Fashion Production: How to Succeed in Negotiations With Manufacturing Factories
Bringing the product you have been working on from the initial sketch to life is an exciting journey to walk through, but once you have given your approval to your final samples and reached out to different manufacturing companies, how do you exactly proceed in order to get your first production run?
One aspect of fashion production planning which many small and medium-sized design companies may find themselves under-prepared for is factory negotiations. Being prepared, and knowing what your goals are for your finished product line will help you to stay focused and get the best possible outcome when negotiating with manufacturing factories. Before you step into the process, make sure that you have a few of these basics written down.
1. Know the Factory's Guidelines & Background
You know your product, and you know how you want it to look and feel. You need to make sure that the factory which you choose is best suited to produce the product you have envisioned; slow production speeds or low-quality workmanship can result in an unsatisfactory designer-manufacturer relationship. When you begin your negotiations, make sure you keep the following questions in mind:
What are the products and brands that they produce? Knowing what they already make will let you know if they have the experience producing the quality products you need.
How do they handle minimum orders? If you want to start with a small run, and they require a minimum of 1000 pieces, does this include variations on colors or sizes, or is this a per-variation minimum order? There is a vast difference between 1000 pieces of varying sizes and colors, and 1000 pieces for each size or color.
Are they equipped to scale up production? When your business grows, and order numbers increase, will your factory be able to handle orders twice as large as your initial expectations? Ten times as large?
Once you are aware of the factory's standards, both in terms of how quickly they can produce your order, and at what level of quality, you should negotiate terms which both parties agree upon to maintain the time and quality standards which you expect for your product line. If by any reason those standards are not met during the process, you should expect compensation through damage liquidation. Securing this compensation may be difficult, but important to protect your company from loss due to the manufacturer's fault.
2. Understand Pricing
As a small or medium-sized fashion design business, it is crucially important to negotiate good terms for production costs. However, it is just as important to not try to drive costs down as low as possible. A willingness to pay slightly above the market rate (as little as 2-5% over) when starting out small will give you leverage you would otherwise lack to insure that the factory produces your product in a timely manner. It will also give you a place to bargain down from when orders increase, to secure the best rate at greater volumes of product.
When establishing a new business relationship with a factory, your manufacturer will expect you to pay a percentage of the costs of production before beginning, with the remainder to be paid upon shipment. Be wary of any future factory partner willing to offer a line of credit or delay payment to a later date to a new customer. It is your responsibility to have funds ready and available before you place your first order.
3. Maintain Communication
It is vital that you keep good records of all communications which you have with your manufacturer. At a minimum, on a weekly basis you should be in contact with your factory to discuss problems with production, plans for the future, and other issues that may arise and require your attention. Your manufacturer may use online project management tools. Gaining access to these tools will help you become aware of problems as they arise and help you to resolve them.
4. In Summary
If you can keep these three issues in mind -- Knowing the factory's standards and holding them to your expectations, understanding your pricing and need for capital, and maintaining clear and open lines of communication -- the relationship with your manufacturer can be productive and fruitful for both parties.