One concern many small buyers have in China has to do with the minimum order quantity imposed by manufacturers. It is actually the barrier that keeps many retailers working with importers/wholesalers. But some smart importers have figured out ways to decrease these minimum quantities.
The Imports Oriental blog wrote two posts about this issue in the context of the garment industry, but they are applicable to many other custom-made products.
1. Material supplier
The key is to understand the reasons behind a minimum order quantity imposed by the supplier.
Usually, there is a solid reason. For example, it is imposed by a material supplier. This pops up all the time for garments because controlling the color is difficult when dying a small quantity of the fabric. Or sometimes a small metal accessory is out of stock and its manufacturer needs an order of at least 10,000 pieces to launch production.
In these cases, the buyer can use the required amount of that material/accessory across several products. Some of my clients use the same fabric on two lingerie sets, a cami top, a chemise, some suspenders, and even eye covers.
Another solution is to buy some stock fabric, but the customer needs to be quite flexible in terms of designs…
2. Internal requirement
In other cases, the minimum order quantity is an internal organization issue. If the buyer is not in a hurry, production can be spread over a longer period:
It is easier for your supplier to fill a few temporary positions lasting two months than find twenty people willing to work full time for only two weeks.
On the other hand, some factories simply don’t want small orders. They don’t want to focus their attention on very small quantities, at the expense of their main customers’ orders. Many buyers are tempted to pretend that they will increase quantities over time. But suppliers are often suspicious:
Be careful promising that you will place big orders after your first trial order. Every factory has heard this story many times. It is not new. Be upfront with your plans, but don’t be surprised if they don’t take your future promise of big orders very seriously.
3. Manufacturing efficiency
There is one more reason why factories ask for minimum order quantities that are not justified by any external constraint. Chinese factories only look at local efficiencies, and it leads them to wrong conclusions. In their mind, large orders that can be processed in big batches drive their unit costs down by 10 to 30%. So they become literally obsessed with large orders.
4. Quality risks
In some cases, it is harder to control quality on a small quantity. Especially when complex processes (e.g. dyeing & finishing fabrics) are involved.
>> Related e-book: Controlling the Costs of Quality
This can be quite disheartening for importers. There is nothing to do about it… Except maybe looking for other, smaller manufacturers!