Typical Problems
in Contract Manufacturing
Contract Manufacturing is not without problems. The problems are more or less similar, except magnified by distance and cultural challenges. Here are a few examples of problems while dealing with India. However, remember that these problems are there in every country.
- Communication issues: Indians speak “Indian English”. Many American buyers need to learn Indian English in order to understand the letter and spirit of the communication. There are of course people in India that speak perfect English, which everyone can understand. However, they are few and far between.
- Indians have a laid back culture. The foreign buyer needs to be firm in his expectations and demand results. Your counterpart will adept quickly.
- Indians respond well to friendship over legalities. But there is a fine balance to be maintained.
- Since most of the payments are through Letters of Credit (L/C), the foreign buyer needs to understand the process of issuing L/C.
- Visit to the supplier after samples are approved and first shipment is about to take place, is always recommended.
- The foreign buyer needs to realize that quality problems, if any, are difficult to resolve, especially if the damage is quite large. So it is always wise to prevent such problems by good documentation, communication and effective quality planning. Depending on the complexity of the product and financial risk associated with potential rejection, it would be a good idea to put in place some sort of independent source inspection.
- However, when it comes to source inspection, be aware that corruption plays a part in it.
- There are a few good contract manufacturing companies in USA, who will act as a middleman between the US company and the Indian vendor. Some of these middleman (NOT ALL) will provide guarantee of high quality and will take care of all other issues such as communication, vendor qualification, nurturing, financial details, etc. Even if the middleman adds to the cost, he will prevent damages and make the process much more bearable. Working through such middleman is strongly recommended.
- This is a slow process. Results will not happen overnight. Be patient. You have to want to succeed in this arrangement. Half-hearted efforts will not do. So think long and hard before getting in. But once you are in, don’t back off. It will yield attractive results.
|