As the COVID-19 pandemic ravages the country, many manufacturers are pivoting their production lines to produce gravely needed supplies, including face masks, surgical gowns and hand sanitizer. Before you volunteer your services, consider this before committing:
Identify the Right Factory Partners:You may be making products you’ve never made before, so only engage with FDA-approved and qualified factories. Keep in mind you may have never worked with them before, so get a clear understanding of the factory’s production capacity and payment terms ahead of time. If you’re unable to obtain open payment terms with suppliers, mitigate your risk by working with a trusted lender to obtain letters of credit. Never send cash advances to factories overseas because you cannot compel performance if they under-deliver.
Secure Quality Control and Inspection Procedures in Advance: Since the factories and the products you’re making may be new to you, be sure to vet quality control prior to leaving the factory. Work with a trusted quality control resource and don’t rely on the factory.
Review Orders and Contract Terms Carefully: Study the fine points of all underlying contracts and orders for supplies, especially ones from state, local and government agencies. Negotiate short payment terms – asking for 7-15 days is not out of the question. Secure non-cancellable contracts so you aren’t stuck with inventory you can’t use.
Fine the Best Logistics Provider: Assuming the products will be imported, make sure you know the entry provisions for both regulated and unregulated products. Delivery times are key, so be sure you’re working with a good logistics provider to ensure that your goods don’t get stuck in customs.
Don’t Go This Alone: Find partners with experience working with government contracts and importing FDA-approved goods during times of crisis. Work with seasoned professionals at companies like Rosenthal & Rosenthal with a track record of helping clients during national disasters like Hurricane Katrina and epidemics like SARS. They can help you figure out how you can contribute, while also protecting your financial interest.
For more information, contact Paul Schuldiner, Executive Vice President, Rosenthal & Rosenthal, at pschuldiner@rosenthalinc.com or 917-324-4520.
