Factory Visit for Your Private Label Product 

An often underrated, misunderstood and underutilised role of the entrepreneur is the site visit. Seen by some as a waste of time, the site visit has become a low priority or something only to be done in dire situations. In reality, the site visit is an essential tool of assessing your partner. Given the turbulent nature of international manufacturing, savvy marketers and misrepresentation, the site visit is the primary tool for seeing the reality of a supplier’s operation.

Websites, information requests and email correspondence are all subject to bias and economies of truth because they’re part of the suppliers’ sales pitch as much as anything. 

The supplier is generally accustomed to their segment of the process and sometimes doesn’t see the bigger picture. Things that we take for granted can be overlooked by a supplier who’s disconnected from the consumer opinion. There’s an old expression that to a hammer, everything looks like a nail. Over time, I’ve seen that many suppliers are so close to their goods that they see their job in terms of process flow, raw materials, their expenses, and perhaps dealing overly meticulous buyers (ie:us). When you have thousands or millions of products movinging through your operation daily or weekly, it’s easy to overlook the perspective of the person who will only see one.

That experience of the person who will see one (the end user) is one of the things we bring to the table when we visit a supplier. While small creases, blemishes, pits, tears, and smudges might not be the end of the world to them, it should be to you because it will be to your customer. In the example of these cast iron appliances from a factory in China, the differences that determine the appropriate level of market-selling come down to ergonomics, and finishing -  something the supplier may not understand but you as the savvy entrepreneur does. They don’t know your market or how you’re positioning. It’s really up to you to see where the rough edges are so you can have the discussions that ensure the product delivered is suitable for your customer and your segment of the market. 

On a recent site visit for a high-end beauty product producer of mine, I noticed the packaging process was creating a failure rate and wanted to see their process. Upon viewing, I noticed certain packaging sizing issues and hasty assembly was causing the issue I had encountered with my samples. I got this from sitting and watching their assembly line workers for 10 minutes to uncover a couple things:

Obviously there are quotas but how much are they rushing to process the units?

Are the workers taking a second to check their work?

Are they talking to each other?

Can the process be changed for the better?

Do they look happy enough in their role?

On this visit, I also noticed that from inspection of the finalized goods on the pallets that a number of the products were bent or otherwise imperfect. When going through the products, the sales representative didn’t understand why I was being so meticulous about the issue of folded corners and small tears. I explained that our market segment was top tier and the customers in western countries wouldn’t accept the products as being ok. A larger conversation was later had with the owner and I learned that much of the process would be automated within the next 6 weeks and human error would be reduced. I was happy to hear about the assembly line automation and so now I know to keep that information in mind when I continue to track my failure rate. This conversation also led to another step in the process where workers would feel each package externally to detect failure while bundling product.

The Quality Assurance (QA) process is so important because all of these things play out and have an impact on the end result.  The quality of your product either sets you up for hassle-free operations later, or it means you’ll be answering requests, sending refunds, replacing damaged products and losing customers downstream. The negative outcome here is so important to avoid because it’s multi-faceted and costs time, money, and perception of your brand. It’s important to remember that there is a multiplying effect of positives and negatives as things move downstream.

In terms of the operations flow, the timing of your visit is an important factor as well. Of course it’d be useful to stop in every two weeks to check on progress but that’s not often possible. You must select the time frame depending on which stage of the process you find most difficult or likely to create problems for your company. For some suppliers, it’s important to visit earlier in the process because they’re making significant changes to a design for you and you need to make sure it’ll get of the ground the right way. For other suppliers, you may be rebranding an existing product they make so the time to visit should really be focused on the packaging and shipping phase. It’s up to you to determine the right window of time to peek through.

When considering investing a significant amount of your time and money developing an OEM or private label product, the site visit becomes additionally important for the contextual information you can get about the supplier. For example, spending some time with the supplier during a visit (site tour, lunch, drive from the airport, etc) allows you to learn more about the regional producers and other factories in the area. In the site visit in the video, I learned that segments of the most famous cast iron makers operate in the same region of China that I recently visited. These other brands spend a fair amount of time broadcasting that they’re made in their “home” countries but learning that they’re outsourcing provides some useful insight that isn't obvious from their branding.  It was eye-opening to say the least and it allowed me to get some more information about competitors and the market.

Assessment of facilities, organization, worker attitude/conditions, state of production machinery, operations flow, and state of their inventory all give you valuable information about what to expect of the relationship. Also, it gives you some ideas in terms of the true size of their operation, the age of the company, and how healthy they are. If they’re sitting on a large amount of aging and disorganized inventory it means they’re not running a lean and healthy operation with consistent customer demand and product moving through the system.

All of this information comes in handy when it comes to negotiating price and determining if, when and how you can ask for things like ramp ups in production, changes in design, use of different materials, or special consideration when it comes to packaging and shipping. Each piece of information gives you a lever that you can decide when to pull.

Site visits can show you the size of the operation in terms of the number of products they create. Do they have any kind of research and development or design departments? Is their product family diverse or are they invested on a small handful of designs? Are they subcontracting some of their operations out to other suppliers or is everything in-house? These are important questions because they’re additional variables that must be controlled and are subject to failure. 

For me, one of the biggest things I look for is the feeling of the supplier’s longevity. Is the company healthy or moving in the right direction? Does it feel like the owners, managers and employees care about the operation? If the owner feels like a venture capitalist playing a hand of cards and is likely to walk away or cash out, you might consider seeing who else makes your products. If the company isn’t working on building, growing or improving, you might also want to walk away. It’s ok to get in on the ground floor when things are a little less secure (I’ve done this with a supplier and been repaid with exclusive contract terms). It is important though to feel like the people are moving toward something and are motivated to do so. The goal is to move toward a long term and healthy partnership and so picking the right partner is important. 

So much of what we do as eCommerce entrepreneurs is to create value through experience. Everything from the website, to marketing content, packaging, product, and customer service are all about delivering on a promise of positive experience. People buy things that make them feel a certain way and we work hard to make sure the seams match and things do what they’re supposed to do. We’re only as strong as the weakest link in our chain and we can’t permit our supplier to be that weakest link. If we’re to first assess the alignment of an organization to ours, and then grow as partners, we have to familiarize ourselves with the true conditions of our supplier’s operation. Site visits give us the opportunities to drive valuable investment and avoid problems but they also begin the process of building a favorable and symbiotic relationship which pays huge dividends for us over time.