Updated: Jun 15, 2020
By Corban Bryant & Alex Berryman
For a brand, a manufacturer's Minimum Order Quantities (MOQs) can seem discriminatory and arbitrary. Smaller brands can’t afford lots of stock and often don’t know how well something new will sell. When your manufacturer requires a higher MOQ than you would like, it can be frustrating. In this blog we lift the veil, giving inside perspective on WHY manufacturers set MOQ's. You may be surprised to learn that it is often to your benefit!
By understanding why a manufacturer establishes an MOQ, you can find one that suits your business. Below are three considerations manufacturers make when establishing their MOQs.
Whether it’s ethical fashion or not, price is among the top priorities for a buyer. In manufacturing, labor efficiency is crucial to getting prices down. Production quantity significantly affects both overhead and production labor efficiency and is key to giving you competitive prices.
Overhead labor - Each style produced requires significant man-hours spent by managers before production,
to define the product,
set up machines,
and document everything.
There is also significant work for every order that is unrelated to production, for example:
Whether a large or small quantity is being ordered, all of this work stays relatively constant, and the people doing this work typically have higher salaries making their time very valuable. The more pieces produced per style, the more the overhead labor cost is spread across each piece, and the lower the price.
Production Labor - Practice makes perfect. Even a highly experienced sewing technician has a learning curve for a new style and there are always a few bugs to work out in a new production line before it’s running smoothly. We find at Purnaa, that our production speed peaks on day 4 of producing a style.
You might be asking,
“Why set an MOQ? Manufacturers could just charge more for lower quantities.”
That’s true, but, manufacturing companies are fine-tuned to operate at a certain scale. Typically, larger manufacturers are responding to price pressure, so they set up for maximum production and minimum overhead and simply can’t handle all the overhead work needed to fill their production lines with small orders. In a big factory, if managers become the bottleneck, lost production time is super costly. Manufacturers that have small MOQs, tend to have small, flexible production teams and more admin staff to be able to handle the work of processing orders. In this way, the MOQs can help guide buyers to the types of manufacturers that can give them the best pricing and service.
A good manufacturer considers the manufacturing run as a whole - not just considering their own factories’ MOQs but those of their material suppliers. A cut-and-sew producer may be able to offer a low MOQ but be forced to require higher quantities for lack of ability to purchase materials at low quantities.
Supplier MOQs vary based on color, composition, and weight of the fabric.
Sometimes materials can be ordered below the supplier’s MOQ at a higher “sample” rate.
Unfortunately, we find that sustainable materials usually have higher MOQs due to the more sophisticated factories needed to produce and certify them. Below is a very general table showing our experience in the MOQ differences between purchasing sustainable materials versus non-sustainable.
While considering a production run, feel free to ask your manufacturer what the MOQs of their material suppliers may be and if that affects the order quantity - this can save you a lot of confusion and heartache when it comes to sourcing later on.
As ethical manufacturing (fair and just treatment & wages of workers) is on the rise, this third aspect to consider is relatively new and unique to Purnaa - What is the optimal order quantity that creates the most social impact?
Because of Purnaa's social mission to create dignified and continuous employment for marginalized communities in Nepal, we consider which MOQ allows us to employ the most people from marginalized backgrounds. Most of these employees start in entry-level positions, usually on the production floor. So we target orders that help us put producers to work, rather than needing to build up a large management team to handle the many details of small orders. We also consider our customer’s needs and try to balance their need for lower quantities with our mission. As a rule of thumb, we like to target production orders that create 11 days of work for a sewing team.
When you manufacture with Purnaa, you receive ethical manufacturing that truly represents you. Considering the whole manufacturing run, our services consider your brand, your customers, your product, and the hands that will make it all possible. To partner with us in your next manufacturing run, submit your design, and receive more information about our process.