Posts Tagged ‘manufacturing’

The High Cost of Low Price Promotional Products

February 8th, 2011

If there’s a more ubiquitous buzzword than branding, we don’t know it. There’s a good reason for this: Customers know you through your promotional products.

Visibility is a key component of a brand. But what about when a brand is being represented on the glasses at a bar in Austin, or the backpacks at a baseball game in Boston? Brand integrity hinges not just on exposure, but also on quality and consistency.

You can’t be everywhere your brand is, nor should you be. What can you do? You can take steps to ensure that your company’s brand integrity is both protected and enhanced by each impression from Boston to Austin — and everywhere in between.

Simply put, best price does not always equate to best choice. Here are some drawbacks of cut-rate deals when it comes to promotional products:

Quality Issues

Poor design. Cheap construction. Ineffective placement. Promotional products with any of those drawbacks have less staying power and therefore are less visible. Instead of a positive impression, you may create a negative impression, and those have notorious staying power.

On the production side, cut-rate equates to materials substitution, assembly shortcuts, and production delays. Profitability is a concern for everyone – including the factories. Increases in materials and labor continue to drive up cost and negatively impact margin. Something has to give in the equation. Quality at some level is sacrificed.

Production Issues

The reality is that manufacturing is based on a repeatable process. Substitution or short-cuts outside of the normal process can create a variety of issues. These include things like skipping quality control steps, use of untried and proven materials or delays and errors in retraining the line.

The road to hell is paved with the best of intentions. This old adage proves itself true when it comes to cutting price to the bone. Attempting to get a “deal” can lead to the worst of outcomes when price is king. Watch your assets. Protect yourself and your brand’s bottom-line. In the end, if your brand is represented on an inferior product, it doesn’t matter if you scored a cheap deal. You will end up holding the bill for damages which is far greater than what you may have saved up front.

Global Supply Chain Woes: Navigating Today’s Challenges

September 9th, 2010

asian-sourcing

Hiccups in the global supply chain have a wide reaching effect on the promotional products industry. Both domestic and direct import programs who source overseas will have to navigate a new series of challenges.

The global recession has also greatly affected our manufacturing partners in Asia. Asia is responsible for the manufacture of approximately 95% of ad specialty products. The net effect impacts price and deliverability. What are the issues and how do we proactively manage them?

The Issues

Inventory Shortages – In order to survive the recession, suppliers took a leaner inventory position. Subsequently, Asian manufacturers also took a leaner position in raw materials. Take cotton for example. There is now a worldwide shortage. The difficulty in obtaining yarns is causing production delays and increased material costs.

Fewer Factories – The global recession and subsequent lack of demand has resulted in a winnowing of production facilities. This may not have been obvious within the recent climate of curtailed need, but it is becoming increasingly evident as levels return to normal that there are fewer options out there.

Increased Cost of Labor – Manufacturing in Asia is simply becoming more expensive. Human rights issues have put pressure on governments to ensure better working conditions. Workers are beginning to organize and demand better wages and benefits. Populations are aging and younger workers are looking for higher status positions creating a labor shortage.

Lack of Container Space – The recession also hit shippers hard. With vessels still in dry-dock, it will take time for them to ramp back up. Upwards of 120 days on the water (if you can get your product on a vessel) is the new norm. The industry was previously at about 70-80 days.

Chinese New Year – It happens every year. The double whammy effect of Chinese New Year shuts down and causes major headaches for suppliers and Chinese manufacturing facilities alike.  The subsequent game of production catch up can be equally daunting. We have listed the schedule below for your review. The best way to avoid issues: plan ahead.

Proactive Management

Plan Ahead! – Your best protection against these issues is to give your supplier as much time as possible to position an order for success. End to end production will take longer. Allow enough time, particularly on the shipping side, to make in hands dates. A good vendor will tell you the reality of the situation not what you want to hear.

Expect Price Increases – There is a tremendous amount of pressure on price today. Between increases in raw material, labor, and shipping costs, product cost will rise. Some of this will inevitably be passed on. A good vendor will be solution focused and help you look for options or alternatives.

Lots of Communication on Both Sides – It is very important to stay abreast of fluctuations in the process. Make sure you are receiving good communication from your vendor regarding the status of your order. With good upfront planning, quality production art the factory can work with, and the luxury of additional time, vendors and clients can navigate current industry realities.