How To Reduce Production And Delivery Delays [Podcast Ep08]
When dealing with Chinese manufacturers, attention to detail will make, or break you.
Delays and hidden costs all add up.
They can vaporize your profit or, in the worst case, you may take a massive loss.
In this episode of the podcast, I’ll tell you how to minimize production delays and run the numbers right, so your business can operate profitably.
- The single biggest reason for production delays most businesses overlook
- Why there’s no such thing as “avoiding delays” when manufacturing in China
- What to keep in mind when negotiating production and delivery dates
- What to include in your invoicing/shipping documentation so your goods don’t get delayed at customs
- How to protect your investment once you’ve paid for the finished goods and they’re in transit
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Packaging and artwork
Why is this a hidden risk?
Packaging and artwork is the single biggest reason for manufacturers delaying the start of production, and the most overlooked reason by buyers.
It’s essential you understand this:
Your manufacturer can only start production when they have all the materials on hand.
No one will start production if they don’t have everything they need.
That includes your gift box and packaging, and all the details that appear on them (that need to be confirmed and signed off by you.)
Normally, this is done after signing off the on purchase order (when they’ve already committed to the delivery date.)
THIS IS WHERE EVERYTHING GOES WRONG.
Preparing the design, artwork, labels, barcodes, etc., for packaging can take a lot of up-and-down work and time to get right.
Manufacturers rarely warn you of the fact that it’s going to delay production.
And they will definitely not start production until the artwork’s signed off and the packaging is signed off as produced, printed (they need at least 10 days to print,) and is in their production facility.
So that’s your biggest single risk and exposure to having delivery dates slip out of control quickly.
In a perfect world, do all the artwork and packaging and labeling yourself.
In a not-so-perfect world, have the manufacturer do it for you and you sign off and approve it.
But make sure you agree upfront with the manufacturer on a deadline to complete the artwork and packaging to avoid production delays, and make sure they stick to it.
This is a big risk when working with Chinese manufacturers.
Many businesses assume once a delivery date’s set, production delays will not happen.
So they make a lot of plans around advertising, promotions, launch events, etc., based on the production dates given by the manufacturer.
Take it from over 20 years of experience:
Production delays happen often and a lot, for a multitude of reasons.
Whether it’s material delays, production capacity issues, worker issues, artwork and packaging sign-off delays…
There are so many variables that pointing fingers just bears no relevance and doesn’t solve the problem.
So it’s best to be prudent about building enough lead time and assume that there will be some delays, if you’ve got critical deadlines to meet.
In terms of campaigns, marketing, and promotion, this is the rule of thumb:
If it’s not inspected yet, or it’s not on the water yet and hasn’t physically shipped, don’t book anything.
Until you can see the goods are produced and the shipping vessels are booked, it’s high-risk.
So, don’t make any commitments to customers on delivery or schedule any promotions.
The other reason delays often occur is Chinese holidays, for example Mid-Autumn Festival, Chinese New Year, national holidays, etc.
These are all compulsory government holidays, where Chinese workers get off and factories shut down. In some cases even the electricity supply gets shut down, and production cannot continue.
Delays like this are often not factored in when placing the order, even by the manufacturer.
These things can’t be avoided and are just common areas of frustration that can be removed if you are aware and discuss them in advance, so you can add a suitable buffer to your production time
Shipping bookings, shipping costs, and customs clearance
There are so many hidden risks here that can undermine all your hard work and efforts to date.
With shipping bookings, you must make sure the supplier has a designated forwarder and shipping company.
OR that you nominate a forwarder and shipping company in advance when placing the order or shortly after placing the order.
This is so you’re not scrambling around looking for somebody to ship your goods at the last minute, and that includes getting quotes and being clear about your costs of shipping.
Once production has started, you need to confirm a shipping order has been placed by talking to your manufacturer.
You need to find out if it’s air freight, sea freight or LCL, that these goods are booked and confirmed on the flight or vessel schedule.
People often assume there’s always space available but this is simply not the case.
Shipping costs can also vary weekly and monthly.
Costs should be agreed far in advance with your shipping forwarder and then verified and confirmed before the goods leave.
Customs clearance is a major cause for delays when receiving goods.
Usually, this is because invoicing documentation is unclear.
Your documents need to be very clear on what the product is and include the HS codes if possible.
HS codes are what Customs agencies around the world use to determine what tariffs or headings the goods fall under.
Including the HS coding and a very clear description will make sure your goods are cleared as fast as possible.
Using a good forwarder should ensure that your customs clearance, shipping costs, and bookings are efficient and done correctly.
A big issue that often comes up is shipping forwarders blaming manufacturers or shipping lines. It’s hard to identify where the problems lie.
Making sure these things are dealt with as clearly as possible is a lesson in itself.
But it’s very important to address as early as possible in the ordering cycle to avoid problems.
Knowing your customs import duty is also critical, as the way your goods are described in your invoicing and in your packing list will affect the way which customs tariff is used on your goods.
If something’s unclear it will create a customs stop, which will take time to resolve.
If it’s incorrectly described you may end up paying a higher customs duty or, in some cases, a lower customs duty.
The most important thing is accuracy and clarity.
It’s also important to make sure that your shipping company gives you shipping insurance so you’re covered in case something goes wrong after you’ve paid for the goods and they’re in transit (this is often overlooked.)
Once you’ve paid and the goods leave the factory, you are going to be exposed until you physically receive them.
Your forwarding and shipping company can easily bill this into the price, and it’s money well spent.
Of course, a good agent will help you manage your shipping bookings, find you a good forwarder, and help you with all your bookings and documentation with ease.