Manufacturing considerations when expanding your business
January 24
As you grow as an ecommerce business, demand for your products will increase.
That doesn’t just put a strain on your website and your warehouse. It also means you’ll need to manufacture more products whilst retaining the high standard of quality your customers expect.
In the US alone, ecommerce made up almost 70% of total manufacturing shipments in 2020. That means you have plenty of competition, and honing your operation is essential.
So how do you ensure that your manufacturing process is built to withstand growth? And how can powerful integrations aid you in your journey?
We’ve taken a look at our top manufacturing considerations for ecommerce businesses looking to scale.
Facilities and manpower
Different businesses, depending on their size and experience, take different approaches to manufacturing. Many are capable of producing their own products, often large fashion brands, however 68% of companies outsource either part or all of their manufacturing process.
That’s because small to medium enterprises (SMEs) typically don’t have the resources to operate their own manufacturing sites.
But regardless of your approach, the capabilities of your facilities and manpower must be reviewed when you scale. If you run your own production, you’ll probably already know the limits of your operation.
However, if you’re outsourcing, you’ll need to think carefully about whether your current supplier still suits your needs. You might not need to end your contract with them, but you may need to find an additional supplier and delegate demand between them for efficiency.
Do you have enough storage?
The capabilities of your manufacturing process shouldn’t be the only consideration. If you’re producing more products, you’ll also need more places to store them.
Re-evaluate your warehouse holistically alongside your manufacturing. Do you need to open up a new site, or do you just need to find a way to more efficiently use your space?
Manufacturing and fulfilment should always be communicating closely with one another. You might be seeing increased demand, but there’s no point manufacturing more products if you have nowhere to put them.
Where are you expanding to?
Growth isn’t a catch-all buzzword. It means different things for different businesses. For some, it could simply mean growing within your current market by opening up more sites locally.
For others, it could mean growing internationally and selling to foreign markets. If you’re expanding internationally, there’s some more complicated manufacturing considerations to take into account than on a national scale.
A flagship product you sell locally might not even be allowed in a foreign country due to the materials it uses. Kinder Eggs, for example, are extremely popular in Europe; but in the US, a federal act prohibits food products which contain non-nutritive objects such as plastic.
There’s also customs to keep in mind. If your supplier is based locally, it can be problematic and expensive to ship those products over to a warehouse in a different country. You may need to consider opening a new manufacturing site abroad.
Sourcing raw materials
If you’re a fashion brand or another type of business which typically uses natural materials, this shouldn’t be too much of a worry. You’ll need to source more raw materials, like cotton and wool, but as long as you have a reliable supplier, scaling up will be more than possible.
However, other types of businesses deal with harder to source and more expensive raw materials. Electronics, especially, is an industry heavily reliant on rare earth metals.
And with over 60% of rare earth production taking place in China, as these companies expand, they may need to find different suppliers from other countries.
With a strong expansion strategy, this is completely manageable. But you may need to consider whether too much expansion will result in less profit, as you spend even more on sourcing rare materials and production lines.
Enter Patchworks
Adapting your manufacturing strategy is essential when experiencing growth.
A client of ours recently went through this process. Originally an exclusively B2B seller, they decided they wanted to expand their offering to regular consumers.
To reach this new market, and to sell internationally, they decided to open up a brand new manufacturing site in North America.
However, to make the most out of their new strategy, they wanted to wipe the slate clean with their current ERP. They needed to ensure their manufacturing operation was expertly linked to the rest of their business to support their growth.
That’s why they contacted Patchworks. With our self-serve, no-code/low-code integration platform, we connected all of their disparate systems to ensure their manufacturing operation could run smoothly.
So are you looking to expand your manufacturing operation? Whether you need an ERP, a best of breed WMS, or a diligent internationalisation solution, Patchworks will build the seamless connections you need to scale.
