5 Questions to Ask a Contract Manufacturer
Whenever work goes into creating a product, you can bet your wallet that there’ll be a cost associated with it.
When you’re working with a contract manufacturer to define the terms of creating your products, you need to cover all your bases in a legally-binding contract. After answering these 5 question, you can review the contract with your business attorney to make sure the terms are adequate before entering a partnership with the manufacturer:
Who owns the designs?
If you’re using your own designs, you need to ensure that you keep the property rights to your designs, dyes, and molds. You also need to make sure that the manufacturer will protect your designs, drawings, and pricing and keeping this information confidential.
What are the minimum acceptable standards?
Depending on what type of product you’re creating, the specs will be different but you always want to maintain quality control. Is there a certain % thread count you’re using, or are you committed to only using resources acquired through fair trade? Lay out your expectations for the materials used when creating your product.
Can you inspect the facility to ensure that there are humane working and sanitation conditions? Outline a condition for required inspection visits in your contract.
How long do you have to discover an error in your order? Can you easily communicate with the manufacturer once you know of an issue, and how does the manufacturer remedy these issues? State your preferred methods of communication, remediation, and ownership when it comes to resolving these errors quickly and efficiently.
How many goods are made?
In case a conflict erupts between you and your manufacturer and goes to court, you’ll want to make sure the contract is on your side. In order for the contract to be appropriately scoped and enforceable in court, you must specify the number of goods made. Don’t skim through your product catalogue and do your diligence when it comes to documenting how many of what type of products you create -- it’ll also save you a headache when managing your supply chain.
Does the manufacturer own the IP for the designs it provides?
If you’re using designs provided by the manufacturer, make sure they actually belong to your partner. Otherwise, you could be held liable for selling products that use another company’s IP without permission.
Avoid an intellectual property lawsuit by getting your manufacturer’s warrant in writing, especially when working with companies in countries with lax intellectual property laws (like China).
How can changes be made?
Changes to the product, whether it be in design, quantity, or materials, happen all the time. The tricky part is being able to make those changes in a timely and precise manner. Discuss with the manufacturer how often you can make design changes, whether that will involve changes in pricing, and if it needs to be submitted via verbal or written change order.
This is also a great opportunity for you to understand the manufacturer’s perspective, since they will have to account for how changes will impact production time or if certain resources are harder to secure (and will thus drive up costs).