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Avoiding the Pitfalls of Overseas Product Development and Manufacturing

Aug 30, 2022 | General, Manufacturing in China

Manufacturing overseas is often one of the biggest challenges for companies; sourcing, design, development, contract negotiations, quality control, and delivery are just the beginning.

However, manufacturing overseas is not a new concept, nor does it have to be complex.

Snowballing over the past ten years, companies have strived to access industry experts and specialists overseas, achieve incredible time and cost savings, and have the opportunity to scale without the need to increase immediate workforces.

So, to ensure seamless product development and manufacturing (and we assure you there is such a thing), we’ve pulled together the pitfalls to avoid when manufacturing overseas.

Common Pitfalls

You don’t have a plan

A plan that includes vetting manufacturers, outlining how you will measure quality, maintain quality, manage conflict, etc.

From the very, very beginning, you need a plan. You must be specific in what you want to achieve and what this looks like, creating standards you can then communicate with everyone you work with.

You haven’t done your research

Are you taking a chance on an overseas manufacturer you don’t know?

Maybe you’ve not had time to vet them, check out their reviews, previous companies they’ve worked with, standards, work capacity, etc.

You must have confidence and assurance that you can trust the manufacturers you are working with. This is not just your product development at stake but also your time, reputation, and money.

But how do you validate them?

GHL has developed a points-based system to evaluate all suppliers, ensuring they are the right fit for you. We’ve designed this robust system from years of experience working with the right and sometimes wrong manufacturers.

Lack of communication

Communication can always prove tricky in business. However, we cannot emphasise how important it is to stay engaged with your manufacturers and suppliers.

You need to be responsive to questions and enquiries; remember to request updates at certain stages and carry out regular control checks. This ensures you are following your critical path.

In addition, don’t only communicate via email! Speaking to people verbally can help break down barriers, avoid confusion, and reduce the chances of potential misinterpretation. Also, in today’s digital world, don’t be afraid of messaging apps. Messaging apps are an excellent way to send a quick, convenient message or photos outlining a critical point.

You have an unclear technical package

Mismanaged manufacturing can cost you an exceptional amount of time, resources, and money.

An unclear product blueprint, i.e., your technical package, is a significant pitfall in overseas manufacturing.

Your technical package contains all vital information about your product and its specifications. This is essential to ensure that the design and build of your product are precisely how/what you need them to be.

Not checking your prototype comprehensively

We use prototyping to protect all parties in the development and manufacture of new products. It is the basis that allows you to carry out quality checks and ensure both parties understand the quality expectation of the product.

Quality is not a predetermined standard. What is right for you might not be correct for someone else. The best method to establish the correct standard for you is through sampling and approval.

This makes accessing samples and prototypes before jumping into full manufacturing essential.

You need to check these product samples thoroughly from the start as getting your technical package and samples right is vital to successful production.

Not carrying out appropriate quality checks

Quality checks must be carried out at various stages of production.

The most basic of these checks is a pre-shipment inspection. During this inspection, production will use your approved samples to check against the finished product, noting any variations in size, material, colour, and quality which can then be discussed before final payment is made to the manufacturer.

It is essential to get a product repaired or replaced before the final payment is made.  

However, a pre-shipment inspection is only as strong as your contract terms of purchase. Without the correct clauses in your contract, even if the inspection finds faulty goods outside your permitted tolerance, there might be no obligation from the factory to repair or replace the goods.

Misunderstanding intellectual property laws

It’s vital to consider patents and NDAs to protect you, your company, and the product. However, are you equipped and experienced in this field? Do you have the resources and time to deal with the minefield of paperwork and legislation?

Ideally, you want solid IP rights in place to stop people from stealing your unique ideas.

You’ve fragmented your development process

Are you working with so many different parties that your processes have become unmanageable?

There are companies (GHL) that have the skill and experience to manage the entire procurement process; streamlining processes that will make operations smooth and easy to manage.

You don’t know the costs

What does it cost to make your product AND get it to your warehouse? What are the incoterms of purchase? What does your unit cost include, design work, sampling, moulds, packaging, compliance testing, etc.?

You must be able to account for all key expenses and build these into your process. Knowing your costs upfront will allow you to price your products accurately.

The alternative is selling your product for a lower-than-expected margin and increasing the cost to your clients, or even selling the product at a loss.

Understanding and accounting for the key cost hurdles are vital to making the right product for the right market.

No contracts in place

It is vital, and we can’t stress this enough, that you sign a legally binding factory agreement.

If you fail to contract with your chosen suppliers, you can find yourself with no legal protection if something goes wrong. For example, if the factory uses different material to the one you have previously agreed upon, or they don’t deliver on the entire order quantity by the agreed timescales.

It is also good practice to discuss areas of importance before the order is placed.

For example, if your product is seasonal and on-time delivery is vital, you can add a late delivery clause to your contract.

Alternatively, if colour matching is essential, this can be highlighted explicitly in a contract, so each party is aware of the importance of this particular area.

International procurement solutions

Overseas product development and manufacturing can have many complex pieces to the puzzle; ensuring you reap the benefits and avoid the pitfalls, GHL is on hand to help.

Now you can access a diverse range of products and services, use innovative technology, shorten your timelines, reduce costs, and manufacture at scale.

With overseas teams, we carry out thorough research and checks on all factories, handle negotiations fairly, and provide businesses with time and cost savings.

We have years of experience from design to manufacture, working with a network of overseas manufacturers.

Let us take care of your supply chain, so you can focus on growing your business. Get in touch with our team today to discuss your requirements.

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