Archive for the ‘Outsourcing’ Category

My experience outsourcing manufacturing to China (or WTF happened to my samples?)

Update: You can read my follow up to this post here

Ever since I read Tim Ferriss’ book “The Four Hour Work Week,” I’ve been convinced that I can outsource large chunks of my start-up. About 9 months after starting the process, I’m realizing that outsourcing itself is about trading time for cash savings. I wrote a blog post in the past about my experience outsourcing to India. Some of the issues that arose from outsourcing code involved difficulty communicating, unrealistic expectations for initiative, and an inability on my part (as a non-coder) to verify the work being done. Now having understood those issues, I decided it was still worth it to outsource the  manufacturing of TrekDek playing cards.

Why did I decide to outsource manufacturing when I’ve had a negative experience outsourcing code? The reasons are as follows:

a) The cost savings were substantial (and I’m low on cash at this point)

b) The product itself  is simple (playing cards), unlike code.

c) I could hedge the risk by ordering a product sample first

I listed what I was looking for on alibaba.com and was contacted by about 8 different playing card manufacturers, most of them in China. Some of them were clearly scams (asking for 100% payment upfront, cheesy design templates, etc). I finally narrowed it down to one manufacturer whose sales person is named Sophia (on Alibaba all the sales people pick western names for business).

My friend Gilbert did the card designs and I sent them over to Sophia. We hammered out the specs. For playing cards, these included things like card thickness and card size (poker vs bridge). In order to mitigate the risk of getting a crappy batch of cards, I ordered sample decks with a couple of different specs. I payed for the sample via paypal; it was $100. I had to fight the impulse to order all 500 decks because I was very eager to start selling these things and generate revenue. Good thing I didn’t.

I received the sample packs today. At first glance, they looked pretty good. However, upon further examination there was a bunch of things wrong with them. Here are some of the issues:

a) Many of the borders on the cards aren’t uniform. Some images are shifted right, others are shifted down, etc.

b) On one of the boxes, they did not print a few things on a few of the box faces that were supposed to be there. They were present on the other box so I don’t know what the issue was.

c) The edges of the cards were cut very roughly. Its kind of like some print books whose page edges aren’t uniform.

Now those are the things that I thought professional manufacturers should check for. I didn’t expect to come across those issues. There are a few others things that I want changed, however, they weren’t in the original specs so I don’t fault the manufacturer for that.

Here are my options now:

a) I can e-mail Sophia and order another sample with the corrections

b) Find another outsourced manufacturer

c) Order a much smaller batch of cards at a higher price from a US manufacturer

d) Market test the cards by putting them up for sale using the pics of the samples and see how much interest there is. Determine whether or not I should even produce these cards.

So far I’ve been unimpressed with the results I’m getting from outsourcing. Though outsourcing at first glance appears to be an attractive option for those with limited funds, the actual cost seems to be much higher in the end. Is outsourcing worth it? Let me know what you think.

One of the sample boxes

The back of the box. Notice how the text isnt centered and shifted too far to the right.

An example from each suit plus a joker. The actual designs and colors came out well.

Update: Read my follow up to Sophia here

A few things I’ve learned about outsourcing to India

As some of you may know, last fall I began the process of
building trekdek. Now, since I have no web development/programming
skills, the process of building trekdek started with a visit to
elance.com , a site where you can outsource all manners of projects
you can’t or don’t want to do. Here are some of the steps I took
and some lessons learned.

1. Post the details of your project on elance.

This was a fun and interesting step for me. I posted the
job with some vague details about what I wanted. I think I titled
it “Travel themed social-networking site.” I had many developers
place bids on the job. I eliminated the ones who immediately asked
for a list of features and gave me a quick price quote. It seemed
as if they were in for quick cash and wanted to meet the minimum
requirements only. It is at this stage of your project that you
will meet the “Sales guy/guy who types the best English at the
company.” This guy will not be your primary point of contact after
you award the project to his company. However, he is useful for the
purpose of clarifying the actual features of your project. My sales
guy Samit even gave me some ideas for more features on the site and
a mockup. Cool.

2. Negotiations

Once you find the sales guy you
enjoy talking to most, you can start negotiating price and
deadlines for the project. The former is easiest to negotiate. I
had no idea how much something like this would cost, but after
receiving multiple bids from several companies, you kind of get a
feel for what the cost should be. Don’t make the first offer. Samit
started with an offer of $5500 for the whole project. We eventually
got it down to $3800. The other aspect of the negotiations includes
the type and number of features you want and the various deadline
milestones that should be reached. Your sales guy should send you a
relatively detailed project proposal outlining the features and
dates they will be done by. Don’t be so concerned with the dates,
the project will inevitably take longer than planned. However, you
should make a point to include as many features as possible for the
given price. In the end you will eliminate features, but this way,
you won’t be negotiating a higher price to add features you
could’ve included in the first place.

3. Introductions to the money guy and the lead developer

So this is where things become a little
more frustrating. Your nice english speaking salesman will fade
into the background and you will be introduced to the guy who makes
sure you pay, and the guy who will be building your site. The money
guy, in my case Rajdeep, will pop up sporadically throughout the
development process “to ensure you are satisfactory” and “please
release next milestone payment at convenience by today.” Make sure
that you are being updated on the progress of the website and they
are taking your feedback and incorporating it into the site. If
they aren’t, withhold payments until they do. This is really the
only leverage you have over the the money guy.

Your introduction to
the developer will be necessarily a little frustrating. All that
time you spent hashing out the details with the salesman will have
to be repeated with the developer. The developer’s English skills
(Rajdip don’t be offended) will be a little worse. As a programmer,
he will be more concerned with the nitty gritty details and
technical features that you want rather than the amazing,
revolutionary concept you have. It helps to have a clear
step-by-step outline of how your website’s users will interact with
the website. Throughout your talks with the developer you will also
be able to figure out which features would be best left out. For
Trekdek, I recently decided to eliminate a separate blog section
that was unrelated to any challenges. This lets the developers
focus on the most important features of the website which is
challenge creation and accomplishment.

4. Keeping tabs on the project

Your project will inevitably be delayed. Trekdek was
supposed to be launched in November. It is now supposed to be
launched by the end of January. I’m thinking this won’t be launched
until March. The most important thing is to ensure progress is
being made. I made the mistake of not being strict enough about
getting weekly updates and setting agendas for the weekly Skype
date. As a result, I’m confronted with a list of updates on Friday
mornings and an unfocused discussion of what needs to be changed.
You should get updates on Mondays so that you can be prepared to
discuss them the following Friday. I plan on doing a better job of
this for the duration of the project.

The benefits of outsourcing to India is primarily the cost savings. Hiring an American developer would have cost 3-4 times as much. Had I decided to do the website
myself ,I would have spent many years learning how to program
poorly and it never would’ve gotten off the ground. For a
relatively simple website (basic e-commerce shop or blog),
outsourcing may be the best option. For more complex websites, one
must carefully consider the costs and benefits of outsourcing. When
trekdek.com is finally launched, I’ll let you be the judge of
whether outsourcing is worth it.

Cheers,

Dale

PS: Christmas and New
Year’s blog post soon to come.