First of all its important to understand that a “factory” doesn’t do it all. People always talk about “the factory” thinking that everything it’s made there.

 

This is just fiction, do the so-called “factory” it’s just one of many “factory’s” involved on the creation of one single product and they just assemble the parts together as final process. Usually this is one of the major failures for entrepreneurs and it’s to don’t understand that a single unit “factory” it’s not enough: if you want a successful product you need to check all the supply chain, from the ones who make the packing, the labels, the boxes, the raw materials and so on: We need to understand that a single product has more than 20,40,50 even 100 pieces, so you can imagine the “logistic” operation that this requires to put all that together on time.

 

Factory’s are not build for process engineering, communication and the people who work inside has limited knowledge on this fields, so this should never be underestimated. 

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Another big myth is that you will get cheaper prices if you go direct to final “factory”. Let me explain you how it’s works. 

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Usually, agents and traders manage a big portfolio of clients, putting all together as a “package” to reach a big volume to face a supplier. When we talk about volume it’s not 1,000 or 5,000, not event 10,000 Units/ it’s above 50,000 units of the same product/category and will be the only way to improve pricing.

 

As well, you need to consider that there’s is a thing that it’s called “Position” on the supplier side and it’s “how big you are”. If your small, you will face a lot of inside problems, as delivery times, quality and service requirements won’t be done. Suppliers don’t have infinite production ability and when they need to reach a delivery date for a big client, they will simply put you out of the calendar, prioritizing alway the bigger accounts.

 

Inside suppliers who produce smaller elements of a product will only take “local currency” so if you can’t proceed locally it will be hard to accomplish. 

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Another advantage to working with and agents besides fluent communication, I will say it’s the “insurance” role that the agent play. If something happens to deal directly, the chances you will recover something it’s near to 0 if you are facing alone and directly a “factory”. Are you going to travel to Asia? Or anywhere your supplier will be ?. Agents are putting the money in advance on behalf of clients to the whole supply chain, so them more than anyone wants the project to be successful. 

 

In Resume, what it’s the biggest unit for your self ( since it’s your own project ) don’t reflect at all on the supply chain, so be aware of your size/project so you can know your real position and start from there. 

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