There's a lot more to manufacturing than just settling on a price for your product and placing an order. Sourcing can be a jungle, and if you go into the jungle blindly, you won't fare well. It is true that a lot of companies here in the United States, especially startups or young businesses, don't understand how to deal with manufacturers overseas. They are either lacking the experience, or unsure of what to expect. So let's talk about how to change this, and ultimately how you can protect your business.

Sourcing Rules to Live By

There are rules we live by when it comes to sourcing and choosing manufacturers. Just like our rules, you need rules. Rules also help you overcome anxieties and fears. You have to know what the parameters are and you have to be educated about the company you are talking with, their process, their history, and so on. Without further ado:

  1. Put a team on the ground. Always do everything in person, build relationships. Get to know every single person that will put hands on your product, from beginning to end. Make it a point to learn their names and communicate regularly. This personalization of the process will 1) mitigate risk of being ripped off, and 2) allow you to be more involved in the process. It's a lot easier for someone to do mediocre work for an email address. But if they know you, they've shook your hand, they've looked you in the eye... it's a different story. Ultimately, this connection will breed accountability.
  2. Divide and keep it secret. Break up your pieces and parts and shop them around individually. This way, each individual piece is made by an expert in that category, but also this protects you from having your idea stolen or copied. If the manufacturer only has one piece of a whole, that really makes it difficult for them to steal your ideas. So break up the parts and get them quoted in pieces, so that one factory doesn't know the whole thing. Then put that together and ask yourself, "Out of all of these, which factory has the best capability and the best possibility of producing what we want in a custom way developing?"
  3. Don't focus on educating. This never works out. It's just like being the first to market, in a new product category. You end up educating your potential consumers, and by the time you get around to selling, your competition is in the door, and you just did all the work. Same with manufacturers. If they've never made the piece you need, go somewhere else. We call this the 'been there, done that rule'. We had this problem back in the 90s, "You've never made pens before but you're an injection molder. We think you're going to be great at making pens. And you're just down the road from my office. We're going to give you the business." We found that to be a failure every single time. It takes too long to educate and there are too many mistakes, which costs you a lot of money and a lot of time. In our case with the pens, they miscalculated the threads, and the pens exploded, and it almost cost us our whole entire business at that time.
  4. Have evaluation criteria. Evaluation criteria, that you use every single time you interact with a manufacturer, will help you gauge each one by the same set of standards. Some examples of our evaluation criteria:
    1. Is this factory going to be good enough?

    2. Are they going to be at risk for knocking us off?

    3. Are they going to establish a long term relationship with us?

  5. Use an uninvolved translator. If you are meeting with manufacturers overseas, you will need a translator. If you don't already have somebody on the ground, somebody that you've done business with and can trust, go to the front desk of your hotel and ask if they have anybody that speaks English well. You can easily hire the hotel staff to go with you or your team on the ground. They don't know anything about the product you're looking for and they have no motivation to be dishonest or try to benefit from the meetings. All they're doing is being paid to be your translator.

The Bottom Line Is YOU

At the end of the day, it's on you to find quality manufacturers or developers.. It's on you as a the founder, the owner, or the head of your department to be educated, it's on you to find the criteria. It's on you to find the relationship and build that relationship. It's on you to follow up and double check, do the quality control required, do the testing. Don't trust. You trust by verifying. Risk management is all on you. If any piece of this process fails, it's actually your fault and really not the system of manufacturers or the system of developers. Ultimately, the bottom line, of whether or not you settle in with quality manufacturers, is you.

Published on: Sep 21, 2017
The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.