A Common Scenario
Company ‘A’ finds a product that a China factory manufactures, not necessarily a custom product, but one that’s fairly new. The company also notes the possibility of selling the product to a particular industry, or to current customers. They check it out, and sure enough, it’s a useful product and there’s a market for it. Therefore, Company ‘A’ begins to sell this factory standard product and package it in their own unique packaging. They use a custom product sticker with their company name and logo on it. Perhaps they may also give the product its own unique name. Company ‘A’ also prints the standard instructions with their logo, contact information, and unique product name on the box.
Over time, sales remain good and life is good. Furthermore, Company ‘A’ gets great markup because they’re buying the product at an extremely low price. However, they may not realize that this very low price is due to the China factory running very large production. The quantity that the Chinese manufacturer produces is far greater than what Company ‘A’ could ever sell. Yet, because this product is “standard’ or “off-the-shelf”, and not a custom product, they can take the small quantity needed. And consequently, they can make a large profit. Therefore, the customized packaging, sticker, and custom printed instructions are minor costs.
The issue that often arises in this scenario is when Company ‘A’ has to differentiate their product from other companies selling this product for less. Because this product is a commodity, the more companies that buy and sell it, the lower the selling price becomes.
Why Industries Change
Another scenario arises when the industry that Company ‘A’ is selling into changes. For instance, the industry changes and eventually the product lacks a feature that would keep it current and desirable. As a result, Company ‘A’ contacts the China factory and asks for modifications to that standard product. Company ‘A’ doesn’t understand why the China factory “doesn’t understand the modification” they’re requesting. Or also, why they “do not respond” to their requests. Soon, Company ‘A’ begins to realize the difference between a “factory standard” product and a custom product.
There are a great many scenarios as to why a China factory may not be responsive to a company’s request for modification. The most common and likely reason is a China factory manufacturing a standard product knows how to manufacture that product very well, and they aren’t willing to change. They are not interested in re-training their workers, modifying their manufacturing procedures, or changing their suppliers. Another related reason may be that the factory is accustomed to running very large quantities of products (“mass production”) for various companies, and it wouldn’t be feasible to do smaller production runs for any one particular customer.
A third and real-world issue is that some US companies have no (or limited) engineering and/or prototyping expertise, or have no contacts that can provide those services. Therefore, they are dependent on the China factory for any changes, modifications, and enhancements to that product.
Company ‘B’ sees an opportunity to sell a particular product to a certain industry. They do their research and learn they have what they think is a winner. They document engineering drawings, BOM, and other necessary details, and make a prototype. Company ‘B’ also tests it and perfects it. Then they contract with a full-service offshore contact manufacturer like ITI Manufacturing, to have it produced by a reliable China factory uniquely qualified to manufacture that custom product to their exacting specification.
With ITI Manufacturing’s “no manufacturing defects” guarantee, Company ‘B’ has the assurance that every shipment will match their approval sample. They can also rest assured that when the time comes to change/improve the product to keep it viable in the marketplace, their ideas and documented modifications remain. In fact, they’ll see that ITI will faithfully communicate, sample, and ensure production with the same no manufacturing defects guarantee.
Custom product testing and inspection, seamless integration with freight forwarding companies, and international supply chain management services, are all part of what ITI Manufacturing brings to the table for our customers – with competitive landed pricing. We’ve been in this business for 43 years, and we know how to successfully do this for you!
Contact ITI Manufacturing
When it comes to custom manufacturing, it’s not as scary as some may presume. Learn how ITI Manufacturing can help you. When choosing a manufacturing partner, it’s important to work with a provider that can change to meet your company’s requirements, rather than a manufacturer that expects you to change your requirements to meet an already established standard. Working through our professional team at ITI Manufacturing, you partner with Chinese manufacturers that produce to your specifications, not theirs. To connect with ITI Manufacturing, simply call (281) 242-7030.