There is no doubt that if you want a business to survive that you must be constantly reflecting, revisiting and redefining your product base. Following the feedback of your customers and your competition, you can make the necessary adjustments to keep your business viable and profitable.
It is no different for a manufacturer. Quality manufacturers want to stay on the cutting edge. This is why they have research and development departments with top employees and state of the art equipment. After all, if a manufacturer cannot keep up with the demands of their customers, the manufacturer will suffer as well.
During improvement of research and development, it is common for some production costs to drop. Manufacturers can then pass these savings onto customers, who will in turn gain from the lower costs. The result is a positive cycle of improvement > cheaper costs > higher profits > more spending across the board.
This is why Sourcing Nova takes evaluating the technological research and development departments of any manufacturer as a core indicator of the overall manufacturer’s evaluation.
As a small to medium business, particularly if you are e-commerce, the concepts of industrial design, research, access to a proper lab and testing areas are not something you have access to nor care to invest in. This is why you provide Sourcing Nova’s purchasing agents detailed requirements and data on your products.
Our cooperating manufacturers can take your product design to manufacturer’s R&D. R&D reviews the prototype, determines feasibility within the parameters provided and often comes up with unforseen issues along with potential improvement ideas. The result is a solid win-win for you and the manufacturer as well as the competitive advantages on the supply chain. After all, technological innovations are the primary driving force behind success and failure of most product markets across the globe.
Ultimately, the technological capacities of the manufacturer effect every part of the supply chain from the raw materials to the customer. This is why Sourcing Nova uses a four point evaluation: patent numbers, product development speed, qualifications of the research and development team and investment in research and development.
As our team performs these investigations, we also are checking the certification of the technical capabilities of the manufacturer above and beyond manufacturing.
The four methods used to evaluate the technical capabilities of the manufacturer
1. The Research and Development capability
The Research and Development department, R&D, is the backbone of the supply chain innovation and the base of the manufacturer’s technical capabilities. There are three core areas:
- Basic research
- Applied research
- Experimental development
Sourcing Nova will also use these three activities as part of other evaluations of the manufacturer. Specifically, we are looking at:
- Collaborative development
- Technical support
- Technology advancement
- New product development capabilities
- Application capabilities
- Production Part Approval Process – PPAP
- Advanced Product Quality Planning – APQP
- Ratio of personnel
- Other elements related to R&D
Specific case study – Research and development of China’s wig industry
Within the wig market, advancement in synthetic hair continues to grow and find a stronger foothold in markets. The reason – more and more manufacturers are doing fundamental research into chemical fibers for wig manufacturing. In China, wig manufacturers are investing tens of millions of yuan into R&D for new hair fibers. This means there is a smaller and smaller gap between synthetic hair and keratin, natural hair fiber.
The pandemic and environmental protection policies mean that natural human hair is scarce for China’s wig manufacturing industry cluster. Hair from India and its temples is difficult to import into China, so there is a greater emphasis on synthetic hair. Looking at this from an applied research viewpoint, the better wig manufacturers invest heavily in world-class hair stylists for wig development.
One of the world’s leading hair stylists, Institut International de L’Éducation Raphael Perrier, works along side of the top Chinese wig manufacturers.
The wig research industry in China requires significant investment and as such, only larger manufacturers perform fundamental research into chemical fibers. The small to medium-sized manufacturers lack all of the necessary prerequisites for large scale research.
This applied research allows these manufacturers to reach into new and untouched target markets with suitable solutions for their target customer base.
2. Manufacturing technology evaluation
The technology in manufacturing is a direct reflection of the production system efficiency and adaptability for their product lines. It is the absolute support of manufacturing technology that flexibility is possible. Specifically, the evaluation of technology includes:
- Application of advanced technology
- Flexibility in production variety
- Detection and control of the production processes
- Maintenance and support capabilities of equipment
- Technical capabilities of production personnel
Specific case study – On staff or outsourced sampling engineers
Recognize that many small to medium-sized manufacturers do not have their own in-house sampling engineers – specially trained employees who can build product prototypes based on design drawings. Many of these sampling engineers, technically prototype engineers, can design prototypes based on text or oral descriptions only. Those manufacturers with in-house sampling engineers can return samples to a customer with relative speed. Those manufacturers who lack in-house sampling engineers outsource design to a third-party engineering group, increasing the return time as well as other outside factors.
Your plan is to be a retailer and not design your products. CAD and production prototypes are well beyond your abilities. What you have is a list of ideas and perhaps a sketch of what you envision your products to be and look like. The sample engineers in our partner manufacturers have decades of sample production experience. They have extensive experience in production details and can easily produce samples to your specific standards and descriptions.
If your product is full of improvements in function and appearance, it is vital for the manufacturer to have sampling engineers on staff for the the best content assessment.
3. Information technology assessment
Today’s supply chain, including the internal management of the manufacturer, means significant information processing, exchange and dissemination. When possible, your Sourcing Nova purchasing agent reviews the information technology capabilities of the manufacturer. They will make sure there is effective information transmission and exchange. This assessment will include:
- Information integration
- Information processing capability
- Information exchange speed
- Management information systems
- Compatibility of information systems
- And other, related elements of information transmissal
Understand that many of China’s factories do not have an effective information system or lack the resources to establish one.
The majority of manufacturers will provide basic formats to convey information. Typically these include: PDF, Powerpoint or Excel format files. A scarce number of manufacturers will have websites with only the absolute basic information – contact information, address, introduction of the manufacturer and a few product pictures. Content marketing is not a priority for many Chinese manufacturers. Using a website as a metric for a manufacturer’s specific strength, product competitiveness and service awareness will not provide any pertinent information.
N.B. – As an aside on the this particular topic, the language of information technology is highly specific jargon. Even those fluent in Mandarin as a second language often struggle with this specific field. Our purchasing agents are familiar with information technology and are comfortable with speaking with information departments of our partner manufacturers.
4. Logistics technology assessment
Logistics technology means the methods and processes for logistical activities. Specifically, how efficient and effective the manufacturer handles procurement and delivery for products. The purchasing agent will consider the following as part of this assessment:
- Transportation organization and management
- Warehousing technology
- Packaging technology
The warehouse as part of logistics
So far, the information we have conveyed is important for an overall decision. One thing that Sourcing Nova also takes into consideration as part of the logistics assessment is the warehouse and its management. It is expected that a warehouse will be busy and bustling but certainly not overly chaotic and poor management oversight.
As an example, our purchasing agent finds a considerable number of damaged complete or semi-complete products filling the warehouse. This often means the manufacturer has a high return rate and low quality control. Are the employees moving product with forklifts or hand trucks – the latter means extra time waiting on your products to arrive. Is there a significant amount of product waiting for shipment – if so, this could mean the transportation logistics is in question.
Even something like the packaging could be a strong predictor of issues with the manufacturer. Private label products often have particular packaging needs and ideas. For sample or trial orders, production will not meet the MOQ of the manufacturer. The purchasing agent will need to make a determination if the manufacturer can provide the unique packaging for small batch product orders. Larger manufacturers often have positive relationships (guanxi) with printing companies, thereby having more flexibilty for packaging.
Sourcing Nova has previous pieces on Moka pots. You have decided to produce a private-label Moka pot. A small manufacturer may have a relatively low MOQ on the pot, say 500, but the packaging MOQ is enormous, say 3,000. A larger manufacturer with strong relationships with printing companies may can lower the MOQ for packaging to 500 pieces.
Evaluating reseach and development is a deeply involved task and requires extensive experience with the specific language of research and development. Sourcing Nova makes it a point to find the manufacturer with best product development capabilities. How can we help you with your products?