• December 3, 2015

Production minimums….wait…what?

Production minimums….wait…what?

1024 288 Zack Hurley

Production Minimums

Production minimums are the smallest number of units that a manufacturer can (or is willing) to go into production on. Most manufacturers set their minimums by body style and colorway. For example, at Indie Source our production minimums for most custom work is 250 units per style, per color. This means that a crop top in maroon jersey fabric will require 250 units or a men’s french terry sweatshirt in blue will require 250 units. These units can Minimum orderthen be graded and divided into any number of sizes that the client requires.

Why do we do this?

While there are many things that go into this calculation such as fabric minimums, sewing minimums, etc. the main reason manufacturers need to set a production bar is to protect themselves. There is an inherent setup cost for a manufacturer whether they are running 100 units or 10,000 units. That cost is absorbed (in most cases) by the manufacturer and divided by the total number of units.

Using this same example, lets say the setup cost is $500. This could come from the cost of sourcing fabrics, sourcing trims, gathering artwork, making patterns/samples, and collaboration with the brand to understand exactly what they need.

Factory minimumIf we divide $500/100 units, then there is a $5 per unit cost for each item to be made before any profit is calculated (manufacturers actually need to make a profit to stay in business). This does not even take into account the COGS (cost of goods sold) like fabric, trims, and printing materials let alone costs for labor and quality control.

Alternatively, if the order is 10,000 units we’ll divide $500/10,000 = $.05 This is much more manageable for a manufacturer to absorb.

The trick here is finding a balance. Every day there are thousands of new designers eager to go to market. Our goal is to afford them the least amount of risk as possible while still maintaining a business model that keeps our doors open. The more designers and new brands can understand the challenges of manufacturers the easier collaboration between us will become. We love to see new brands thrive and want to support them whether they come to Indie Source or go elsewhere. Good luck!!

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