Sourcing is perhaps among the most exciting parts of the product development lifecycle. The first step is to picture a new design in the mind, then create prototypes, and finally, the product is ready to be manufactured.

However, according to majority of companies that create products, sourcing and deciding on a manufacturer can lead to the success or failure of a product. Finding a compromise between deciding on a factory to manufacture a quality product and managing logistics – like timelines, shipping and minimum order quantities – is the challenge usually encountered in developing new products. It becomes even more difficult in today’s worldwide economy to identify many factories to choose from.

The steps that need to be taken in identifying manufacturers are as follows:

How To Identify The Right Manufacturers to Work With

As a start, identify a number of factories that a business can learn more about. It would help to get referrals. A business can contact the companies with similar products and inquire about the manufacturer they use. This way, the business can discover more about this company from the outlook of someone in the same position.

At this point, a business should identify the factories that could meet their requirements and make a shortlist. When identifying factories that they will investigate further, they should ask the following questions:

Do they like a domestic or overseas manufacturer?

There are important things to consider in choosing between a domestic and overseas manufacturer. There are advantages and disadvantages to each, and it also depends on the product they plan to manufacture. They should weigh the cost, quality and speed. Most of all, they should think about their needs. Products that need to be assembled will be cheaper abroad, since they have lower labor costs. However, big parts that occupy much space in a crate will be cheaper locally. Also, shipping and duties need to be considered as well.

Do they like to work directly with the factory, or would rather work with a broker/agent that is a factory representative in the US?

The answer really depends on their needs. When they work directly with the factory, it would cost less, and they may be more involved. When they work with a broker/agent, though they will be less involved, they will be able to work through an agent whose relationship with the factory is already established. Everything depends on what is best for their situation.

Can the type of manufacturing they need be managed by the factory?

It is obvious that businesses have to be specific in identifying the manufacturer they need. For example, a factory that is working with electronics does not necessarily mean that they have the capacity to manufacture all kinds of electronic products, since there is a vast assortment of requirements involved. So, businesses should choose a manufacturer that best meets their needs.