For customers who customize wet wipes products, wet wipes factories often set a minimum order quantity. The following are the reasons why wet wipes factories have minimum order quantities.
1. Production Setup Costs:
Regardless of the quantity produced, customized products (including wipes) incur certain fixed additional costs such as design, printing, configuring machinery, testing and quality control. This is both time consuming and expensive. These setup costs can be high, and when minimum order quantities are low, the costs are spread over fewer units, which means the unit price of wipes becomes higher. So manufacturers prefer to produce in large quantities to give their customers better prices while increasing efficiency and reducing unit production costs.
2. Economies of Scale and Supply Chain Efficiency:
Manufacturers are generally more efficient and cost-effective when producing large quantities of products. Larger production scales make better use of resources, machinery and labor, and setup costs such as equipment preparation, raw material purchases and production line setups are spread over more units, resulting in lower production costs per unit. Bulk ordering helps streamline the supply chain. It enables manufacturers to better plan raw material procurement, production scheduling and logistics. This reduces lead times and ensures a more stable production process.
● Material costs:
Ordering materials in bulk usually results in lower material costs. Manufacturers can negotiate better prices for raw materials or packaging when purchasing larger quantities, which can help save on overall costs.
Resource Allocation: Factories have limited resources, including production capacity, labor, and storage space. Setting minimum order quantities helps manufacturers allocate resources efficiently and prioritize larger, more profitable orders.
● Capacity utilization:
Manufacturers aim to maximize the utilization of their production capacity. Larger orders help keep production facilities busy and ensure a steady workflow. Larger production runs allow for better production planning and manufacturing process optimization, which reduces downtime and improves the overall efficiency of the production line.
● Logistics and Transportation:
Transportation costs can be more efficient when shipping larger quantities. Higher starting quantities allow for better optimization of transportation logistics and lower unit transportation costs.
Manufacturers need to cover costs and make a profit. Smaller orders may not generate enough revenue to justify the effort and resources required for customization. Manufacturers need to ensure that each production run is financially viable. Minimum starting quantities help to ensure a minimum level of revenue per order and ensure that the factory can produce profitably.
4. Risk Mitigation:
Customized products may face a higher risk of rejection or specification changes. Manufacturers can set minimum order quantities to minimize the risk of overstocking if a customer changes or cancels an order.
5. Market Demand:
Minimum order quantities may be influenced by the manufacturer’s assessment of market demand. Setting a minimum order ensures that production is in line with expected market interest.
It is important to note that the specific reasons for implementing minimum order quantities may vary from manufacturer to manufacturer. While minimum starting orders can be a barrier for small businesses or individuals, they are a common practice in the manufacturing industry to ensure efficiency, profitability, and sustainability of the production process. Negotiating with manufacturers or finding alternative suppliers may be options for businesses with lower volume requirements.