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When the clothing manufacturer undertakes a bulk order, a large quantity order from medium to big size clients, the wholesale price is low. The gross margin per unit produced is quite small, but it is offset by the large quantity manufactured. Large quantity order usually means: over 5000 pieces.
This type of quantity allows for the setting of a production line. It sometimes takes about one full day to organize the production line. This translates into physically moving the sewing machines so that they line up in a way that is convenient for the specific clothes to be produced. It requires expensive skills, the skills of mid to top level production people.
After this set up is done, the chain works almost by itself with (less expensive) labour cost involved. Two or three days into the production, the productivity increases because the sewers get used to the new production line. When the productivity increases, the clothing manufacturer makes a profit while providing clothes at a very competitive rate.
2) Small quantity order:
Taking care of a small run of clothes makes the whole game of producing clothes very different for the clothing manufacturer:
- The clothing manufacturer can not waste one day in organizing a production line, it takes more time to do so than the time saved by the increase of productivity.
- During the few days when this small order is being produced by the sewers, the company is also preparing the next order.
Translating the client file, sourcing, cutting, printing or embroideries all have to take place before sewing.
That's why small orders are dealt with by a special department in the clothing manufacturing company. This department is usually made of very skilled managers and sewers who will engage all the cost necessary to the bulk production of clothes, but these costs are spread over a small quantity, hence the price per unit.
3) The right quantity for you:
The ideal quantity for your business is not necessarily the smallest one. the right quantity might also be smaller than what you have in mind. It all depends on a number of factors: The style of the clothes and the targeted wholesale price. When discussing the size of your small run, other technical issues such as sourcing, printing, dying or stonewashing should be taken in consideration as they can involve a fix fee.
Let's take a simple example of a client looking for a t-shirts manufacturer for a small run of t-shirts. The cost of dying fabric is around 200 usd. This cost is the same whether the order is for 50 or 200 t-shirts, that's because the cost is related to the time used for dying which is the same for 50 meters of fabric or 200 meters.
Other example: When a design manager draws the pattern for a garment, this takes from 1 to 2 hours depending on the style of clothe. The cost involved (the labour time of such a skilled worker) is not related to the number of times the pattern will be used. Therefore, it might make sense to spread such cost over a slightly larger quantity, let's say 200 clothes instead of 100.
I strongly recommend being very direct about the targeted retail price or wholesale price, this is the only way your consultant can help you work out the right quantity for your order of clothes