New Laboratories founder Rohan Widdison talks the importance of not going cheap when it comes to manufacturing and the importance of strong relationships with suppliers.
If you want your start-up to succeed, stop asking “How cheap can I do it?”
Quality products & services and achieving brand loyalty with customers are two factors of business success – and you cannot achieve either of these if your main focus is on landing the cheapest price for a product you are going to on-sell to customers or the manufacturing of a product you plan to sell them.
As the CEO of a cosmetics contract manufacturing business, “How cheap can you do it?” is a question I get asked by a lot of new businesses, and I believe these entrepreneurs are not thinking about the long-term success of their business. Cheap does not equal quality and definitely does not equal success. I think a lot of new start-ups do not understand the value of building a relationship with their suppliers.
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In 1997 I did a joint venture with a Chinese and a Belgium company that really put the Chinese market into perspective and provided me with some invaluable lessons. This joint venture, along with my background in manufacturing, meant that I was able to provide invaluable knowledge when it came to quality standards across multiple markets, and it made for a good working relationship as we were able to really work together to identify what products were going to fire in different markets.
Along with quality products and achieving branding loyalty, the success of a start-up can come down to the relationship with your suppliers. In trying to produce quality products that can lead to brand loyalty, your suppliers will be the ones that will help you solve a problem if you’re having a product issue with a client. If you make a mistake and need to ask a favour of your supplier, do you think your suppliers are going to go the extra mile for you when you need it or rush an order through if the foundation of your relationship is built on gaining the cheapest price?
At the start-up phase of your business, you will need all the help you can get, and your suppliers are going to play an important role in that – especially if you are looking to your product suppliers for advice and drawing on their experience. Your suppliers are not going to spend time with you if you have whittled down the profit margin to within an inch of its life. A valuable quality manufacturing partner will have a long history in your industry and be able to share the hacks that add value to your brand and drive innovation. They should also understand who your end customer is, and work with you collaboratively to drive value into your product, and to tick off the boxes that consumer love: quality and value.
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I recommend all start-ups learn how their supplier’s business operates, learn their manufacturing/production processes, and learn who does what in the business. This will hold you in good stead if you need to ask them to go above and beyond for a specific order or if you need their assistance in solving a problem.
A good business philosophy for all entrepreneurs to keep in mind is to treat your suppliers how you want your customers to treat you. That is: 1) be a pleasure to deal with, 2) don’t try and haggle on price, 3) pay on time. This doesn’t mean you don’t question invoices if they are incorrect and or don’t raise issues of poor quality, this simply means thinking about your ideal client and replicating that behaviour.
If you are in an industry similar to the beauty industry, where we need to place a focus on what new formulations we can learn about before our clients even know about it and where the importance is in being on the front foot, it’s vital to find the right supplier that you can build a relationship with. It must become more of a partnership in order to best achieve consistent quality end products.
Be strategic when engaging your suppliers. Think long term and align yourself with companies that share the same values, who takes care and has respect for their brand, and who demand the same standards of excellence and quality that you expect.
When was the last time you asked, “How cheap can you do it?” and how did that turn out?
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