14 Questions Brands Should Ask When Vetting Vendors
When planning for a new product or product line, it’s vitally important to find a quality vendor or manufacturer. However, this is seldom a simple process. And, it’s important to remember, a brand’s vendor or manufacturer inevitably becomes an extension of a brand’s team. With this in mind, asking the right questions will help identify the best vendor for a brand. In this blog post, we share 14 questions to ask while your brand is vetting vendors.
What is your factory’s mission?
A vendor’s answer will let a brand know what matters most to the factory. And it could be a deciding factor between them and another manufacturer.
Is your factory vertically integrated?
In other words, does this factory operate in more than one location? It’s custom for Chinese factories to close for at least two weeks during Chinese New Year. If the factory is based in China, it’s important to have another ‘back up’ location. Asking this question can help brands avoid unexpected roadblocks and slowed production.
Does your factory have a commitment to sustainability?
This question is particularly important for brands making sustainability claims. Whether a factory uses plastic, recycled materials, or organic materials will make a difference when a brand tries to get a premium price. Regardless of the factory’s answer to this question, we suggest getting documentation of their claims.
Is your factory approved to manufacture for major retailers like Walmart?
Many big-box retailers, Walmart or Costco for example, don’t approve factories to produce for their stores until they pass their own certification process. These certifications ensure factories adhere to the retailer’s standards. Usually, ethical sourcing is the most important.
Can we see your facility?
Pre-pandemic, brands usually take a tour of the factories they’re vetting. But, the coronavirus has made this challenging. Instead, we suggest brands ask for a factory walk template or sheet.
Most factories use these to feature real-life photos of the facility in lieu of physical tours. Seeing machinery, the factory layout, and the overall conditions of the facility are influential in a brand’s decision.
How do you feel about collaborating with other factories we work with?
Proactively asking this question will let brands know if a factory is a cooperative partner. And, if the answer is yes, brands can be reassured the factory will work out challenges with other factories if necessary. Otherwise, working with a factory unwilling to collaborate, could risk halting production if there’s a roadblock.
Are you open to shipping via air?
Shipping via air versus water can reduce production time significantly. Although it comes at a cost to brands, it is often a lifesaver in the event of an emergency. Asking this will tell a brand if the factory is well-staffed and if they’re willing to make adjustments to maintain production time.
What’s the retention rate for your employees?
We’ve touched on this before in a previous blog post. Many Chinese factory workers don’t return to their jobs after the two-week holiday hiatus.
High turnover rates can inadvertently affect production times. Therefore, asking ahead of formalizing a partnership is worthwhile.
Can you share references with us?
As you would during a job interview, asking for references can help brands make a final decision. And, during this conversation, it’s worth asking the factory for names of brands similar to yours. Hearing others’ experiences and knowing the factory is capable of doing similar work can make the vetting process easier.
What would you consider your biggest accomplishment and loss as a manufacturer?
It may seem unusual to ask this, and most vendors aren’t sure how to respond. But, strong partners will provide insight into their potential and what they prioritize as a business. The answer can often offer an idea of what a partnership could look like and how to best leverage the partnership in the future.
Can you give me a quote for one of our SKUs?
If possible, provide the manufacturer the specs of an evergreen product and ask them to provide a quote. The quote will offer insight into how the vendor prices projects and what you can expect from larger more legitimate quotes. Should they come in way under or above what’s expected, this could be a red flag.
Are you open to third-party testing?
Through third-party testing, brands can ensure testing is unbiased and will flag any safety concerns. Finding a vendor that agrees to this is one of the best decisions a brand can make to protect themselves. This ties into a brand’s ability to make claims about their products. Without confirmation from third-party testing, brands take a risk of their major claims being unfounded.
Do you agree to our payment terms?
Most brands operate under a ‘net-30’ or ‘net-60’ payment plan. Asking about this gives brands an opportunity to establish expectations and understand cost concessions and late fees.
What is your monthly capacity in dollars and units? And, of that capacity, what’s available currently?
To understand how much of a factory’s business your brand represents, ask the number of purchase orders they manage and their value. This can tell brands how reliable a factory will be and what where your brand will fall on their list of priorities. Finally, this will let brands know whether this relationship has the potential to be a long-term relationship.
Vetting vendors can be a months-long process. Because of this, brands planning to launch a new product in the fall of 2021, should begin now. Being proactive can set brands apart from their competition and position them for success.