How should you communicate with a factory?

This article is part of my Manufacturing for a Kickstarter series.

After finding a factory and getting their contact info, you are now prepared to start up a dialogue.

When talking with a new factory for the first time:

1. Introduce yourself, your company’s background and perhaps your company’s ambitions (in relation to selling products). Keep your words simple, use short sentences and don’t make paragraphs too long.
2. Describe the types of products your company sells and, if impressive, the volume of products that you sell per year.
3. Describe the type of products you want this factory to manufacturer. You don’t need to go into details about the specs at this point unless instructed to. But you can attach compressed photos if you want.
4. If important to your requirements, tell the factory your payment terms and ask if they accept. Use professional incoterms like FCA, FOB, CIF, DDP, etc.
5. Ask the factory if they are interested in working together with you.
6. Ask who you should contact for further discussion and follow up.

Put your best foot forward and try to get a conversation going.

Not all factories will reply or be interested. That’s the difference between working with an agent and working with a factory.

If the factory replies favorably, a common second step is to ask the factory to quote a ballpark price for your product at different quantity ranges. This allows you to filter out factories that cannot meet your price needs so that you don’t inadvertently waste your time and the factory’s time. This also allows you to evaluate whether your product design is too expensive for your clientele.

This follow up should:

1. Ask the factory to quote a ballpark price for your product at different quantity ranges. Suggest the quantity ranges if you can, to save the factory’s time.
2. Tell the factory your payment terms and ask if they accept. Use professional incoterms like FCA, FOB, CIF, DDP, etc.
3. Include your product specs and any other information required to generate a quote.

Try to keep all your communication (from beginning to end) in written form or at least write recaps of what was spoken and email them to the factory.

If the factory’s price is outside your acceptable range you can let them know that it is, deflect to working on other products in the future and gracefully exit. Or you can give them your target price and ask the factory for suggestions on how to modify the product to achieve a lower price, including but limited to increasing the minimum order quantity, reducing the number of colors, reducing the number of materials, etc.

Some factories may cost more because they have more Quality Control processes going on which is factored into the labor cost, and not necessarily because they make a higher profit. Some factories are cheaper because they can save on transportation by being located close to raw materials and not necessarily because they’re skipping Quality Control.

Depending on your industry or your type of product, you may want to visit the factory to make sure they have the environment to manufacture your product. You will need to ask them to see if they allow it.

You’ll also want to visit the factory to make sure they are not scammers. If you cannot physically visit a factory, consider outsourcing this task to third-party inspection companies (or even a trusted friend in that country) that also offer a service to visit a factory and take pictures of the factory and review business licenses for a fee.

If you are satisfied with the factory, the next step is to discuss finer manufacturing points:

1. Does the factory need a deposit? Deposits range from 20 to 50%.
2. What is the factory’s bank account details? Try to get the factory to put a company chop on the sheet with the bank details to avoid scammers.
3. Does the factory accept “Letter of Credits” in lieu of deposits? (Most small factories do not.)
4. What are the quantity overages/shortages that are acceptable for each shipment?
5. Does the factory accept in-line inspection of goods at the factory floor? This is an inspection that occurs while the goods are being manufactured is performed at different stages of the manufacturing process.
6. Does the factory accept third party inspections of finished goods?
7. Where should finished goods be delivered? To your warehouse or to a trans-shipment company of your choosing?

If you are visiting the factory in person, you may choose to discuss these points in person. The added benefit is that you can see if they really understand or if they are just saying “yes” to everything.

In your communication with the factory and in all your reference materials and specs:

1. Try to use simple words, short sentences and clearly separate different topics into a separate paragraphs. This makes it easier for the reader to understand things without being deceived by uncommon grammar.
2. Leave room below or around your texts so that the factory can insert their own annotations in their own language if needed.
3. Avoid jargon words like “lavender pink” or “crimson red” because not all colors are universal across cultures. Use basic colors like “pink” and create a color code.
4. Try to make your spec as visual as possible with sketches, photographs and call-outs as these things cross cultural boundaries.
5. Try to word you questions so they can be answered with a “yes” or “no”.
6. It is better to be overly polite than neutral in some cultures.

Lastly, if you are meeting face to face and the factory asks you to join them for dinner or drinks, it may be wise to go! Some countries see dinner as a crucial bonding or face-giving event for both parties.