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How Does a Product Go from Factory to Your Home?

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If you have wondered exactly how a product travels from a large industrial factory to your kitchen counter, then today’s blog post will help clear that up. Cell phones don’t grow on trees after all. Today we are going to dive into this process with some tangible examples that make it easy to understand. In this article, we will go over the different stops your product makes along the way and the decisions you will need to make on its journey.

First, let’s start with a little roadmap. This is a very common path your product might take after it’s been designed and is ready to make the long trip from a factory overseas to the shelves at a local shop.

Suppliers →  Manufacturer → Distributor → Retailer →  Consumers 

There are a lot of ways the supply chain can look, but today we want to focus on the supply chain in corporate businesses that involve manufacturers. We will look at what happens at each of these stops and the various paths a product takes.

Step 1—Suppliers

Before a product is even put together, you will need supplies. The supplier provides these raw materials which are then assembled and combined in a way to make the product itself. There might also be other suppliers and stages as well, but for now let’s just clump them together as one.

Once you find a factory or manufacturer to work with, you probably won’t be involved in choosing a supplier, but it helps to see the whole picture. For example, if you are selling an umbrella, then it is made up of fabric to keep the rain off and plastic or metal to provide the structure.

Step 2—Manufacturer

After you have made a prototype, you need to look at samples. Factories can send samples much quicker than they can  regular products because a sample isn’t meant to be sold, so there is no need for taxes or tariffs. Import and export laws are designed for large quantities of goods, so that’s why samples can get around this loophole.

You might go through 2 or 3 revisions of the product before you are ready to place your full order. In fact, the samples are likely to be destroyed as they undergo things like testing. These tests might be performed by your own team or a third party to meet certain certification requirements.

If we continue with the example of the umbrella, maybe the fabric wasn’t as waterproof as needed and so in testing it was destroyed as a result. Knowing that flaw, you would make the necessary changes and ask for another sample.

Here is a quick breakdown of how that might look:

Sample→ Tests & Certifications → Revisions→ More Samples → Approval → Place Order

Luckily, because you are only ordering a handful of the product, you can get them quickly to speed up the process. After tweaking it, you’ll eventually get to place your order with the factory, which should take about a month.

Shipping & Logistics

When it comes to logistics, we’ll only be able to scratch the surface. Some people spend years studying this. Once your product is created and packaged, you have to make a decision on how to transport it. Even deciding on the packaging is a complicated process, but we will cover that in another article.

Let’s look at the different ways to ship your product overseas. There are 2 common methods used to transport your goods, by Air Freight or Ocean Freight. Many companies might use both for different products, but what you need to know is each one has its own pros and cons. Both have to follow their own set of rules and regulations that they have to abide by.

Here is a table to compare the two:

VariablesAir FreightOcean Freight
TimeFasterSlower
CostMore ExpensiveLess Expensive
ReliabilityMore unpredictableMore predictable
DestinationsMore Options InlandMust Arrive by Port
How they ChargeBy WeightBy Volume

If you were shipping something small and light, then sending it by air might make sense. By comparison, if you are shipping a larger quantity of something bigger and heavier, then it’s preferable to send it by ocean. Obviously, there are a number of factors that will affect your decision at the end of the day.

As we recently experienced the Suez Canal Crisis, you might end up having to switch methods due to unforeseen circumstances. When shipping things internationally, not everything is in your control, so it is important to ensure you keep this in mind, especially when drafting your budget.

Customs

After it travels by sea or by air, your product will also have to go through customs when it’s crossing international borders. There are 4 basic steps that occur when the products are being imported into a country like Canada:

  1. Entry. The first thing you need to do is determine how your product comes into the country and where.
  2. Examination and valuation. Once it arrives at the border, it’s then looked at to ensure it’s legal and the value is also evaluated so that duties or tariffs can be applied.
  3. Classification. After the cost is calculated, the product is classified and you can then find out the percentage of tax that is going to be charged.
  4. Payment and liquidation. At this stage, you will have to pay any tariffs or duties to bring it into the country.

There are a lot of forms and paperwork at this point, so you can experience delays if things aren’t filled out correctly. As you might expect, there are people who spend years studying this and keeping up with the laws and regulations.

Some companies even find loopholes to avoid paying certain taxes and there are plenty of humorous incidents that have been reported as a result. One Ukrainian importer found it was easier to cut their cars in half and import them as “car parts” instead of cars because the taxes were lower. They then reassembled the cars after they arrived at their destination.

Step 3—Distributors

Now that the product has passed through customers, it will go to a distributor. At this point, it will likely go to a warehouse or a wholesaler. Let’s look at how that looks for both of those scenarios.

After everything arrives at a warehouse, you can start sending the product in 2 different ways. These are both considered examples of the order fulfillment process, which consists of receiving and processing the goods so they can be distributed to customers.

  1. In-House Fulfillment. Fulfilling the orders yourself.
  2. Outsourced Fulfillment. Hiring another company to fulfill orders.

When you ship the products yourself, it’s also referred to as Fulfillment by Merchant (FBM). Conversely, you could work with a large company like Amazon to distribute your products. Fulfillment by Amazon (FBA) is a popular option of outsourced fulfillment by many, but you should know that they will take a percentage of the sales. These types of  fulfillment centres will also charge a storage fee as they have to make space to store your product until it is sold.

Another way to distribute your product is through a wholesaler. People sometimes use the term interchangeably with distributor; however, a wholesaler is a company that acts as an intermediary between the manufacturers and retailers. Wholesalers will buy the products from a manufacturer in bulk, then sell them to the retailers.

There are many different types of distributors and wholesalers out there helping you get your product in the hands of your consumers. Similar to shipping, you need to weigh the costs and choose what is best for you.

Step 4—Retailer & Consumers

Finally, after a few months of sitting in shipping containers traversing the ocean and bumbling around on trucks from warehouses to stores, the product winds up in the hands of your customers. It’s a complicated and convoluted journey, but we hope that we have demystified it for you.

While it might seem daunting, we wanted to show the whole process and the different paths a product can take on its journey after it’s designed and ready to go. You might think you can jump straight from placing the order to marketing, but there are a lot of steps after you’ve ordered your product from the factory.

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About the Author

Ventrify is a product design and manufacturing firm that helps entrepreneurs bring product ideas from concept to market. We take in fledgling ideas and bring them through our iterative design process to create products our clients are proud of. Then, we work with manufacturing facilities worldwide to bring our clients the highest quality products at competitive prices.

If you have questions or want to discuss going remote, reach out to us through our Website, Facebook, or LinkedIn.

Article by Victoria Fraser

The Price of Mass Producing Plastic Products

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So Cheap, Yet so Expensive

Modern day injection molding practices can get many (if not most) plastic parts made very cheap – under $1.00 – but there’s a catch: mass manufacture using injection molding comes with a hefty up front fee, often ranging from 10-100 thousand dollars. So is this worth it? And where is this money doing?

We will discuss 4 major factors in Mold Costs:

  1. Product Size
  2. Shape & Complexity
  3. Mold Material
  4. Surface Finish

Then, we’ll discuss a few additional items that play into the overall cost.

Some Context

Injection molding is a common manufacturing process where a material is melted and injected into mold, or cavity, the liquid solidifies into the shape of the cavity, and is then extracted. Although this can be done with a variety of materials, we’ll talk more specifically about plastic injection molding today as this is one of the most common and most versatile materials in products today.

A Brief Look at a Common Practice

Plastic injection molding is the most common method of mass producing plastics. To discuss the costs associated with this manufacturing process, I’ll provide a brief summary, but Bill Hammack has a great video detailing this if you want to learn more. Very simply, a mold is made by taking a block of material (typically stainless steel or aluminum) and cutting out (machining) the desired product shape (cavity).

Once made, a mold can be used to make from tens of thousands of units to millions of units (shots) of product. A simple mold can cost as little as $1,000 but as we will discuss shortly, these prices can quickly escalate based on a series of factors. In addition, a finished product will typically be comprised of multiple plastic components, further adding to this up front cost.

Based on the considerable up front costs of injection molding, it is mainly feasible for large production runs. These costs may also be reimbursed by the factory (depending on the factory) at certain production quantities milestones (to be discussed in the negotiation stage, not the production stage).

Factors in Mold Costs

There are many factors that play into the cost of a mold. Here are the biggest ones to consider:

1.     Size of product

What: Simply, the volume of material required to make the appropriate size of cavity will be larger

What can you do: This depends on the type of product – often times, there is nothing to be done. If you have come to the manufacture stage and have designed a large product, it is likely for a good reason and you may not be able to do anything. If this is a functional component, and aesthetics are not important, this is something you may be able to adjust. If you do, this is likely a design decision and the design team should be consulted on any changes.

2.     Shape & Complexity

What: A complex shape is going to take longer to cut out, and require more oversight to manage machining, setup, and mold deformations. (Note, two-shot molding will not be considered in the scope of this discussion.)

What you can do: Again, this goes back to the design process as any change will be significant and noticeable. Any unnecessary complexities should already be dealt with or reviewed with the design team. What you can do, is address large sweeping curves and extremely sharp corners as these will increase cost due to tooling time and may compound with surface finish requirements – these should be standardized unless a key part of the design.

3.     Production Quantities

What: Mold material will determine how long the mold lasts – using softer aluminum is easier on the machining tools, and cheaper, but will not last as long due to the wear on this softer material. Harder stainless steel is more expensive to obtain, and takes longer to machine but will last longer as well.

What you can do: Know your priorities. Are you looking for the best deal on a long term investment or do you need it done cheap now, and are ok with spending more later on?

4.     Surface Finish

What: Machining marks left on the mold will be visible on the molded part. If a surface is visible, it should be finished to one degree or another. However, the finer the finish, the more it will cost. Large surface areas with a high polish can get very expensive. Similarly, textured surfaces are extremely expensive. These finishing processes are more precise, remove much less material than standard machining processes, and require more oversight and thus take more time/cost more money.

What you can do: You can remove any unnecessary polishes and textures (ones that are not critical to function, such as seals, or to aesthetics, such as surfaces not visible to the end user).  In addition, know what you want – A matte finish will go a long way in decreasing cost, and may actually fit your product/brand better.

A few bonus items that affect the costs of a mold:

Tolerancing – Tolerancing is important if it is finer than typical machining tolerances. These will differ based on the common practice (to be considered if you are looking oversees), but +/- 0.005” is typical and is important for smaller, functional components.

Shrinkage – Shrinkage will also factor into tolerance and is dependent on part size (about 0.002in/in), and similar to tolerance is more important for functional components.

Multi-cavity Molds & Family Molds – based on the batch production size or cost reduction efforts, a single mold can make multiple parts. This can make sense if you are running large batch sizes or your part size is very small. Family molds have multiple cavities in a single mold to make different parts (rather than multiple of the exact same part). This must be done carefully as different part geometries often cool at different rates making for sub-optimal results.

Mold Base Compatibility – Your mold is your property and a considerable barrier to entry for competition. Practically speaking, that means you can take it to a different factory (and/or country) if you don’t like your current factory… right? Well not always, some factories will create molds that only fit their machines. Creating universal base and interface will cost more if this is not standard practice at the factory you are speaking to. This will not be a problem if you have found a good factory the first time, so take the time to make sure the factory you use is a good fit for you.

Design for Injection Molding – with your mold cost will come dedicated time to design the mold. This is not part of Design for Manufacture and Assembly (which is product focused), this involves the design of the overall mold – the cavity itself, the orientation and location of the split line, the placement of ejector pins/holes, placement of sprue and runners, cooling channels, and overall mold fit.

T0/T1/T2 Samples & Tooling Changes – Every injection mold is different. It’s new, and new things don’t work the first time. It is standard to go through 2 iterations of mold changes to deal with imperfections, these are referred to as T0, T1, and T2 samples and tooling modifications are made between each to address any necessary changes.

Setup Costs and Labor – simply, all the time associated with addressing each of the above items and everything in between.

Recommendation

Do what you can that is within your realm of expertise. However, do not be afraid to find a professional to help you with this. Factories are a great resource and have the expertise. Working with a designer that can address some of the earlier design decisions can make a significant impact.

About the Author

Ventrify is a product design and manufacture firm that helps entrepreneurs bring product ideas from concept to market. We take in fledgling ideas and bring them through our iterative design process to create products our clients can be proud of. Then, we work with manufacturing facilities across the world to bring our clients the highest quality products at competitive prices.

If you have questions about taking your product through the manufacture phase, connect with us through Facebook, LinkedIn, or our Website.