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Well, you are dealing with a lot of partners. Let's say you want to create a unique mug for your company. In general, you can do this pretty easy by calling a
by dizzystar 8y ago
Well, you are dealing with a lot of partners.
Let's say you want to create a unique mug for your company. In general, you can do this pretty easy by calling a promotional products distributor (you can't contact the supplier directly), but you are bull-headed and want to do it yourself.
You decide you want to buy something USA-made. Well, you contact the factory and you get yelled at for not calling their broker. (I contacted an unnamed factory in Texas and they were demanding all names and numbers, implying heads are rolling).
You call the broker. You contact the broker and she tells you that you can't really order from her, and you have the option of contacting a printer in Chicago.
You contact the printer in Chicago and now they are upset because you aren't ever supposed to call that factory, never mind you have a retailer license.
Okay, well... you call their broker, and well, yeah, they can do that, but you have to use their preferred artist located in NYC.
Got everything wrapped up now? Nah... you have to find someone to do the mold, and no, the factory doesn't deal with that. You contact someone in Colorado and you get quoted $15,000 for an injection mold.
So you go back to the broker who is... well, you don't really know who to contact, but it turns out that the Chicago printer isn't tooled to do anything but the shapes they are getting from Texas (you don't learn of this for 2 weeks because that broker is too tied up with other things). You call up Texas broker and she says "yeah, we do custom molds, but you still have to use our preferred network."
You ask if they can do orange and they say no, they only do red, black, and blue. Sorry.
You say to hell with it, call China who can do all of this in one phone call. You figure the cost is about the same (though the mold is only $5,000) and can get an sample in 2 weeks. They also offer to send you 15 different colors because they can.
I guess that doesn't explain why this happens. The reason is that there are a lot of "policing societies" that factories, suppliers, brokers, and distributors pay good money in order to keep the supply chain in check. There is no dirtier word than "double dipping," which means you are acting as supplier and distributor. Once you do that, you end up losing your society membership and you are basically toast.
There is a bit of inflection point these days. Suppliers / manufacturers are starting to sell direct. The distributors don't really like that the supplier / distributor relationship is breaking down, but it is slowly happening in some segments.
In sum, there really isn't a such thing as a "middle man." There is a whole party of people involved in everything that you buy. It's just a matter of how deep the rabbit hole goes. China smartly chose to streamline the process.
- 18pfsmt 8y ago12 years ago, I was getting quoted for $100k/ injection mold in Colorado, and $50K in China.
- dizzystar 8y agoIt depends on what you are trying to make. The numbers are more illustration than globally applicable to all things. Clearly, a mold for a pen isn't going to be $100k. The situation I'm talking about is definitely reflective of reality though.
- losteric 8y agoDamn, thanks for the overview - I didn't realize manufacturing in America was so ridiculously convoluted. Do you know if there are regulations protecting those "partners", or is this just the established norm for doing business?
- dizzystar 8y agoIt's kind of like a membership to a club. You can see some of the symbols on various websites. People and companies pay to be a member of these clubs. Basically, it's saying that no one is going to step on each other's toes. Not being a member would make things hard for you to do business. This obviously isn't universal to all industries. As far as I know there are no written legal codes, so it's basically an example of self-policing a la libertarianism, where you pay to play and follow the rules.