Page 43 - FoodFocusThailand No.176 November 2020
P. 43

SMART PRODUCTION

                  packaging type and size changed, or even a   3. Making agreement: After collecting sufficient information, and decide to use the OEM
                  shape of packaging. Such those changes make   service, a written contract or agreement must be established to make agreement enforceable
                  more difficult to fulfill with their own factory set   by law. This process is to reduce the risk, and to prevent damages from both parties. The
                  up because the machines were designed to be   agreement shall cover an unreasonable cancellation of OEM production, an unexpected
                  specific to the initial requirements including the   service fee adjustment, or a failure of commitment to deliver goods within timeline. In addition,
                  type, size and shape of packaging. Changes of   the proprietary of product innovation and concept can be established to prevent or mitigate
                  such  requirements  demand  an  additional   by addressing in the confidentiality contract, or the non-disclosure agreement with OEM.
                  investment to adjust, or even to replace the   4. Preparing to use the service: After the contract is made, the further preparation in
                  existing machinery.                     various areas shall be initiated such as a funding, a packaging and labeling design, a packing
                     •  Loss control of initial production: In the   preparation for transportation and storage, a logistics arrangement, a warehouse management,
                  beginning of every new production, the loss is   and etc.
                  often occurred and becomes one of the     That’s all to establish our own branded beverage overnight.
                  production costs. Only experience OEMs who
                  have the expertise and skill set will have the
                  ability to control losses in manufacturing of new
                  products, or production trials. They are more
                  advantage than those who are new to business
                  without a collective experience.
                     •  Expertise and Consultancy provided by
                  OEM
                     Cons
                     •  High Minimum Order Quantity (MOQ)
                  required: To a new customer, MOQ may set on
                  a high side due to the size of machinery and the
                  line production. The MOQ normally define a
                  profitability  and  a  cost-effectiveness  which
                  OEMs  normally  consider  to  their  services
                  offered.
                     •  Risk of order cancellation, or service fee
                  increased by OEM
                     •  Risk of product and idea imitation by OEM
                     •  No product differentiation when selecting
                  on-the-shelf products
                     •  Less  flexibility  on  production  volume
                  compared to self-factory
                     •  Less flexibility to modify productions or
                  processes
                  How to Prepare when Approaching
                  a Beverage OEM
                     1. Preparing the overall business
                  orientation of products: In prior to entering a
                  business negotiation with OEM, a business
                  owner needs to prepare the overall information
                  to support negotiations and decisions. Those
                  information include but not limited to, the type
                  of  product  required,  the  target  customer
                  segment, the competitor  in the market, the
                  required standards, the selling price, and the
                  profit required. The information will determine
                  the cost of goods, the cost of production, the
                  marketing plan, and the distribution channels
                  and methods. The information can also lead to
                  decision of a merchandise forecasting, the shelf
                  life demanding, and so on.
                     2. Studying our OEM counterpart: A
                  business owner needs to understand the scope
                  of services provided such as the availability of
                  research and development services for new
                  products, or the sourcing of raw materials and
                  packaging. He or she also needs to know the
                  types and components of merchandise, the
                  minimum  order  quantity,  the  availability  of
                  standard licenses, the service fee, and other
                  terms and conditions from OEM.

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