Off-Shore versus On-Shore Manufacturing

At Sample Room, there are many questions that we are often asked. One of those is ‘Where is the best place to have my designs manufactured?’

Whether you choose off-shore or on-shore, remember that you are creating a partnership. They are considering you, just as you are considering them.

 

We don’t mind answering this question however many times it is asked of us because our job is to support you. But there is not one answer that fits all designers, all products, and all fabrics. Even if there are a number of designers who are creating similar products, there will still be more than one answer to this question. It comes down to many things, one of which is cost. How much are you prepared to pay for manufacturing, and how much can you increase your price point to cover this important part of the process?

Firstly, no matter if you decide to go on or off-shore, you need to ask the right set of questions.

These include:

Do you work with small companies?
What is your limit on production runs?
Do you specialise in certain fabrics?
How do you handle production flaws?
What are your payment terms?

If you decide to manufacture off-shore, be prepared to travel there as often as this builds trust and forms the base of a good relationship between you and your supplier. It also gives you a chance to see the factory and know the manufacturing capabilities, as well as the conditions. Be prepared for language and cultural barriers and understand that this is an area from where most mistakes germinate. Most factories have a specific person who speaks English and therefore the conduit to a perfect design. But accept that there might still be mistakes. Do your best to work within the confines of these barriers and be patient. Also, keep in mind that some countries are better equipped for manufacturing certain garments. For example, Bali is a good option for manufacturing swimwear. India manufactures excellent silks and natural fibres, and Fiji is great for sportswear and team uniforms.

 

Some things to keep in mind when you are weighing up offshore production. You need to factor in all of these costs. You will no doubt be looking at the very attractive low manufacturing cost but the extra costs need to be included —

Development costs to get a sample right (or at least the cost of freight back and forth which is approx. 8 x $100)

Freight, import duty and GST (unknown until it is too late),

At least one (1) visit to the factory (flights, accommodation, a week off work).

There is also hiring a QC company to check your production and of course, there is faulty stock. I was told recently that some companies factor in 30% loss straight away. That means they only expect to sell 70% of what they paid for and the rest goes on sale or into landfill!

Not to mention the hours of communication needed to complete the task.

You also need to factor in the quantity you need to order. You need to be thinking of 300-500 pcs per style. To put this into context, new brands tend to sell 40-60 pcs of each style/colour each season in the first couple of years.

 

If you choose on-shore manufacturing, the cost of this process may be greater, but you are likely to be able to stick with smaller production runs. We recommend starting with small production runs anyway, 20-60, which equates to 5-15 in each size. This may not sound a lot, but it’s more attractive to order additional stock than to have a sale where you are trying to get rid of 250 shirts. Communication will be infinitely easier and if you choose the right manufacturer, they can save you from making some costly mistakes.

Obviously, situations like visiting the factory is less expensive and much simpler, but do keep in mind to be professional and make an appointment. Mistakes and disasters can happen just as easily with on-shore manufacturers. Businesses, unfortunately, can go bankrupt, even ones which have previously enjoyed a stellar reputation. Trust your instincts – often you will feel it, not in a tangible sense, but you know there is something awry. Back yourself and if it feels wrong, then don’t follow through with it.

Whether you choose off-shore or on-shore, remember that you are creating a partnership. They are considering you, just as you are considering them. Present yourself and your brand professionally and well. This will show that you are here for the long haul, not a fly-by-nighter.

I am not against offshore manufacturing, in fact, they are perfect when you reach a certain size and qty. What I do know is, that you need to work with different people at different times as your business grows. I believe the tipping point for cost-effective manufacturing overseas is 20 styles and 1000 pcs of each. Anything less than this and the costs and hassle just does not add up.

 

I do believe in always developing your pattern and sample locally. Manufacturers hate development and will absolutely love you for giving them all the information they need to make the bulk production, no matter how big your business grows.

Would you like to know more? Sample Room is here to help you. Remember to check our website for webinars and information sessions. If you are part of our Fashion Label Launchpad Program, remember to keep in contact with us. Remember, you are not alone in this.