1. Do you really want to be a diaper manufacturer? It is amazing how many good traders end up being lousy manufacturers just because they did not understand where they were getting into, or nobody told them.Get all the facts!Once your current diaper suppliers know that you are planning to become a manufacturer like them, they will treat you very differently. Many prefer to keep it a secret.I say it is better to have alternatives ready, just in case. Unless you have your own private label, chances are you will have to start from scratch if the dream to be a manufacturer fails.
2. Sometimes it may be easier to make a diaper than what it is to sell it. Trust your marketing instincts on top of OEM’s, Vendors make machines, but don’t sell diapers. Before you can choose a good diaper design for your market, you have to understand how your competitor’s diapers are made and their relative local success. Start with a diaper performance benchmark, and then continue with a detailed reverse engineering analysis; to reduce costs, do it for just the most popular brands or choose only one particular size.Understand what features are truly needed by local consumers and why one brand may be better than the others.If you don’t know how to do it, seek expert advice.There is no better time to invest in good know-how than just before you decide what product to make, way before you place an order.If you don’t know the exact composition of your competitor’s products, you have no clue about your costs, how do you know then it will be a good business?
3. Once you are ready to define the product features that you want from a machine vendor, you also need to define your required speed and technology.You should start by looking at your market potential and your own budget. A simple criterion to define machine speed is to make sure you can sell at least one shift of production at the expected cruise speed within the first 3 to 6 months after the installation. If the required speed of the machine is less than 250 diapers per minute; chances are you will never be able to buy directly from the raw material suppliers. There is always a minimal critical volume you need to pass, this level depends on your region; below this critical volume you are basically doomed.You must think carefully if you want to become a micro-manufacturer, your chances for survival buying from intermediaries could be slim. At this stage of your project it is a good time to go to the industry shows to familiarize with equipment and the raw materials.
4. Make sure you ask for the same exact items or the same diaper machine features to all potential vendors; the acceptable performances for you equipment as well as the product design have to be well defined as part of the purchasing contract.It is easy to promise, some vendors do whatever it takes to try to close a deal, but to deliver against a well-defined contract is something else, few will take the risk. It is always better to visit an actual factory running the equipment instead of just visiting the equipment manufacturer.Of course, this is not always possible.
5. In this industry, variable cost of production is much more important than investment capital, for this reason it justifies paying more for an equipment but only if you are truly convinced you will be able to end up manufacturing with a lower unitary cost.For example, a high-speed machine, working just 10 minutes more per hour, with 3% better conversion efficiency than another similar equipment, it may pay for itself in less than 3 years just from the savings.If in addition, it also has better standard deviation on finished quality, your saving could be even higher.Based on this fact, price differences between equipment may be irrelevant.
6. After you place an order, make sure you have enough money left in your pocket to use for working capital.Keep in mind that the machine and the building is probably less than half of the investment you will need to operate your new business, that is, unless you already have excellent credit ratings.Starting up a new diaper factory without money in your pocket is the very worst thing you can do.
7. Make sure you have a good technical team and with solid manufacturing experience. You must have them ready well before you are being called for the final acceptance test by the vendor.Hiring key personal under time pressure is a bad business decision.The cost of learning by error at your location will prove to be extremely expensive.It may be a good idea to hire an expert to help you during the acceptance test, to make sure the machine complies with your requirements and that you get tips on how to train your people properly while still at the vendor’s site.
8. Take into account all you training needs while at the OEM, like product size changes; electronic calibrations, and stack count changes. Buy enough material to complete the run test according at negotiated performance, and not just for one size but at least two.If the contract was written correctly, the pressure should be on both (vendor and buyer).A common mistake is to be forced by the vendor to take the machine away without passing the acceptance test, just because you ran out of material or sometimes because they misused the materials during a long or painful start up process. Penalties must be considered as part of the contract to avoid having you pay for the broken dishes. The common promise is that they will have the machine fixed later during installation at your factory; most times this is never the case.If it was not fixed at the vendor’s, with all resources near by, it is less likely it will be ever fixed later.
9. Make a budget for your required spare parts, as well as for the initial installation; for the auxiliary equipment like air dryer and compressor, ducting, wiring, laboratory equipment, crane rental, forklift, etc.Make a plan for the start up and the time required for your learning curve.Make sure the people the vendor sends to your factory for initial set up are in fact able to communicate with your local team (a common issue); if not, at least have a good translator ready at hand.Make sure you have a quality laboratory and that you have trained all your staff about what makes a good diaper.
10. Don’t be tempted to accept any new product unless it satisfies all product quality requirements.The machine should never be started if you don’t have a quality manual with product tolerances.
After 21 years with Mexican diaper manufacturer Absormex where he served as general director, Carlos Richer retired in 2005 to start his own company dedicated to providing consulting services to the disposable diaper industry. His website, www.richernet.com, contains useful links related to the diaper industry, as well as links to websites of diaper manufacturers and raw material suppliers from all over the world.