Overseas manufacturing has been a vital component of the American economy for decades. Outsourcing enables larger profit margins and access to production capabilities with less investment. However, differences in Chinese and American business perspectives may make the process of navigating China’s manufacturers seem labyrinthine. One area where confusion commonly occurs is the Minimum Order Quantity or (MOQ). The MOQ for different materials impacts offshore manufacturing projects in different ways. However, there are strategies to minimize this issue:
4 Strategies to Reduce Minimal Order Quantities (MOQs)
1. Work with smaller manufacturers.
It is important to match factory size with quantities needed. Smaller manufacturers are generally more amenable to lowering MOQs. Large manufacturers may have more powerful machines but the smaller runs can be impractical. The more complicated nature of their production lines makes it difficult to frequently adjust machine settings. Each time they stop to do so it costs the manufacturer time and money.
In contrast, smaller manufacturers often have the ability to respond more nimbly to smaller runs because they lack these powerful production lines.
Another reason to go to a “right-sized” factory is your business is important to the factory rather than being a nuisance because you are their smallest customer.
2. Order off-season.
Carefully choosing when you place your orders goes a long way to reducing the overall price and the MOQ of an order. Avoid ordering around major American or Chinese holidays in order to avoid rushing or overwhelming your manufacturers.
3. Choose the materials your manufacturer has on hand.
The MOQ you are presented with is oftentimes a result of the price as well as the MOQ of materials which the manufacturer must purchase from their supplier(s). Choosing rarer materials for products can drive up the MOQ. Likewise, common materials may experience shortages or a manufacturer may have materials on hand they would like to get out of inventory and may do so for a better price.
There also may be a situation where the manufacturer already has the required materials on hand or it may be possible for you to change materials your product can be made of to accommodate the materials your manufacturer carries.
4. Build relationships with manufacturers.
Your China manufacture is part of the backbone of your business model. You should develop a relationship with them in the same manner you would any other business ally. One advantage of working with a China manufacturing liaison like ITI is the long-standing relationships we have with many factory owners and key personnel.
Our staff in China as well as the native Chinese speakers working in out Sugar Land, Texas headquarters not only understand the Chinese business culture they have personal relationships grown out of many years of working with trustworthy factories. This makes negotiations for lower MOQs or prices easier and can smooth out many of the bumps in the China manufacturing highway.
ITI Helps Lower Your MOQ with China Manufacturers
Understanding MOQ is an important part of successfully manufacturing a product overseas. By strategically applying these and other strategies American companies can reduce overhead and increase profit margins.
Since 1974 ITI has managed the China manufacturing process for a wide variety of products and industries. MOQ is only one of the many details to be taken into consideration when manufacturing in Asia.
ITI is the premier OEM contract manufacturer that has been helping American companies reduce their cost of manufactured goods while guaranteeing no manufacturing defects.