Are Manufacturing Brokers Worth It?

17 Aug 2018 Mr. Peterman Product

First, let’s talk about what a broker is exactly, and what they are on. They are a single point of contact for a group of manufacturers who can often together produce fairly complex products without you needing to go to other manufacturers to get a product created. They charge a percentage on top of the manufacturers for their time, and act as a pass-through entity for your goods and money. Brokers are not designers, engineers, or a strong advocate for either side as they only make money when both sides are happy.
If you already have all your own manufacturing sources and don’t have a need for sourcing, then you’d probably never consider a broker as a good use of time. With that being said, if you are paying someone a yearly salary to manage all those vendors you currently have, then a broker would quite possibly be a sounder financial decision as you only pay a fee when you order. As a start-up, finding a good sourcing resource and a good broker can make your product possible for much less than hiring your own team to manage production and find and build relationships with manufacturers.
Good brokers also always have backups for their manufacturers. This can save a start-up, or a Kickstarter project. Many Kickstarter projects have had issues where a manufacturer has closed their doors between launch and time for production. More on this here: Kickstarters and Manufacturing. For start-ups and even large businesses, having vendors go under is a constant issue, and sometimes detrimental to the point of collapsing another company or product.
We provide a rare combination of being a design firm, with full engineering and other technical skills represented on our team, along with having the sourcing capabilities to find new resources if needed. Pair all that with our ability to be a broker for your production needs, we can launch your product and keep it in production even if a vendor goes out of business, you don’t have to deal with scrambling to find a new vendor, we’ve already got that handled.
Supply chain management is important, and the right broker, sourcer, and development firm can make it so that issue is dealt with quickly and for you. So, the answer is yes, they are worth it, especially if you don’t have the resources to have a dedicated person doing sourcing and vendor vetting and management.