Author Topic: Dealers and MOQ  (Read 763 times)

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mogensbeck

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Dealers and MOQ
« on: March 01, 2017, 01:24:28 AM »
I am starting to look at selling to dealers and was thinking what other companies did their MOQ. I was personally thinking that the MOQ would be a cutting field on the laser. Then some products would be 6ea and some 18ea.
But how do you calculated MOQ?

Gear Dynamics

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Re: Dealers and MOQ
« Reply #1 on: March 01, 2017, 10:43:29 AM »
For any dealer, we simply offer a volume based discount. For example, dealer gets X% off if they buy X number of slings. We calculate that by analyzing the gross profit margin for each product and deciding what is the minimum amount of net profit we want to make, and also what is a reasonable amount of product to impose on a dealer. I don't expect a dealer to order 50 chest rigs, but slings or other less expensive/labour intensive products, could be that high.

essal

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Re: Dealers and MOQ
« Reply #2 on: March 01, 2017, 10:47:36 AM »
In a large scale operation, I'd consider the MOQ to be the number required to even out the time it takes to set up the production line. It makes a lot of sense when you have 25+ stations who all need to be re-configured for a new job, make jigs, set up cutting and train the QC. Most places allow you to go under the MOQ, but then you pay more per unit. I talked with a guy who had an order for tents, their MOQ was 10, the client ordered 8 so they added 50% to the price and kept 2 in storage.

For most of us, if not all of us here, it's way different, especially when dealing with dealers. The one thing I'd ask the dealer about, is what their requested order quantities look like. If they think it's a hassle to stock 10 mag pouches, then you'd probably be a dealer short if your MOQ is 50. If you have it timed, how long does it take you to build 1, 10 and 50 of a product- if you start with a clean workshop. If 1 and 50 take the same amount of time per unit, then there is no reason why your MOQ can't be 1, but I'd assume that you can build 50 way faster than 1, so it makes more sense with a higher MOQ so that your dealer can get the best price possible (BPP).
To give an MOQ by the size of your laser seems like a good idea to be honest, especially since I assume that you'd have to do very minimal rearrangement and adjustments to anything in your shop. If you had a manual table saw, MOQ would typically be as few layers are your comfortable about cutting vs. the time it takes to lay up. BPP would be as many layers as your saw is capable of.

What about price breaks? If your MOQ is 1 sheet, and X is priced at 15x$30, what happens when you do multiple sheets of the same cut? Does your dealer get a break when you do 2+ sheets of a product? It's pretty damned quick to just hit the fire button after loading a new sheet, and your sewing will be faster. Let's say for 2-4 sheets X is now $27 per unit and your BPP is 5+ sheets at $25. This gives your dealers are reason to buy more product- just don't let them overstock themselves and end up with tons of stuff just taking up shelf space.

TL;DR: The easiest way to establish an MOQ is to take the lowest number of units you are willing to build and ship and stick to it.

BOgear

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Re: Dealers and MOQ
« Reply #3 on: March 01, 2017, 03:53:29 PM »
In a large scale operation, I'd consider the MOQ to be the number required to even out the time it takes to set up the production line. It makes a lot of sense when you have 25+ stations who all need to be re-configured for a new job, make jigs, set up cutting and train the QC. Most places allow you to go under the MOQ, but then you pay more per unit. I talked with a guy who had an order for tents, their MOQ was 10, the client ordered 8 so they added 50% to the price and kept 2 in storage.

Essal is on the money. There is no right or wrong number, or a magic number at that. It comes down to your costs, and your optimum output, and this number always changes per product (you have to work it out for each and every product).

Transparency: I learnt this the hard way and offered MOQ of 1, and price breaks at 5 or more units (arbitrarily with no forethought). Basically we became a sample shop as dealers often only bought single items and we didn't make any profit on the product (actually in some instances lost money).

Also, I wouldn't base it on your laser bed optimum cut size. I played around with figures in our BOMs, and for us, cutting time usually isn't the most expensive component unless we are hand cutting individually. Majority of the cost of goods come from the sewing steps, and the associated overheads (DONT forget your overheads). Heck, your laser runs by itself while you are sewing, so "technically" it is free labour. You are probably better off basing your MOQ on optimum output of sewing NOT cutting, as cutting isn't your restriction in your process. Essal's comment about setting up processes, lines, QC, etc, transfers across to small operations as well. Even something simple such as taking time to remember the product and the steps involved makes a single unit cost substantially more than 10 of the same (you only think about it once, and then it becomes automatic repetition)

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mogensbeck

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Re: Dealers and MOQ
« Reply #4 on: March 03, 2017, 02:25:04 AM »
There is many good points I will think more about. thanks for the help.

Mike9386

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Re: Dealers and MOQ
« Reply #5 on: March 03, 2017, 09:10:22 AM »
Generally we have MOQ 500 USD for dealer orders. For stuff out of stock there is MOQ 5pcs/per color/per item/per size to be scheduled to production.
Since i have been dealer of many big brands like Camelbak, Mystery Ranch, Mayflower, Velocity, Arcteryx LEAF and many more basically they has MOQ 1000USD

essal

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Re: Dealers and MOQ
« Reply #6 on: March 03, 2017, 01:56:50 PM »
Unless you have products in stock, an MOQ based on value isn't a good idea. All the ones mentioned by Mike have volume and stock, but if you're doing a production run for the dealer then going by value alone isn't cutting it IMO. $500 doesn't really cover a whole lot, like 20 mag pouches or 4-5 chestrigs.

Misfit

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Re: Dealers and MOQ
« Reply #7 on: March 12, 2017, 06:19:11 PM »
Quick noob question what is MOQ?

WPJ

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Re: Dealers and MOQ
« Reply #8 on: March 12, 2017, 06:30:09 PM »
Quick noob question what is MOQ?

Minimum Order Quantity

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Re: Dealers and MOQ
« Reply #9 on: March 12, 2017, 07:02:36 PM »
Got ya, Thanks!

BOgear

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Re: Dealers and MOQ
« Reply #10 on: March 12, 2017, 11:31:45 PM »
Quick noob question what is MOQ?

No such thing as a noob question bud. Ask away, and don't fear "not knowing". The military guys on here drop acronyms like it is going out of fashion, so we are all "noobs" at some point :)
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