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Three Things You Should Know about Factory Minimum Order Quantities (MOQs)


cutting fabric - why do factories have MOQs

We get it. Nobody likes Minimum Order Quantities (MOQs). For a small brand, a manufacturer's Minimum Order Quantities (MOQs) can seem discriminatory and arbitrary. Nobody wants to order more stock than necessary and it's hard to know how well new styles will sell. When manufacturers require higher MOQs than you can achieve, it is frustrating; but manufacturers have MOQs for very good reasons.


In this blog we lift the veil, giving an inside perspective on WHY manufacturers set MOQs. 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.


Labor Efficiency

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,

  • calculate costs,

  • test, order, and prepare materials,

  • plan production,

  • set up machines,

  • and document everything.

There is also significant work for every order that is unrelated to production, for example:

  • sales,

  • invoicing,

  • logistics,

  • and shipping.

Whether you order a large or small quantity, the work required by the above steps for each new style is 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 when sewing a new style before it’s running smoothly. We find at Purnaa, that our production speed peaks on day 4 of producing a style. So again, higher quantities, result in more efficiency and lower prices.

hands sewing

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. They could not handle all the setup work to fill their large production units with many small orders. In a big factory, if sales, sampling, and management become the bottleneck, lost production time is super costly. Manufacturers that have small MOQs, tend to have small, flexible production teams that can start and stop with little notice. They also have more admin staff to be able to handle the work of preparing for and 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.



Material Sourcing


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 might need to require higher quantities because they can't purchase a certain style's materials at low quantities.


Material supplier MOQs vary based on color, composition, construction, 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. Also, consider designing different styles that share the same fabrics and colors. This way, you may be able to more easily achieve the fabric MOQs.


Social Impact


At Purnaa, we care deeply about fair and just treatment & wages of workers, so we don't just consider how MOQs affect our profit; we also consider what is the optimal order quantity to create 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. For Purnaa, we target orders that help us create steady, reliable work and try to avoid business lines that might have huge swings in terms of busy and slow seasons. 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, not only do you get a quality guaranteed product, but your production has an impact you can be proud of. Our project manager will discuss with you different options to achieve MOQs that work for your goals. To partner with us in your next manufacturing run, submit your design, and receive more information about our process.

 

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