it in and they’re like, “The box looks fine. There is no damage,” and then they send it right into Amazon and it isn’t until lots of returns come back from customers that they realized it didn’t do what it said it would do or it was missing something, or the instruction sheets weren’t clear. The time to fix that is at the warehouse level if you can or write as you bring it in from the logistics warehouse. If you can go there, if you can have them ship you one, it might be worth a day to delay to double check that yourself. It’s totally up to you as to how you’re building your brand, but again, if your brand and your quality and all of that matters to you, then you want to make sure that it is achieving those goals. Remember a brand is all about perception and how the customer is perceiving you and your product, and it will come back to you in bad reviews and/or lots of high returns.
I hope this helps you get a framework on producing it. This is so product-specific that I’m sure you have hundreds of questions like, “Does my product need testing? Do I have to send it to a third-party test lab? How long does that take?” It’s different for every product. Do you need UL testing? Do you need BIFMA Testing, or all of these things? I’m throwing acronyms out at you but if you need them, you should know that. Remember that’s what the membership site is there for. It’s your safety net. We are your hazard protection plan. That’s why the membership site is here for you. That’s why you need to utilize the Office Hours. We have people who have been receiving products in and warehousing products for decades. We have people like Timothy Bush who helps rep products and get them into mass market retail. All these kinds of people are there to help you. The tens of thousands of dollars you’d have to pay in consulting fees or retainers to get their information is well-worth your participation in this membership. We want you to get the most out of them being here for you and utilize the Product Launch Hazzards Membership Group to its fullest.
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