Last week, I was working with a manufacturer to create a template for production agreements. It reminded me that we don’t discuss manufacturing enough on this blog, though product quality, costs of goods, and timely product delivery are essential components to a successful apparel brand. Below are some talking points that should prepare you as you shop manufacturing facilities, and create confidence in picking the right manufacturing partner. As with all Law On The Runway posts, please use this post as general information, not as legal advice. You should have a lawyer review your manufacturing agreements before you sign. To reach Law On The Runway with questions regarding this blog, please email Rachel@lawontherunway.com
Minimum Orders. What are the minimum order sizes that you need to make of each product style for the manufacturer to accept the order? Do they offer discounts for larger orders or repeat orders?
Raw Materials. How will the manufacturer receive the raw materials for your order? If you are coordinating the ordering and delivery of the materials, how far in advance will the manufacturer notify you of the need for more materials?
Creation & Edits of Prototypes or Samples. When working with a manufacturer, you’ll want to test out your designs by having the manufacturer make samples of the designs, including the grading process (adjusting the apparel design for body-type sizing). Discuss with the manufacturer how many prototypes are included in payment package and if there are extra costs for design changes, verses manufacturing process changes.
Timeline of Production As you plan out orders with third-party retailers, or as your plan cohesive seasonal lines to sell on your own, you’ll want to get the timing right with fulfilling orders and planning your marketing campaigns. Ask the manufacturer how early an order must be placed before manufacturing can begin, how long the manufacturing process will take, and opportunities for rush or urgent orders, should a particular style be extremely popular.
Quality Assurance Tests Review the types of quality assurance tests your products will go through before they are shipped. You may also want to agree on the quality assurance tests you’ll do after receiving the products, so that you can decide if they are to be accepted. To check out your options of quality assurance tests, please review this earlier blog post which gives examples of common tests, and how to create an acceptance level.
IP Ownership Sometimes, you and the manufacturer will begin a collaborative process, especially when it comes to altering sample or prototype designs. There will be a balance of interests in the ownership of the IP. The manufacturer tends to be concerned that they will put in the work of assisting you with the prototype design, and then you’ll take that design to another manufacturer to complete the order. As the brand owner, you will likely want ownership over your product’s designs. Discuss with the manufacturer how the relationship of the IP ownership or restrictions of use with operate. For example, you may request the IP ownership of the final designs, but agree that the manufacturer will have the exclusive right to produce that design, until your needs outgrow their manufacturing capabilities.
Payment Terms Manufacturers will typically ask for hourly rate payments of pre-production and production work. Pre-production will include the pattern creation, grading alterations, experiments with manufacturing procedures, and prototype quality assurance tests. Once you have decided the proper manufacturing procedures and finalized the patterns, you will move into the production phase. Production payment made based on the number of units, or on the time it takes to produce the products. Some facilities combine this into a hourly rate based on the number of units (often a cheaper hourly rate for a large order). May facilities request a two-part payment, one payment as a retainer or deposit for the pre-production, and a second payment of expected production costs, before the production begins.
Shipping Fees & Liability While the shipping aspect of the order may feel far away at the start of the process, it is crucial to consider what shipping services you’ll need for your order. Some manufacturers will offer complete order fulfillment, where they will package and tag the apparel for you, sending it straight to third-party retailers or customers. Others will only send the complete order to you. It is important to think about this in a long-term view. You may just been ordering enough for craft fairs or trade shows, but think about what you’ll need as your business grows. You’ll want consistency in the manufacturing, and its much easier to achieve this by having a long-term relationship with your manufacturer. Additionally, when planning shipping terms, you’ll need to decide the risk you are willing to take on missing or damaged packages. Discuss with the manufacturer who will retain ownership of the goods during the shipping, and who will take out insurance or hold the risk of the products being damaged or lost during the shipping. For more information on working with overseas manufacturers, take a look at this prior post. If you have questions or would like to get in touch, please email Rachel@lawontherunway.com