How to prevent theft by bad contractors

Posted by Kathleen Fasanella on Apr 11, 2013 at 4:43 pm / Contractors, Operations / Trackback

Following the theme of yesterday’s entry, I’ll post some suggestions on getting your stuff back from a sewing contractor. The first step is to know what you have (inventory management) and a lot of people don’t. I will also provide some suggestions to avoid getting in a bind like this. By way of introduction is this quote:

I just told my sewing contractor yesterday that I will no longer be needing their services. They have my patterns and fabrics that I want shipped back to go to my new contractor and I want them back ASAP. I don’t really trust that they will ship all my patterns and fabric back in a timely manner. I owe them $100 for samples although my property is worth 20 times this amount. They want me to pay this before they ship and I want them to ship before I pay. It’s a Mexican stand off (minus the third party). I feel if I pay them first then there is no real incentive for them to ship my stuff out quickly.

I omitted a lot of information from the quote but the designer in question is justified in worrying about getting her goods back. It must be said that it is traditional to pay before shipping but she has legitimate reasons to worry her goods won’t be shipped when she needs them so it is the proverbial Mexican stand off.

The easiest solution is to not have this problem in the first place so I’ll explain how to limit your liability from the get go. If you’re already underway with someone, I’ll include suggestions that I hope will work for you too.

By the way, this is not an invitation to be paranoid but to be smart because all relationships end. All of them. Even the best of marriages end in death so one plans financially to avoid the worst of fall out. You should do the same with any provider you hire.

Now, your exposure and liability lies mostly in patterns and fabric. About patterns, not to be a nag or anything but as I’ve said ad nauseum:

Always get your patterns. Always. No exceptions.

This means that every time you pay an invoice for pattern services, you should get the electronic file for it. If you’re having manual patterns made, request that the provider drop a tracing in the mail.* If you don’t get the file or the tracing, you don’t approve further work until you get what you want. It doesn’t matter if you can’t sew or don’t have a CAD system, you save these as an insurance policy. If it all goes south, you’ll only have to worry about having your last pattern made because you have all the others.

It is important to have this expectation built in from day one, no matter how in love you are with your provider because everything is just lovely in the beginning. A real honeymoon. Providers (and you, to stores) require payment in advance of shipping to weed out the worst of customers (the stereotypical bad boyfriend or bad girlfriend) but the people who can do you the most damage are the ones who slowly gain your confidence. If you limit your exposure by expecting pattern delivery after invoice payment from the beginning, you’ll be able to manage a mess if it comes to that.

Managing your fabric liability is more complex and expensive (if it were easy and cheap, everyone would do it).

If you’re working out of your home, it is worth the expense of renting a storage unit for fabric, trims, patterns etc. You must avoid using a contractor to store your stuff. Yes, this involves additional costs (shipping and rent) in that you lose the convenience of having fabric drop shipped to the contractor but then you also won’t worry about having to pull goods from them. In this way, your liability would be limited to whatever you had shipped to the contractor for a particular order.

I know that most of you aren’t stupid and many of you have limited funds. I also agree it seems silly to start up and as a first order of business, trot down to the local rent-a-shed when you don’t have anything to put in it. I can’t tell you when is a good time to do this. Only you know. Would you be forced to close up shop if your contractor held your goods hostage? If so, that would be the time to start renting a storage space.

Let’s pretend you have the best contractor ever and don’t need to worry about using them to store your inventory. I’ve worked in good plants but inventory shrinkage (aka theft) happens in the best of them. You think stitchers or other staffers don’t see good stuff in storage and don’t try to clip off a couple of yards for a personal project when the manager is taking a lunch break? And sure, a lot of places also have a minder to inspect employee bags when leaving the plant but if some of your stuff is clipped off, the contractor is not going to tell you. A thieving employee will be fired but that is no consolation to you if your spread comes up short.

Storing your own goods is better in other ways too because you need to inspect a purchased lot in a timely way -personally. I admit to being predisposed to believing people are inherently good and error is responsible for discrepancies but you need to be mindful -particularly of fabric widths since that is the majority of inspection you can do. If you’re receiving the goods, you know if the specs from the mill are different at delivery. If the contractor receives the goods, it is just his or her word. And if it happens frequently, you’ll never know the truth of it. Maybe your fabric is coming up short, maybe the contractor is pilfering for another designer’s line. How will you really know unless you receive the goods yourself?

If you need to switch gears: It could be easier to manage than you think. First you’ll have to implement accountability changes with your vendors starting with patterns. You can broach the subject by being honest -you’re implementing an inventory management system. It’s a good idea to do that for insurance and accounting purposes because you can’t know the value of your company and its assets without it. Be sure to ask what the associated fees are for pattern tracings and make sure the provider knows that you expect CAD files to be sent to you upon receipt of payment.  Remember, you don’t order new pattern work without getting copies or files of the past jobs. One of the ways that Jane was snagged in yesterday’s entry is that she was never billed for patterns so she can’t legally own them. You need to get to the root of that as soon as possible. If your provider won’t release your patterns for a fee, you’re in a very precarious position. Rather like a stay at home mom with five kids, no job skills, and married to a philanderer.

Fabric inventory is easier to handle because you can tell your fabric supplier where to ship the goods. If your contractor is good and honest, they will be happier if you store your own inventory rather than they having to be responsible for it. Storing a customer’s inventory is never a sure thing. Personally, I don’t like to do it, especially things that are drop shipped because of possible discrepancies in shipping and then the customer may think I’m at fault rather than the shipper. It also takes up space and around here, things get moved and it is not unusual to worry about goods that are misplaced however temporarily.

Having to ship fabric to a contractor instead of drop shipping from the supplier is an additional expense so another way to manage that (if you can) is to only drop ship fabrics and trims per cut order. If you do this, you need to have fabric yields nailed down in the cut order based on a mini-marker supplied by the marker or pattern maker.  You would “issue” or authorize X yards for the cut, listing X yards left over as well as the disposition of those goods. For example, your cut requires 150 yards and you have 200 drop shipped. You authorize the use of 150 yards with a cut order (see pgs 114-120 of the Entrepreneur’s Guide or this thread) with 50 yards remaining in inventory. You need to manage those 50 yards somehow. A good and least expensive way to get them back is to ship via Greyhound. Their largest commercial customers are apparel cut and sew operations.

Keep in mind that these are all problems associated with growth. It is not tenable to hope that given costs will remain constant as your company grows. Failing to manage the increasing complexity of larger scale operations is how most companies go under -not due to slow sales which is what most people think. Your strategies to resolve problems as they arise will be the critical difference between success and failure.  Think of it as a high pressure test. If you have an under-inflated inner tube, not all of the leaks are apparent. It is only when you try to put more load on the inner tube by inflating it that you find more leaks.

_______

*A few caveats:

Realize that the provider may not want to release the pattern if it is not production ready. You must be honorable about this. If you decide to switch horses before getting a final pattern, don’t mislead your new provider by allowing them to think that this work is representative of your prior patternmaker’s output (unless it is).

Not all providers will want to send you a print out (be sure to read Lorraine’s comment) so ask when hiring. Even if you only get a file, you are light years ahead because you can find someone to plot it for you.

If you’re having hard patterns made, it is not reasonable to expect to receive oak tag patterns unless the job has been completed (production ready pattern). It is also kind of a hassle to trace them out but not unreasonable. You should expect to pay a minimal fee for tracings of the hard copy patterns (paper + time+ shipping).

5 Responses to “How to prevent theft by bad contractors”

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unimiteddesign
April 11th, 2013
6:11 PM

[quote]Personally, I don’t like to do it, especially things that are drop shipped because of possible discrepancies in shipping and then the customer may think I’m at fault rather than the shipper[/quote]

Don’t even get me started on drop shipped fabric!!!… The type of management required to catch every single discrepancy is expensive and time consuming (BUT still less money than it would cost to ship the wrong goods already sewn)…yet you have so many people who don’t want to pay for it (and we certainly won’t do it for free)

Dara
April 13th, 2013
6:46 AM

Mmm, this has been eye-opening to read. Most of my work has been for vertically integrated companies.

Jay Arbetman
April 14th, 2013
6:12 PM

Two comments.

1. More lead time.
2. Harder than it looks.

Judy Gross
April 18th, 2013
6:05 PM

I find these posts fascinating since I am now on the ‘contractor’ side of the business. – I’m about to get appox. 3000 yds of fabric for a customer which is being drop shipped to me. (where will I store it??) Maybe I can talk them into only sending me a smaller portion at a time, I’m not sure I want to be responsible for storing it, but then again if I have it, I know I will continue to have their business, and it’s a very lucrative contract for me. – And, they want a copy of their patterns – this does make me nervous – are they going to outsource their sewing elsewhere? I’m pretty sure I convinced them to stay with me vs going to China – and yes, I will send them their patterns, they did pay for them, but it still makes me very nervous. Is this unreasonable?

Jason Lucero
April 30th, 2013
11:15 PM

Thank you for the post. I thought just making sleeping bags was complex, but the business end is crazy too.

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