Page 43 - FoodFocusThailand No.176 November 2020
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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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