First, let’s talk about what a manufacturing broker is exactly, and what they do. They are a single point of contact for a group of manufacturers who can often together produce fairly complex products. This all happens without you needing to go to manufacturers individually. They either charge a percentage on top of the manufacturers for their time or are paid by the manufacturer like a salesperson would. They often act as a pass-through entity for your goods and money. Brokers are not designers or engineers typically, though they sometimes are. They are advocates for both sides as they get paid when both sides are happy.
If you already have all your own manufacturing sources, then you may not need to hire any manufacturing brokers. With that being said, if you are paying someone a yearly salary to manage all those vendors you currently have, then outsourcing to a broker may free up some of your cash.
Often brokers are paid by the manufacturer, just like a salesperson and you don’t pay more for it. Finding a good broker can help get your product manufactured cheaper than hiring employees or doing it yourself. They already have relationships with the manufacturers and can sometimes help guide your project.
Good manufacturing 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.
I talk about Kickstarters and Manufacturing in another blog post because of how much of a problem this can be. For start-ups and large businesses, having vendors go under is a consistent issue. Sometimes this is detrimental to the point of collapsing a company or product.
What We Do
Supply chain management is important and the right broker, sourcing agent, and development firm can make it so that issue is dealt with quickly and for you. This is something we handle in phase 4 of the Peterman Method™ and continues through the life of the product. So, in my opinion they are worth it, especially if you don’t have the resources to have a dedicated person doing sourcing and vendor vetting and management.