Solving MOQ Headaches
Solving MOQ Headaches
Understanding Minimum Order Quantity
in Manufacturing
(or M.O.Q.)
All manufacturers, whether situated in China or other regions, maintain a minimum order quantity (MOQ). Securing large volumes is generally not an issue; however, procuring smaller quantities can quickly become challenging. It is crucial to address quantities at the earliest opportunity.
Numerous factors contribute to determining an MOQ, making it difficult to provide a straightforward answer.
The Factors…
Here are the primary elements to consider:
Product Value
Typically, low-value items have higher MOQs. For instance, a company may require promotional caps with a printed logo. The primary expense in manufacturing these caps is configuring the equipment and testing colours and logo placement. This cost remains consistent whether the order is for 200 or 200,000 caps. Smaller orders result in a substantial increase in the price per cap.
Conversely, higher-value items, such as premium packaging materials for products like jewellery, wine, or homewares, have a higher material cost and more labour-intensive production process. Consequently, fixed costs make up a smaller portion of the overall cost, making smaller quantities more viable.
Product Specifications
A simple cap design with a single colour and logo is relatively easy and inexpensive to set up. However, if a client specifies an exact colour, precise logo placement, and a specific finish on the cap, setup costs and quality control become more complex and costly.
Order Uniformity
The factory must account for variations in product size, colour, and design. An order of 20,000 items may include ten different sizes or designs, each in eight distinct colours. This translates to 250 units of 40 unique items, necessitating additional setup and quality control.
Factory Size
A factory’s production capacity significantly impacts MOQ. While a factory capable of producing 2,000 caps per hour might find an order of 100,000 caps worthwhile, a larger factory with a 20,000 cap per hour capacity may not consider it an efficient use of resources.
Factory Workload
A factory with a lighter workload may be more inclined to accept smaller orders that can be accommodated around larger projects.
Potential for Repeat Orders
Manufacturers prefer long-term customers and recurring business. However, unless there is a strong indication of a client’s likelihood to place repeat orders, factories are more likely to prioritise guaranteed orders.
Urgency of the Product
If a client is willing to wait until the factory can fit a smaller order around larger projects, the factory may be more willing to accommodate a lower quantity.
Given these factors, establishing MOQs on the spot, particularly for custom-designed products, is challenging. Procurify, with over a decade of experience sourcing and importing from manufacturers, often has insight into whether low quantities are feasible for specific products. Part of Procurify’s value lies in its extensive network of supplier contacts, enabling it to quickly and efficiently find suitable factories that meet client quality standards and are interested in producing the desired volume.