Excitement abounds: there is demand for your new product. Now comes the really hard part - the product needs to be made. Be aware that you will be entering perhaps the most challenging and risky part of developing and growing your business.
Product sourcing (the first steps in the supply chain management) is getting your new product produced, packaged, and market-ready.
It is the practice of developing and buying your products from either domestic or international producers. You will be investing your money in advance for finished products to be delivered on time to your specifications, working with an entity with which you may have no experience.
Unless you’re prepared to produce your new products in-house, you must find a manufacturing “partner” capable of producing your product or product:
- At a desired quality level
- To your specifications/on time
- Packaged and packed to your specifications
- Meeting legal, safety, and industry quality standards
- Able and willing to communicate daily
- Willing to assume responsibility should they not live up to the terms of a contract
- Competitively priced
Ideally, you or a trusted colleague’s skill set includes extensive experience in almost all facets of supply chain management, including product development, production, and importing (if you’re sourcing internationally), preferably in your product category or industry.
Should you lack this skill and experience, the next viable alternative is to hire an employee or contract a buying agent whom you can trust implicitly for both expertise and integrity. To act otherwise, including hiring an independent buying agent, will be putting yourself in harm’s way. One mistake in the process and all of your work may go for naught, and worse, may put you out of business.
The steps outlined below are the product of hard-won experience and should be meticulously supervised and coordinated.
Develop a time and action calendar that must be rigorously followed and enforced.
Find a factory that meets quality and required legal and safety standards and also has a record of on-time delivery, accepts responsibility for their mistakes, and is easy to communicate with. Be sure to check references thoroughly.
Source the components, including materials, fabrics, packaging, hang tags, and labels. The ideal scenario is to have the factory handle all these tasks, even if you pay a premium. Proprietary interest should be negotiated with the factory for all components. (If they’re sourced separately, you will have the additional responsibility for supervising and approving the production for all the components, as well as for the logistics of shipping them to the factory.)
Develop a quality assurance process and schedule where you must sign off on all components for quality, color, and any other features.
Develop a sampling process and schedule where you approve proto-samples, pre-production, and production samples.
Once production is completed, contract a professional lab (e.g. www.consumertesting.com, www.sgs.com, www.bureauveritas.com) to lab test final production. Then, schedule transportation to your warehouse. If production is overseas, you or your employee/agent must understand how to move your order from port of export, arrange for transport to a U.S. port of entry, arrange for customs clearance and arrange to move the order to a designated warehouse. (These post-production steps may call for another set of import-export skills.)
The importance of attention to detail and due diligence in handling these various processes is underscored by three recent examples:
- October 31, 2015 - Health officials in Washington and Oregon announced that an outbreak of E. coli infections may be linked to food served at Chipotle restaurants in Washington and Oregon.
- Jan 23, 2017 - Samsung Electronics said irregularly-sized batteries in its premium Galaxy Note 7 phones caused the devices to catch fire.
- April 18, 2018 - The CDC reported that 53 people from 16 states were infected by E.coli in romaine lettuce.
Developing and selling a new product is not the end of the process. It is only the beginning. Your ability to properly manage the sourcing process may determine whether your business will thrive, survive or die.
Burt is a a volunteer counselor with the New York City chapter of SCORE, is also a principal and founder of a global sourcing, marketing, and consulting agency. He has also written commentaries on improving higher education for the Washington Examiner and the John William Pope Center.
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