Outsourcing My Sanity

When I started Black Anchor I was super romantic about making everything in the US. Late last year I had an epiphany of some sort while reading Shoe Dog, by Phil Knight. There was a part of the book that resonated with me, and convinced me that I needed to let go of whatever romance I was hanging onto and move production overseas. I wasn't built to build a manufacturing company.

Premium materials, age old construction, and traditional retail directly correlated to expensive, expensive, and even more expensive! Don't get me wrong, I have no problem spending good money for quality products. But when the products that I made were things that I, myself, would never actually buy - what is the point?

I have always been an REI kind of shopper, not the hipster boutique in Brooklyn or the Mission District.

So here I am, working with a manufacturer in China and a manufacturer in Vietnam. The struggle is different, but it's still there. Take Vietnam for instance. They import all of their materials from China, because China is the headquarters for the worlds materials. It's kind of insane, really. But the Vietnamese manufacturer is constantly having to work with Chinese companies to get the materials we need, causing delays in sampling, which means there will certainly be longer delays in production. When they ship our samples, the bags go through Hong Kong as well. Which is just extra shipping cost that we could avoid by not doing business in Vietnam. The prices are lower in Vietnam, and the quality of life is the same as in China, so Vietnam initially makes sense.

But if I pull back and look at the big picture, it actually would make more sense to spend some extra money on each unit with a Chinese manufacturer. If you take the extra shipping cost from Vietnam and divide it into each unit, that effects your landed cost. So feasibly, a product being made in Vietnam for $28 could have a landed cost of $39 because of the shipping cost per unit. If we spent $33 to have each unit made in China, and still paid $39 landed, then the cost would be the same. $39 is the same not matter where it comes from. Even if I had to spend $41 per unit instead of $39, but I was able to get my customers their product sooner and without hassle - that's a huge win.

Having our product manufactured in China gives us the opportunity to keep lead times lower and work with a manufacturer that has a little better terms for minimums, allowing us to give our customers a few color options - if that's what they wanted. And once we get to a larger scale of production we would get better pricing per unit. And there is more to subtract from $33 then from $29.

I'm not trying to talk as if I know what I am doing. But some things are coming together over here at Black Anchor as I navigate this new world of overseas manufacturing. The goal is to offer the best prices to our customer while taking care of the WHOLE supply chain. This starts with the materials supplier, and then gets to the manufacturer. I don't have a clear picture on how we are going to build a bomb-proof supply chain where everyone is happy and making an honest living, but damnit, I am sure as hell going to try.

-Stephen

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