There has been an increase in the number of multinational companies that source their products from India due to the availability of competitive prices, varied manufacturing capabilities, and competent manufacturers. Be it textile, apparels, automotive parts, electronics, pharmaceuticals, or machineries, Indian manufacturers have been supplying different products to varied industries across the world.
Nevertheless, sourcing products from India is not simply a case of choosing quotations and a manufacturer based on them. It entails the making of some wrong assumptions by the buyer regarding the quality of the product, the manufacturing capacity of the producer, its pricing, and the delivery time.
Knowing the way in which Indian manufacturing works can help one choose the best manufacturer in India and ensure product consistency.
This guide highlights five misconceptions related to Indian manufacturing along with the information that needs to be known by international buyers.
Why Are International Buyers Preferring Manufacturers From India?
Several factors favor international buyers who are seeking to collaborate with manufacturers in India. This includes the diversity in India’s industrial sectors, a skillful labor force, reliable supplier networks, and competitive production cost.
The following are some of the factors prompting international buyers to seek out manufacturers in India:
Wide range of manufacturing capabilities: Manufacturers of a wide range of industries are found in India, such as those making textile products, leather goods, pharmaceutical products, engineering, auto parts, electronics, and consumer goods.
Competitive production costs: For the products and their production needs, the Indian manufacturers may be able to provide competitive prices while at the same time maintaining the agreed quality.
Experienced workforce: The Indian manufacturers in many industrial sectors have a labor force that is both experienced and skilled.
Export experience: There are Indian suppliers that have worked with international buyers, and therefore they are familiar with export processes, packaging, and shipping.
Supplier variety: International buyers may find a variety of suppliers within India ranging from workshops to industries.
However, successful sourcing from India will depend on finding a manufacturer that matches your business needs.
5 Common Misunderstandings about Indian Manufacturing
There could be various misunderstandings about manufacturing capabilities that will impact procurement practices and result in unnecessary risks. Below are five common misunderstandings that international buyers should stay away from.
Misconception 1 – All Indian Manufacturers Provide the Same Quality
Even though India is a country that has a wide range of manufacturers, their product quality differs from factory to factory. In other words, each manufacturer will be different in its technical equipment, skills, quality management system, raw material usage, and production process.
In other words, there could be two factories producing the same goods, but using different materials, machines, and finishing methods. As a result, even though the quotes could be similar, the end products will be very different in terms of their durability, performance, and appearance.
Instead of That: Request product samples, review quality control procedures, verify relevant certifications, and establish measurable quality requirements before production begins.
Misconception 2 – Lowest Quotation Equals Best Value
While it is tempting to select a lower quotation, especially when buying in bulk, it is not always the best choice since it does not provide the overall cost involved in getting the goods.
Some quotations may not include packaging, testing of products, costs associated with tooling, inspection, and transportation. On the other hand, some quotes may be on different specifications of materials or minimum orders.
Selecting a vendor based on the price may end up increasing your costs, producing products of poor quality, and production problems.
Instead of That: what you need to do is to compare the quotations based on the product specifications and consider the total cost of production, packaging, inspection, freight, insurance, customs duties, among others.
Misconception 3 – All Factories Are Able To Produce Large Quantities
Not all factories have equal production capabilities. Some factories specialize in producing small quantities and customized items; whereas some factories have machines and tools that can produce large quantities.
A manufacturer who produces good samples might not have enough machines, workforce, materials, and space to produce a large quantity within the stipulated period.
Instead of That: Find out whether they have machines, workforce, materials, and space for the job. Find out how many units they produce per month, their current orders and production capabilities in the past.
Misconception 4 – Manufacturing Schedule Needs to Be Flexible Always
The manufacturing schedule is unique in each case depending on various factors such as availability of materials, machine hours, work-force, complexity of the order, and load of production on the part of the manufacturer.
Any alterations made to the specification of the product or the packaging or the quantity ordered have an effect on the delivery date. International orders require time for inspections, documentation, custom checks, and logistics.
Assumptions regarding flexible manufacturing schedule can negatively affect your inventory management and sale agreements.
Instead of That: Make a manufacturing schedule with a list of deadlines. Deadlines for delivery of the raw materials, manufacture of the order, and deliveries need to be set before the order is placed.
Misconception 5 – Sample Order Ensures Quality in Bulk Orders
Sample order gives an idea to the buyer regarding the appearance, design, material, size, and finish of the product. Just because the sample was approved does not mean that each piece in bulk order will have the same quality.
Some of the variations may come as a result of material changes, machine calibration, process variations, and lack of inspection.
Such considerations are crucial especially when ordering precision products that require specialized materials.
What to do instead: Approve a pre-production sample, document the required specifications, and establish quality inspection procedures for the bulk order. Where appropriate, arrange inspections during production and before shipment.
What International Buyers Should Be Aware of With Regards to Indian Manufacturing
Sourcing is effective when the buyer knows that manufacturing is not the same from one supplier to another and even among product lines. Instead of being obsessed with the end product or price, international buyers need to take into account the whole production process.
Manufacturing Capability Varies from One Factory to Another and by Product Line
There are no manufacturing companies that manufacture everything. While a company may be able to manufacture simple garments, this company might lack the technical capability to manufacture technical and performance apparel.
Also, companies that manufacture electronic parts would have varying technical capabilities and certifications.
It is important for buyers to determine if the supplier is able to produce their product lines.
Quality Requires Specifications, Processes, and Inspections
Quality standards have to be spelled out at the beginning of manufacturing. Words like premium quality or export quality could have varying meanings to various suppliers.
Buyers have to set up quantifiable criteria in respect of materials, sizes, tolerance, finishes, durability, labeling and packaging.
Setting down a quality control program will help the manufacturer know what to expect and give a standard to judge their production output.
The type of quality control to be carried out varies according to the products. It may involve inspection of incoming materials, in process inspection, functional tests, and final random inspection before dispatching.
Price Has to Cover Materials, Packaging, Testing and Other Costs
Manufacturing costs go beyond the unit cost of production in the factory. The type of materials used, labor costs, production complexities, packaging and testing costs, among others, could affect the quotation.
Importers have to look at logistics, insurance, duties and taxes among other import costs.
Ask for an itemized quotation where possible. It makes it easy to compare suppliers based on identical specifications and commercial terms.
Scheduling for Manufacturing Should be Practical
The timelines for manufacturing need to take into account material supply, sample approval, manufacturing, quality testing, packing and shipment.
Purchasers may want to make allowances for potential delays including lack of materials, equipment repair and any unforeseen need for adjustments in the manufacturing process.
Follow-up is important to catch problems before they lead to problems with delivery schedules. Setting up milestones and sharing of responsibilities between the two sides helps with this.
How to Select the Appropriate Indian Manufacturer
A lot of investigation, verification and communication goes into finding the right manufacturing partner. Rather than just going through the quotation process or listings online, companies searching for manufacturers in India should have a more organized evaluation procedure.
Identify Product Specifications and Requirements
First of all, list down your product specifications. This includes dimensions, materials, colors, design specifications, quality standards, packaging, labeling and regulations.
Check Manufacturer’s Experience, Production Capability and Certification
Examine the manufacturer’s experience in making such products and their capacity to fulfill your orders.
Ask the manufacturer details about their production facility, equipment, number of workers, export market and experience of dealing with similar products.
Wherever possible verify the certification from the issuing body. Please keep in mind that the certification should match the product, process and the market.
Based on the value and complexity of the order you may consider visiting the manufacturing plant yourself or getting an independent inspection company to do it.
Sample and Pre-production Sample Approval
Samples are useful for buyers to check the understanding of their requirements by the manufacturer.
Compare your sample to the specifications provided in the purchase specification, which include material, structure, size, functions and finish.
The sample should be used as a reference for mass production and any change made to it should be recorded.
Quotation Comparison Beyond Unit Price
Obtain quotations from several appropriate manufacturers based on the same specifications and order quantities.
Comparison criteria include:
- Unit price and minimum order quantity.
- Tooling, set-up and customization costs.
- Costs related to packaging and labeling.
- Costs associated with samples and tests.
- Production time frame.
- Terms and currency of payment.
- Inspection arrangement.
- Shipping terms and extra costs.
In this way, you can judge the overall value of each quotation rather than select the supplier based on the lowest starting price.
Set Quality Controls and Production Milestones
Quality control and inspection arrangements must be defined prior to order confirmation.
Based on the nature of the products, quality controls could be necessary during procurement of raw materials, preliminary production, manufacture, and packing.
Milestones during the production should be defined, including availability of materials, commencement of production, approval of samples, inspection and shipping.
It is also necessary to define defect reporting and corrective measures.
Affirm Communications, Payments and Delivery Timeframes
Communication is very important when dealing with international manufacturing sources.
The main mode of communication, response time, reporting frequency, and issue escalation strategy should be determined.
It is necessary to affirm payment schedules, advance payments, balance payments, delivery terms and remedial measures for breached agreements.
The two parties should also determine the person responsible for exports, transport arrangements and tracking of shipments.
Challenges in Sourcing from India and Their Solutions
While India presents varied sourcing opportunities for international buyers, there are some challenges that they might face while organizing production and shipment of goods across borders.
Awareness of such challenges will help organizations create effective mechanisms of sourcing.
Managing Quality at Different Stages of Manufacturing Process
Quality problems can emerge as a result of the poor quality of raw materials, poor manufacturing process or poor quality control process.
Solution: Specifications should be written down, pre-production sample approved and inspection points defined. Independent inspection prior to shipment is recommended for some products.
Delay Due to Material Shortage and Other Issues
Material shortage can be due to a lack of materials in the manufacturing facility, limited capacity of the manufacturing facility, change in design, or other unforeseen circumstances.
How to overcome it: Create realistic schedules, confirm material availability before production, and monitor progress relative to the milestones set out. Note any changes in product specifications and quantity and how it impacts the cost and delivery schedule.
Coordination Issues Due to Time Differences and Diverse Language Usage
There could be difference in schedules, language skills, and technical terminology used by international buyers and Indian producers.
How to overcome it: Create a standard operating procedure that includes written directions, product specifications, visual references, and approval process. Hold regular meetings and have a record of all the decision made at the meetings.
Compliance with Product Specifications for Destination Market
International market products will have to comply with safety, labeling, testing, packaging, and documentation requirements for different products and destination markets.
How to overcome it: Check for regulatory requirements beforehand. Find out who is responsible for testing, certification, labeling, and export documentation.
Visibility Throughout Order Placement and Shipment
Production updates being limited may make it hard for buyers to know if there are any problems or to prepare for arrival of goods.
How to solve the problem: Seek periodic updates, set up milestone updates, and keep track of the production process. Co-ordinate with the manufacturer, freight forwarders, and logistics firms to track the shipment from dispatch to delivery.
How a Sourcing Partner May Assist International Buyers
Collaboration with a sourcing partner may make supplier selection and production management easier for companies that do not have much experience with Indian manufacturing industry.
The right partner may assist buyers in selecting suppliers, communicating their demands, monitoring production, and coordinating all shipment-related tasks.
Nevertheless, buyers should check on a sourcing partner’s credentials, scope of services, cost of services, and relationship with manufacturers prior to using its services.
Selection of Sourcing Partner-verified Manufacturers
The sourcing partner can recommend suitable manufacturers according to the product type, capacity, quality standards, and order quantities.
Based on the level of service, it may also assist in initial verification of factories, qualification of factories, and vendor comparison.
It could help in saving time in the selection of possible manufacturing partners.
Management of Sampling, Costing, and Manufacturing
The sourcing partner may act as an intermediary for coordination between buyers and manufacturers during product design.
It may assist in arranging samples, clarifying technical details, comparing quotations, and checking progress of manufacturing.
Documentation is still necessary to communicate the needs of the buyer clearly.
Inspection and Action Management
Some sourcing partners may coordinate inspections by third party companies or may organize visits to factories for evaluating manufacturing.
In case of any problem, they may help in reporting defects and in communicating corrective measures.
Buyers need to check if such inspection services are covered in the sourcing arrangement or not.
Enhancing Communication and Visibility of Shipments
A sourcing partner can be engaged to facilitate coordination among buyers, manufacturers, inspection organizations, and shipping companies.
It may help achieve better visibility regarding the state of manufacturing, test results, date of shipment dispatch and shipment progress.
It is important to set up expectations of reporting from the very start and clarify which processes the partner is going to take charge of.
Final Checklist Prior to an Order Confirmation with Indian Manufacturers
Prior to order confirmation, make sure you have considered the following checklist in order to make sure that all necessary business, production and shipment considerations have been taken care of.
- Product specifications and samples approval: Materials, dimensions, quality requirements, packaging and labelling needs.
- Manufacturer capabilities and qualifications: Experience, production capability, facilities and certificates, if any.
- Pricing, payment conditions and minimum order volumes: All applicable charges and terms of business.
- Production schedule and inspection points: Milestones, quality control points, reporting and shipping schedule.
- Packaging, testing and shipping requirements: Regulations for destination market and responsibilities for documentation and shipping.
- Communication protocol: How to report on progress and solve production-related problems.
- Establish communication and escalation procedures: Define how progress will be reported and how production issues will be resolved.
- Document changes and approvals: Ensure that revisions to specifications, quantities, or delivery dates are recorded and approved by both parties.
Completing these checks before placing an order can help international buyers reduce uncertainty and establish more reliable manufacturing relationships.
Conclusion
Manufacturing in India provides an extensive range of products, experienced suppliers, and favorable conditions for production. But the right sourcing is possible only when knowing about the difference between manufacturers and assessing them according to the needs of the business.
The most frequent mistakes are selecting suppliers by price only, believing that all factories can process large orders, neglecting production timeframes, and using samples without control measures.
With the aid of specifying the requirements, confirming the suppliers’ qualification, calculating the total costs, and creating the processes of inspection and communication, businesses will make right decisions regarding sourcing.
For those who consider sourcing from India, the aim is to create stable cooperation with the suppliers, not just finding the cheapest manufacturer.
FAQs
What must international buyers know before sourcing from India?
Buyers need to know that there is variability among suppliers in regard to their manufacturing abilities, quality level, pricing and production capability. Buyers have to check out manufacturers, test their product samples, make sure their product specifications, compare prices and create inspection plans before ordering.
How do I validate the credibility of an Indian manufacturer?
Analyze the business registration of the manufacturer, manufacturing capacity of the factory, certifications, exporting experience, and references of the manufacturer. Get important credentials validated independently, obtain product samples, and even factory visits and inspection services can be considered. The credibility of the manufacturer needs to be validated through several means rather than being just a part of some listings.
How does international buyer ensure quality during the process of buying from India?
The international buyer can ensure quality through creating product specification, approval of samples produced prior to mass production, establishing inspection parameters, and monitoring production at agreed points. It is necessary to document defect allowances, test procedures, correction procedure, and final inspection for shipment authorization.
Is Indian manufacturing suitable for international brands?
Yes. Indian manufacturing is suitable for international brands in various industries like textile, apparel, engineering, automobile parts, pharmaceutical and consumer goods.