The definition and function of the factory’s minimum order quantity
The concept of factory MOQ
The factory minimum order quantity refers to the minimum production quantity required for each customer order when the manufacturer negotiates the production contract with the customer. Manufacturers will stipulate this minimum production quantity in the contract as the minimum batch they can produce. Usually, this quantity is relatively large to ensure the efficient operation of the production line, reduce production costs and improve production efficiency.
The size of the factory MOQ usually depends on factors such as the scale of the manufacturer, equipment, and production process. Some large factories’ minimum order quantity will be relatively high, generally more than a few thousand pieces. In contrast, some small factories’ minimum order quantity is relatively low.
Some newly established small enterprises often need to face the problem of high factory MOQ because their purchase demand is small and cannot meet the manufacturer’s minimum production requirements. Currently, enterprises can consider cooperating with other enterprises to complete production tasks together to reduce the minimum order quantity to achieve procurement goals better.
The role of the factory’s MOQ
The factory minimum order quantity is the minimum production quantity requirement set by the manufacturer to reduce production costs, improve production efficiency and ensure efficient production line operation. Its main functions are as follows:
Ensure the production line’s efficient operation: The factory’s minimum order quantity is usually relatively high because mass production can reduce the production line’s preparation time and conversion time, thereby improving production efficiency and reducing costs.
Reduce production cost: mass production can reduce the purchase cost of raw materials, production line preparation cost and equipment depreciation cost, etc., so the production cost is lower.
Improve production efficiency: Mass production can improve production efficiency and reduce the production cost per product unit, thereby improving the enterprise’s profitability.
Stable production plan: The factory minimum order quantity can help manufacturers better plan and control the production plan to ensure stability and reliability of the production plan.
In short, the factory MOQ is a vital production management index which can help enterprises reduce production costs, improve production efficiency and ensure the stability of production plans. It can also help enterprises better control inventory and manage risks.
Why is the minimum order quantity of skin care brands lower than that of factories?
Skin care brand enterprises are small
Since the company has just been established, its scale and market share are relatively small, its brand influence needs to be improved, and it also faces problems such as a lack of resources, low market awareness, and fierce competition. Therefore, when purchasing products from the factory, they need help to meet the MOQ requirements of the factory.
Skin care brand companies target niche markets
Niche markets pay more attention to personalized services, and they have unique pursuits for products, including product ingredients, formulas, effects, etc. This also leads to the low minimum order quantity of the product, which is challenging to meet the factory’s minimum order quantity requirements.
How to solve the problem that the minimum order quantity of skin care products is lower than the factory minimum order quantity?
Establish a cooperative relationship with the factory
Before finding a suitable factory, consider the following steps:
-Clarify the products you need to produce.
-Determine the production quantity.
-Communicate with factories.
-Conduct on-site inspections.
-To find the right factory, you need to consider many factors comprehensively, carefully screen, and compare, to choose the cooperative factory that best meets your requirements.
According to the products, quantity, price, delivery time, and other factors required by your target customers, you can choose suppliers that meet the requirements. You can compare and find the most suitable supplier by asking multiple suppliers. The core is to manage the inventory product SKU and control the inventory cost.
Looking for an agent
To clarify the products you need, you can find an agent suitable for you through Internet channels, offline exhibitions, and industry associations. Ask the agent whether they can provide products and services that meet your requirements, including information such as minimum order quantity. Sign an agreement directly with the agent, including the product price, minimum order quantity, payment method, agency scope, contract period, etc.
Make a reasonable purchase plan
You need to consider your historical sales data and the life cycle of new products, make a good purchase plan, and budget and communicate with your target suppliers. Suppose the quantity of all the products you purchase is large enough, or the total price of your single order is large enough. In that case, you can meet the supplier’s MOQ requirements.
Low MOQ has become the choice of many skin care brands.
Control the procurement plan and cost under the condition of low MOQ.