5. SEEK THE OPINIONS OF OTHERS
Utilize your relationships or contacts within other companies. It can be very useful to validate your interest in a potential new supplier with people who already have experience working with the vendor in question. Think of it like a serious relationship: There’s a difference between dating someone sporadically and living with them every day. Get the inside scoop on how a vendor really functions from people who already work with them. Recommendations are easily given at the various bars, coffee shops, and cafés around annual toy industry trade shows.
6. DO YOUR DUE DILIGENCE
Use the same approach to bringing on a new vendor as you would when buying another company. Comb through everything you can in as much detail as you can. If a vendor claims to supply a particular company, find out for sure that’s the case. If they claim to have been audited by a particular retailer/licensor, make sure you get documentation to prove that. Remember: Cutting corners can increase risk.
7. CONSULT THE EXPERTS
There are lots of individuals and companies that can help you find the right toy and game factories, whether you’re looking for a Hong Kong factory or a U.S. domestic outlet. If you have any doubts, there’s little harm and a lot to gain by seeking professional help. Most professionals that can assist you in this area are paid by the supplier, so the cost is built into the price you pay. If the price is not right, you don’t proceed with that person or company. Factory finding services will often pay for themselves, saving you costs by opening up access to a broad vendor base or pointing you toward specific vendors, depending on what you’re looking for. My company was asked to help find a new board games supplier for a leading games company that had too great a workload for too few staff members. We met with the potential candidates, got quotes, and helped the company choose the new supplier. Aside from reducing the stress and leg work for the client, we also saved them an average of 14 percent per product in costs. On another project, the owner of a multicategory toy company needed to secure a new supplier for several different product categories at short notice due to a
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Think of it like a serious relationship: There’s a difference between dating someone sporadically and living with them every day. Get the inside scoop on how a vendor really functions from people who already work with them.” supplier audit failure. We introduced the company to five or six leading factories (with squeaky clean audit bills of health). The company then selected two factories, which are now supplying and hitting all the required standards.
OTHER CONSIDERATIONS
Even with all of these steps, there are still a few other things to consider. Due to the slide in value of the Euro currency versus the value of the U.S. dollar (which is the currency overwhelmingly used to buy stock from Chinese factories), more European toy and game companies will be forced to manufacture within the Euro-zone this year. As countries within this area are likely to account for roughly 15 percent of global toy sales this year, this may open up capacity and appetite from high-quality vendors in China. That said, many people view China as a toy manufacturing base that has lost a certain degree of its price competitiveness in recent years, with a general trend toward opening additional manufacturing facilities where labor costs are lower, such as Vietnam. This doesn’t necessarily need to affect your approach in the short term, but it could be prudent to have local manufacturing options validated, should exchange rate fluctuations or labor issues threaten to restrict price competitive supply from the heartland of toy manufacturing in southern China. ■ Steve Reece runs Kids Brand Insight, a leading global consultancy to toy and game companies. For more details, visit www.KidsBrandInsight.com/toysourcing.
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