We have been in the import business for over 70 years. In that time we are often asked about sourcing. We’ve lost and regained customers who have tried to source directly. Many times, customers fall into the price trap. Historically we’ve found that smaller mills have better prices and greater flexibility for minimum order quantities. The question for us was why?
So, in a recent visit to mills in Asia, one of our goals was provide an understanding of the core difference between a large and small manufacturer of the same product lines. Logically one would assume a small textile plant would cater to a customer that had more modest needs, and handle more boutique orders. But how could costs be reduced when the mill cannot benefit from economies of scale? It would seem logical that large-scale manufacturers and modern machinery would offer lower prices. However, every mass merchant, including low-cost models like Wal-Mart, Costco and Sams Club, seemed to gravitate towards having their products manufactured with large mills that don’t necessarily have the lowest price in the market.
We discovered that the core difference between the rock bottom prices that 'cottage industry' exports offer and product produced at a large-scale facility was consistency. When we visited smaller facilities, we found that the selling proposition was just that... price-driven. When we toured large-scale producers we witnessed a value proposition that aligns with Western expectations:
Supply Chain Quality Assurance
Independent Product Testing
These facets are critical to maintaining product consistency, service times, and overall reliability in the textile market. The two examples below paint a clear picture of the wide discrepancy between a small mill that will offer a better price, and large mill that will provide better long-term value.
Small Mill Price
In the first picture and video, you can see one of our competitor's small-scale supplier producing mops at a “great price.” The raw material is outsourced, which means the mill is reliant on 3rd party producers and therefore cannot guaranty quality or supply. The assembly machinery is dated and worn, which means the weaving weight will be inconsistent and slow. We witnessed products spilling out of containers, lying directly on the dirt floor. So, it appears that competing on price means using unknown yarn fed through shoddy machines to create inconsistent products that will be contaminated during storage.
Large Mill Value
In the second video is our mill's production area. State-of-the-art machinery weaves yarn that was produced in-house into precisely measured cloth which is cut to size and spec. A benefit that the larger mills possess is the ability to stockpile resources to mitigate production interruptions due to external forces (e.g. Chinese New Year, or cotton shortages due to a farmhand strike). A robust supply chain costs millions of dollars to acquire, develop and support, but the capital investment allows the mill to provide a consistent product time after time.
Quality costs slightly more and requires higher minimum orders. However, in a commercial setting, where product is distributed directly across the country to national franchise distribution points, consistency allows a reliable costing for depreciation and process. In other words, the consumer has a strong understanding of how the product will perform and how long it should last in the field.
The question is, how do you know what you’re buying as a consumer? Most textile manufacturers of size and scale also go through certification groups to establish their quality standards and social compliance. I’ve attached a list of the most common certifications and their meaning. When these credentials are listed as part of the suppliers’ credentials, a buyer gets a greater understanding that they can expect consistency in their product and supply chain. Although the upfront cost is slightly greater, the long term savings of product reliability and performance far outweigh the initial minimal price differential. Product value consists of the initial cost of the product divided into the lifespan and performance, not just the initial cost. As the old saying goes, you get what you pay for!