Big Factories or Small and Medium Size Factories?

Big factories or small and medium size factories?
A Big factory or a Small and Medium size factory?

Big Factories or Small and Medium Size Factories? How to decide?

When you source products from China, you will be flooded with hundreds of thousands of factories, and they are way different in many ways. There are many big factories with modern workshops and well-organized, as well as many small and medium-sized factories that are also professional and reputable.

Now with the development of transportation today, it’s very easy and convenient to check on-site and see what are these factories like. But how to choose and decide which one to cooperate with? Big Factories or Small and Medium Size Factories?

Without further ado, let’s dive right in!

Big factories are fine but not for everyone.

Many people tend to work with big factories because they think it can give them the guarantee that big factories will make the products with good quality at the best price and offer them good after-sales services, fast lead time. But is that really true?

It is true that big factories in China are well established, with a professional team, standardized workflow and advanced equipment, etc. When you visit these factories, you surely will be impressed by their scale and have a feeling of “WOW”. It makes you feel that you can do so many good businesses with them. But, do you really think that they can fit your current business?

Before you make the decision to cooperate with the big factories or small and medium-size factories, please keep in mind that what’s the most important thing that you want to achieve from them, Price? Fast Lead Time? Flexible Payment Term? Strong R&D Ability? Zero Quality Problems? Modernize production lines? Or you just want more flexibility, simplified procedures, quick response, and high efficiency, etc?

Knowing what you truly need and what kind of factories you’re going to cooperate with, together then you can get the most out of it.

What are the big factories like?

  • Long history, more than 20 years
  • Sizeable staff force, minimal 500 employees
  • Large organization with a clear division of works
  • Standardized workflow
  • Great scale of manufacturing
  • Financial support, e.g. OA 30 days, OA 90 days, etc.

There are still many advantages that can be listed but it is also important to know its downsides:

  • Required big quantity for an order (High MOQ)
  • High operating costs
  • Cumbersome process
  • Long lead time if it’s a small quantity

Modernized equipment – SMT Lines

You may think you can get good prices and good products by working with big factories, but as a matter of fact, the prices you get from big factories is not that cheaper than from the small and medium size factories, or it’s even higher (sometimes this happens a lot).

When you choose to cooperate with a big factory, it’s no doubt that they can offer you a very good product that is with quality assurance, high consistency, warranty periods and well after-sales services, etc. But they will also measure your business, whether you have a big order quantity, whether your products can bring them more margins, whether you place orders more frequently, etc. If they think you’re too small for them, then they will not treat you as first priority.

For example, if they start a production line to run your orders, they will evaluate first and if the order quantity is small, the production cost will be higher and production time is also inefficient. To start an assembly line, it requires 10 workers (or more) in position. If the order is too small and it has to occupy a line to run, it makes the production cost much higher and time wasted (then affect the lead time of the other order),

They probably will put your order wait in line and produce the big orders first. So if you’re not ordering in big quantity and the product value is also not high (say you just buy LED tubes, LED bulbs, LED panels, or LED Flood lights, these lighting products are very common everywhere and with low value, factories who produce these products normally require big quantity to make a profit), it’s better to look for the small or medium size factories.

What are the small and medium size factories like?

  • Employees just fit, from 50 to 300
  • Simplified procedures
  • High efficiency
  • More flexible
  • Support small quantity order

Downsides:

  • Not too long history, around 6-15 years
  • Quality is not consistent
  • Not responsible when faced with big quality problem
A small factory producing LED Linear Trunking Systems

A small factory producing LED Linear Trunking Systems

They may not have too many employees but they’re also well-organized, and due to simplified management, there are fewer decision-makers, it’s easier and faster to get an answer. If you have an urgent order needs to be delivered within 20 days, but the standard delivery time is 30 days, normally the small and medium size factories can meet your requirements.

For instance, when you place an order to a small and medium size factory, they can just run the production after 2-3 days. As it has fewer procedures to run and as soon as the management and supervisor confirmed, the order will be in the process, save more days compared to the big factories.

For a big factory, they need to input the P/O into a system (known as OA or ERP system that provides a platform and enable automation of the information processing and communication tasks in an organization) first, and then evaluated by each division like Sales, R&D, Procurement, PMC, QC, and Management, etc.

The best situation is it will run smoothly and takes 2-3 days to finish. But if one of the principals of the diversions is out of the office or on vacation, it might take several more days to run the system, probably it takes 7 days or more before the production order is placed. It’s been a week after you’ve sent P/O to the factory.

Note: Sometimes it might take much longer, even a month, if the product you order is changed a little, say you purchase LED Tubes or Linear Luminaires, you need to change the white PC cover or end caps into transparent, or you need the housing printed with other colors, but there is no such code for this product in their system, so they need to build a new code/BOM(Bill of Materiel) for the product you order, build a new code/BOM will take 5 to 10 days or more depends on the product specifications.

The other benefit of working with a small and medium size factory is that if your order is not too big and not too small, to them you will be their big customer and they will put you in first priority. They will attach more importance to your order that you will never get from the big factories. They can arrange production for your order first or at least put it into an earlier schedule, and if you meet any questions or problems you can also get a fast response and receive a solution more efficiently. There are better customer services you can receive from a small and medium size factory than a big factory because you’re their big customer and they will do everything to serve you well.

Quality Control for LED Lights

Quality Control for LED T8 Tubes, LED Tri-proof lights,

How the factories handle your product quality problems?

Everything goes all pretty well unless there are quality problems occurred. When this situation happens, the factory’s attitude is very important and could lead to a strong impact on your business.

To the big factories, it can be more relaxing for you that they can handle this issue pretty well and provide you the best solution. Not just because they’re more responsible and with a reputation in the industry but they also have strong financial resources. The big factories are able to bear the cost and pay the reimbursement out of quality problems. Also, their Quality Management Process can help to find out the reasons and offer solutions to solve it permanently.

Things go quite different for small and medium size factories. Some of them can be responsible enough and act just as well as the big factories, but some are irresponsible to pass the buck and sometimes even disappear. Whether they will solve this problem depends on many variables, such as the owner’s personality, factory’s financial situation, the relationship between you and the factory, etc.., it is hard to distinguish this kind of factories, there are many situations the small and medium size factories can assure you, or fail you.

So, big factories or small and medium size factories?

I think you may have your own answer now. In my advice, whether big factories or small and medium size factories, the factories that bring advantages outweigh disadvantages are good factories!

Still have questions? or you would like to have further discussion, you can leave your comments below or contact us at [email protected] Penglight is a professional sourcing agent that specializes in led light, we help customers handle their current suppliers and develop new products for them, adding more value to your business.

 

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