China is the manufacturing powerhouse.

Let’s start with the basics.

I get most of my leather supply from China, where raw hides are brought in from Europe, tanned in China and then shipped back to Europe post tanning.

To me this is incredible, the fact that someone can ship something halfway around the world for part of a process, then ship it back to the origin for further wholesale or retail distribution.

That being said, given the right trade agreements and cost base, it seems the world is trending towards country based specializations across various parts of a manufacturing chain.

Nonetheless, this works well for me. My location in Malaysia means that I can intercept leather (post tanning process) and ship it a few thousand kilometers south, rather than waiting for it to get back to Europe and then having it shipped out to me.

To that extent, Malaysia is well positioned for my manufacturing base. Not just for leather, but for almost everything that I need to run a factory eventually.

As long as the material and machinery originates in China that is.

Finding suppliers is easy. Finding the right supplier is not.

Touch wood, my current supply chain is ‘quite ok’ (I don’t want to curse myself). But that’s after going through the pain of sorting through tens of suppliers for each material that I use.

This is a process that takes months, if not years (depending on what’s being sourced). And, this procurement process happens concurrently with the product development process.

Firstly, a draft Bill of Materials for the new product is assembled. Then, I ship in samples of what I need from various suppliers, both existing and new.

As an example, let’s take leathers for use in an upper.

I like to bring in half hides (25 square foot) to get a feel for the quality.

From the half hide, a few test pairs of the new product is made, until finally a certain leather is settled upon, from a certain supplier. This is more or less the very simplified process.

Yes, I know I could just get a swatch roll instead.

However, the supplier may just cut the swatch pieces from the best part of a hide, then later when you order the full hide in quantity, you find that it’s absolute crap in quality.

MOQs vary, depending on what, who and where.

Lets continue the example.

Having settled on a leather for an upper or lining, ordering it is fairly straightforward. MOQ’s can vary wildly, but assuming that you’re lucky, shipping is straightforward and customs duties are ‘acceptable’ within Asia.

However, when you start talking about leather used for midsoles and outsoles, this is where things change somewhat.

Firstly, MOQ’s start to become much higher. Most suppliers don’t want to ship anything less than 40kg of 5mm+ leather. This equates to around 150-200 square foot, which for an independent bootmaker is a huge amount.

It’s not so much that I don’t have the order volume to use this quantity, but rather, the space required to store stiff, very large pieces of leather is the problem.

Effectively it’s like storing wood. It can’t be rolled up effectively, and it has to have a certain storage humidity. This last point is very important in my part of the world.

The humidity makes the leather become floppy and fall over whilst being stored upright and also encourages mould growth.

So, because of MOQ’s, suppliers start to push me to take more volume. They’re reluctant to give less, because it simply doesn’t make sense to waste time packing and shipping ‘small’ volume of a product.

I totally understand; it’s business.

They now have control.

As a workaround to this, some suppliers will swap out parts of your leather order with something completely different.

Imagine the surprise you have when you take receipt and open your shipment, then realise what you ordered isn’t there in full. Or worse; at all.

And after contacting the supplier, they happily tell you that they didn’t have what you wanted, so just decided to substitute whatever was missing with something else.

Huh?

In day to day practice, what this means is that I need to be extra careful in monitoring my inventory of leather.

Because I need to take into account that any future order I make, may come in with a different product than what I ordered. So, if I’m out of material already, and the order comes in product swapped, I need to re-order and wait again.

This lesson was learnt the hard way.

Interestingly, I’ve come to wonder if supplier behaviour like this due to cultural norms.

It’s seemingly the way of doing business in Asia, where suppliers will take a risk in order to not lose a sale, and then if there are problems with it, sort it out later.

This is completely opposite to business practice in western culture, where if you order something, you generally expect to receive what you ordered.

Sometimes it sometimes turns out surprisingly well.

To be fair, when product substitution has happened to me, around 50% of the time it’s turned out to be a ‘positive’ experience.

I found a way to use what was substituted into my order, and if it had never been substituted, I likely never would have discovered that product.

Take this as an example. Instead of receiving 5mm bends for insole use, I received 4mm. After doing some testing, I realised it was a better product for flexibility. So going forwards, I ordered 4mm bends.

Short shipment isn’t just less material. It becomes a higher cost base.

Let’s take another example. I may order 25 square foot of leather for use in upper making, but only receive 12-15 square foot. Strangely enough, the size is often stamped onto the hide, so it’s hard to understand how the supplier can make such a simple measurement mistake.

When this happens, it really pisses me off. Yes, I’m missing material. But I can always order more. It just means that need to wait for a new shipment.

The real issue is that my product costing has to be recalculated, as the price per square foot of leather I thought I was buying at, suddenly becomes higher.

The BOM (which included costing) has now changed abruptly.

And not just from the cost of the material. The cost of the shipping per square foot of leather is also impacted, as shipping is often flat rate for ‘small quantities’.

So I could have received more quantity in that shipment, but the supplier short changed my material amount. Meaning, my shipping cost per square foot also increased.

And all these changes flow through the rest of the logistics chain. Customs duties, import tax, last mile delivery.

So imagine, you’re going through product development, trying to source new materials, a shifting cost base, understanding your margins.

And by the time you’ve juggled it all, you realize what you can build isn’t actually what the market wanted anymore.

It’s 30,000 feet above what most people think when they imagine ‘being a bootmaker’.

No technical knowledge? Prepare to get burned.

It’s a different game when ordering a material which can be very technical, such as rubber. There are a million ways to develop a rubber compound.

This is already worthy of another post just by itself. Contrary to popular belief, rubber, is not ‘just rubber’.

So if part of your required material is very technical and you don’t know what you’re talking about, most suppliers will just give you whatever they see fit.

It’s not that they’re actively pulling a fast one on you, you’re just not specifying exactly what you want.

Because you don’t know what you don’t know.

The nature of business in Asia is that it moves fast. Suppliers don’t have the time to baby you and give advice on what you want for your particular use case. Especially at low volumes.

So you do your best and order a sample. But when you receive said sample, you have no idea if it’s what you ordered. Because you don’t have the equipment on hand to test abrasion, tensile strength, hardness, tear resistance, flex cracking and a million other technical details.

I’ve ordered multiple samples of slipsole rubber from suppliers, where they sent me the identical item every time. Despite confirming before shipping that yes, it was what I specified.

And then when it arrives, it isn’t.

Incentives are not aligned.

Regional distributors often distribute products from competing brands, which end up dictating product development.

Why? Because they’re incentivized by the brand manufacturer to push certain products.

Let’s just say that you want to use a product from a particular brand that they stock. However, the distributor may be reluctant to supply it to you. Because the commission or incentive that the brand is paying them isn’t enough to waste their time with your order.

Or it could be that a competing brand they also stock pays higher commission. So they’ll try to convince you to replace the product from the brand you wanted with similar from the competing brand.

Again, all this impacts the BOM, the pricing, the end product-market fit.

And can apply to anything from leather to outsoles to shoelaces to whatever.

In Asia, reading between the lines is necessary.

Of course, most times the distributor won’t tell you what’s happening behind the scenes. Rather, they’ll let you know that ‘shipment only happens a few times a year’, ‘lead times are long’, ‘that product isn’t popular’, or a million other reasons.

And then leave it to you to read between the lines. If you don’t, you’ll be left hanging until you just give up.

In such cases, I can’t go straight to the manufacturer either. Because I simply don’t have the purchasing power. And additional to this, the manufacturer and distributor usually have an exclusive distribution agreement for a particular of the world.

So if the manufacturer were to supply me directly, they could be directly breaking the distribution agreement with the distributor who supplies this part of the world.