Fully Factored<\/a> fast fashion, such as India, China and many more, tend to have very high quantity requirements. And these are based on a number of factors. The majority of overseas manufacturers operate on incredibly tight profit margins, sometimes as low as 3%-5%. Therefore, large quantities of products must be produced in order to break even.<\/p>\nHow is MOQ determined?<\/h3>\n
The manufacturer’s Minimum Order Quantity requirement is a reflection of the MOQ set by their materials and components subcontractors as well as for efficiency and operations cost purposes. For example, Fabric suppliers may require a minimum order of 1,000 yards, or a cut and sew supplier might have a minimum order quantity requirement of \u00a31,000 for just one order.<\/p>\n
To keep cash flowing, a minimum amount of stock materials and components are held by the manufacturer. When they receive an order they will have to purchase these items on an order-to-order basis. The factory is therefore required to satisfy the MOQ of the subcontractor.<\/p>\n
Minimum Order Quantity – The Math<\/h3>\n
This explains why different items and different materials including colours, have different MOQ’s.<\/p>\n
In some instances, the designer could reduce the limitations of MOQ\u2019s by identifying which materials are stock items and use them to produce their goods.<\/p>\n
Many factories in Italy, specifically those producing accessories, offer a customizable service. The more you customize a product, the higher the MOQ requirement rises.<\/p>\n
Lowering the MOQ\u2019s in high yield overseas manufacturing units is difficult as the supplier has very limited room for reduction. They may not be able to offer you a lower Minimum Order Quantity without taking a loss or being forced to take a bigger risk by buying more materials and components that are actually used for your order.<\/p>\n
Some suppliers may consider offering buyers a lower MOQ, in return for a higher price. Working out the supplier’s quantity requirement structure is often far more efficient. By doing so, you can design your product, and use materials and components that the supplier is able to procure in lower volumes.<\/p>\n