Big Factory or Small Factory, Decisions Decisions!

detection-563805_960_720Many people want to work with big factories, simply because it seems the best and easiest way for them to get what they want done easily, and have it be the best possible quality. But is that really true?

It is true that big factories in China can appear more established, professional and seasoned than smaller factories. When you tour a big factory, they pull out all the stops to give you the best possible view of their facility. But for you, honestly, what is the most important thing in terms of getting your product to market in a timely, safe, and cost-effective manner? A beautiful factory, and big production lines?  Probably not. For many ordinary products, a small to medium factory will be your best choice for a number of reasons.

Firstly, price is often the most important thing for you to consider when placing an order. And it would seem logical that the bigger the factory, the cheaper the price. It seems right that big factories which produce bigger orders than small to medium factories, presumably can do that at a lower cost per unit. But in fact, this is not the case at all! Typically the price is actually more expensive. Why? The short explanation is that when factories are so big, they have to invest more into management salaries, and their price has to be increased accordingly. However, small and medium-sized factories are able to save that surplus management fee, passing the savings on to you, often providing the same quality product at a cheaper price.

About the quality though, are small and medium factories good at quality control?

You’ll be pleased to know, often the answer is a resounding yes! These smaller factories can indeed provide the same quality you’d expect from a big factory, because of the very fact that they are smaller.  The size of the factory has no bearing on the Quality Control it can provide. Please be assured there is no doubt that big factories have good policies and procedures where quality control is concerned. But think of this: when something happens, people can often get quicker and more direct attention at the smaller factories. Imagine there is an issue of slight color variance on a hairdryer you’re manufacturing. In a big factory, when QC finds a problem, they must report it to QC leader, then QC leader has to report to QC supervisor. Then QC supervisor often can’t make a decision without talking to the QC manager. But the QC manager has to wait until their regular quality meeting until they can discuss the issue with related managers. It’s like a Quality Control Carousel!  So the moral of this story is that some quality issues look small, but they can lead to major quality problems if they can’t be handled easily. And often the big factories can’t handle it very easily!

But at small and medium factories, because there aren’t all these management levels to get through, a QC manager (or someone else in authority) will immediately notice the issue and just take action. Often in no more than one day, the defective issue can be made known to the customer, and the customer’s feedback can be made known to the factory so much faster.

Another important point: big factories can’t be all that flexible on Minimum Order Quantity, like smaller factories can. For example, let’s say you want to manufacture a coffee maker… 1,000 units is typically acceptable for small and medium factories, whereas it has to be more like 3,000 at bigger factories.  When order quantity is below 3,000 it increases their management cost, and that cost gets passed off to you.

I have found from personal experience that people tend to receive better customer services at small to medium factories.  Once I worked on a project bringing 3,000 stainless steel kettles to market, using one of the bigger factories in China. Our lead time was quoted at 120 days. I tried my best to bargain with them, and finally I got it down to 90 days.  They actually told me in so many words that our order was very tiny to them, and 90 days was the best they could do for us. At a small or medium factory, 30-45 days is a totally normal and expected lead time.

I do feel it is important to note that big factories usually have advanced equipment, good R&D teams, and more. The do add value in many cases, and they do serve a definite purpose in certain product runs.

So my advice is this: If the products you’d like to manufacture are OEM (Original Equipment Manufacturer), or high technology products such as hard disks, televisions etc., then big factories are your definite choice.  If you just want to manufacture everyday products like shoes, clothes, small home appliances etc., then it’s probably wise to order from small-medium factories, especially when your order quantity is small!

Stuck? Confused? Message me and I’ll help you sort it!

About the Author
I am a former Amazonian, where I spent 3 years as a sourcing consultant. I have more than ten years of sourcing experience, both at Amazon and sourcing electrical home appliances. As an experienced sourcing consultant, I know how to help clients distinguish between a true factory and a pretender trading company - getting our clients the best possible pricing and long-term relationships with legitimate businesses rather than those who would take advantage of naive entrepreneurs, sadly often found on Alibaba.

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