Fashion production is a complex dance of creativity, logistics, and economics. One of the pivotal concepts in this intricate ballet is the Minimum Order Quantity (MOQ). For anyone looking to scale their business, understanding MOQ is crucial. As a On-Shore/ Local manufacturer we get asked often what our MOQ is.
In this blog post, we'll delve into what MOQ is, why it matters, and how it impacts designers, manufacturers, and sustainability.
What is MOQ?
MOQ stands for Minimum Order Quantity. It is the smallest number of units that a manufacturer is willing to produce in a single order. This threshold is set to ensure that the production process remains cost-effective and efficient for the manufacturer. MOQs can vary widely depending on several factors, including the type of garment, the complexity of the design, and the production capabilities of the manufacturer. Higher the MOQ, lower the price. Low MOQ will usually come with a higher price.
Why Does MOQ Matter?
Economies of Scale
At its core, MOQ is about economies of scale. Manufacturing is most efficient when producing larger quantities of a single product. The cost of materials, labor, and overhead can be spread out over a larger number of units, reducing the cost per unit. This efficiency is lost with smaller orders, making them less attractive for manufacturers.
Cost Efficiency
Producing below the MOQ often results in higher costs per-unit, which can make the final product prohibitively expensive for both the producer and the designer. For small brands or emerging designers, this can be a significant barrier to entry.
Inventory Management
Manufacturers also set MOQs to manage their inventory and workflow efficiently. Producing in larger batches means fewer disruptions in the production line and better management of raw materials and labor.
How MOQ Affects Designers and Brands
Startup Challenges
For independent designers or small fashion brands, meeting the MOQ can be challenging. These businesses may not have the capital to invest in large quantities of inventory upfront or may not have the customer base to justify such an investment. This can lead to a catch-22 situation where they need products to grow their business but can't afford to produce at the required scale.
Inventory Risks
High MOQs can lead to excess inventory, especially if the product doesn’t sell as expected. This ties up capital in unsold stock and can lead to significant financial strain as well as it being unsustainable.
The Manufacturer's Perspective
From the manufacturer's viewpoint, MOQs ensure that the production process is commercially viable. Setting up machinery, training staff, and managing quality control all involve significant effort and cost. MOQs help manufacturers maintain profitability and efficiency.
Manufacturers also need to manage their supply chain effectively. By setting MOQs, they can better predict their material requirements and production schedules, leading to more streamlined operations.
MAES London's Take on MOQ
At MAES London, we pride ourselves on offering flexible MOQs to meet our clients' diverse needs. Our standard MOQ of 40 units per style is designed for optimal efficiency, but we understand that some projects may require smaller quantities. For orders below 40 units, we provide the flexibility to accommodate these requests with a nominal surcharge, allowing us to remain agile and responsive to our clients' unique requirements.
Negotiating MOQs
Despite the challenges, there are ways to navigate MOQs. Here are some strategies:
- Negotiation: Some manufacturers may be willing to negotiate lower MOQs, especially if they are at capacity. However it can't be tenable to grown the relationship on small units. You can demonstrate potential for future larger orders or if you’re willing to pay a higher price per unit initially.
- Local Manufacturers: Smaller, local manufacturers might offer lower MOQs than larger, overseas counterparts.
- Focus on Core Products: Limiting the range of products you produce can help meet MOQ requirements while managing costs and risks.
- Group orders together: If you haven't met the MOQ per style, allocating more styles with one manufacturer is great way for the factory to accept smaller units per styles, but more styles to create a bigger order.
Sustainability and MOQ
High MOQs can lead to overproduction, resulting in excess inventory that may eventually become waste if it cannot be sold. This contributes to the environmental footprint of the fashion industry, which is already under scrutiny for its impact on climate change and resource depletion.
By understanding and strategically navigating MOQs it empowers designers and brands to make more informed decisions, optimise your production processes, and ultimately create a more sustainable and profitable business as they can better position themselves for success in the competitive fashion industry and contribute to a more sustainable future.
Get in touch with us today at : hello@maeslondon.com