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Ever Think About
Manufacturing Overseas?
Entrepreneurs: Don't Try This At Home!
 By: Denise Mahnick, Owner 3 Sixty Direct
After nearly a year of design, development and
manufacturing research, Vince opened his first product shipment from an
overseas manufacturer. In that one defining moment his dream of a
best-selling home decorating product all but disintegrated.
The product did not meet his design specifications. The hole in the
center was too small, the dye used to color the pieces sloughed off at
the slightest touch. The parts were completely unusable. The cost to
return the shipment was beyond his budget, and the manufacturer beyond
the reach of U.S. legal channels. How could a simple colored plastic
piece with a hole drilled through the middle turn into such a financial
and emotional disaster?
Overseas manufacturing has become the norm, but there's nothing
"normal" about it in terms of locating and contracting with
reputable facilities, handling issues long-distance, or dealing with
international trade law compliance and logistics. This article
touches on only a few of the considerations involved in taking a product
from the drawing board onto store shelves.
Sadly, Vince and many others like him learned a tough lesson - no matter
how thorough you think you have been, overseas manufacturing is not a
do-it-yourself project.
The Four Challenges
Finding facilities to manufacture a product in the U.S. is difficult -
the industry continues to shrink in the face of global competition and
generally rates are three times that of its overseas counterparts.
Entrepreneurs and corporations alike see the economic logic of working
with overseas manufacturers, but are often caught in a web of challenges
that, if not handled properly from the beginning, land them in the same
global quicksand as Vince. Four of the major challenges are:
· Locating reputable
manufacturing facilities
· Quality and Inspection control
· Differing time zone,
languages, and business cultures
· Laws, regulations, and coding
for shipping and importing
Locating Reputable Manufacturing Facilities
We've all become accustomed to searching the internet for a particular
product or service, and have reasonable faith that we're dealing with
qualified people in our domestic purchases, whether it's from a local
store or one twelve states away. But, shopping for an overseas
manufacturer is different than locating the distributor of a particular
widget. In the years that my company - 3SixtyDirect - has been helping
entrepreneurs bring their product ideas to life and to market, we've
found wide variances in manufacturing capabilities among overseas
companies that purport to be comparable - variances in quality, ethical
practices, and prices. Fortunately, our research and experience has
allowed us to develop long-term relationships with the most reliable
product manufacturers in Asia, and given us insight into the barriers
entrepreneurs face.
When seeking out overseas manufacturers, make "Buyer Beware"
your mantra. Here in America manufacturers are required to meet certain
ethical standards, such as compliance with product safety, product
quality, and child or prison labor laws. But many foreign countries have
built their industrial bases on practices quite different than those in
this country, and knowing what those practices are could impact your
ability to bring your product into the U.S. once its been manufactured.
3SixtyDirect hires outside agencies to inspect any overseas manufacturing
facility we consider contracting with to ensure that their ethical and
practical policies, including their production and management abilities,
are in line with U.S. regulations and standard business practices.
Quality and Inspection Control
Once you are satisfied that your manufacturing choice is ethical and
qualified to produce the type of product you have developed, insist on
materials testing, pre-production and pre-shipment samples - and don't approve
full production until you are completely satisfied. 3SixtyDirect
requires that all materials be tested and approved before manufacturing
begins, and has established relationships with independent testing
laboratories throughout Asia for this purpose.
The last thing you want to learn is that your product is colored with
lead-based paints, or molded from a banned material. Vince's product
wasn't in danger of a massive recall and PR nightmare, but that too-small
hole discovered too late was his financial ruin.
Differing Time Zones, Languages, and Business Cultures
While the Internet and email have made it simple to interact with anyone
anywhere in the world anytime you want to, it can't guarantee the
effectiveness of the communication. We've all had the experience of
call center workers who "speak English" but don't understand
the nuances of our every-day language, and the difference it can make in
resolving or compounding our particular issue. What we trust as
standard business practice in Michigan, California or Oregon is not
necessarily the norm in Thailand, Sri Lanka or Taiwan.
Your understanding of the local language and culture can make or break
your deal, and have a huge impact on the quality - and even the
dimensions and materials - of your product. If you are not well versed in
the language and business culture of the overseas facility with which you
are contracting, consider working with an intermediary who understands
the nuances of both sides.
Laws, Regulations, and Coding for Importing
International Free Trade laws are modified frequently. Just as carbon
emission laws vary from one state to another, some products or materials
that are legal in one state may be banned or monitored in another. No
matter what foreign country you turn to for manufacturing, you will have
to work with customs brokers, adhere to U.S. customs protocols, pay
duties and custom entry fees, and manage the logistics of having your
product shipped to their final destination.
How your products are shipped - whether they come by boat or airplane,
and how many other countries they may travel through before they reach
you - has a huge impact on the cost and timing of your deliveries, but
there are many other factors involved. Customs coding, shipping methods
and even the port of entry choice is a confusing part of the process.
Make sure you or your representatives are well versed in the
options.
Beyond the Specifics
People like Vince tend to be visionaries - inventive people with the
drive and guts to step outside of the ordinary, see potential, and do
what it takes to give their vision reality. Without them, we wouldn't
have light bulbs, airplanes, air conditioning or computers. But the
nuts-and-bolts of taking a product from the drawing board to the mail-order
catalogue or big-box store is not a visionary, do-it-yourself
venture. We see the reality of that statement every day at
3SixtyDirect, and have developed a process that allows entrepreneurs to
generate more and better ideas, and leave the logistics and details to
us.
Entrepreneurs come to us with a product concept or rough sketches, and
ask for assistance or guidance in bringing their visions to reality. They
ask us to help determine and locate the most appropriate raw materials,
and find qualified, cost-efficient manufacturing facilities. We work with
them as consultants, making design suggestions, developing production
specifications and artist renderings, researching tooling costs and
manufacturing options, interacting with foreign agencies, and manage the
shipping process.
_________________________________________________________________________
Denise Mahnick is the owner of 3SixtyDirect, located in
Troy, Michigan. Denise is passionate about entrepreneurship, loves
the creation process and helping people bring their products into reality
- ultimately making the world a better place. She has 17 years
experience in marketing and promotions, and is a Certified Advertising
Specialist. In 2006, the Michigan Women's Business Council named Denise
and 3SixtyDirect the "Women Business Enterprise of the
Year." For more information, visit her website at: www.3sixtydirect.com.
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