What kind of Chinese factories should you work with?
First, a couple of rules to keep in mind:
- If you work with a supplier that is too large relative to your orders (e.g. you would occupy 1% of their annual capacity), you will be quoted high prices and given poor service.
- If you work with a small supplier that cannot produce the quantities you order, they will be forced to subcontract production and you will probably be in for a disaster.
My general advice would be as follows:
- If your orders are very small, you might need to work with a trading company that will place your orders in a level 1 factory and follow production.
- If your orders are large enough to work directly with a manufacturer, but not big enough to be interesting to big factories, go for level 2.
- If your order are considered large and even big companies actively fight for your business, go for level 3.
- If you are in a very quality-sensitive industry and you cannot afford even 1% of defects, spend time and search for level 4 (but you might not find any in your vertical).
What do you think?
Level 1: the small factory whose staff don’t speak English;
Level 2: the semi-organized factory that got out of level 1 but that is still struggling to keep quality & timing under control;
Level 3: the factory that made big efforts to get organized, with the objective of pleasing large customers;
Level 4: that rare bird that applies lean manufacturing, and that avoids level 3’s rigidity.
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