Manufacturing Club Concept

Manufacturing Club The Global Production Network by

Raphaël “Delan” Vonlanthen

Manufacturing Club

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Prologue Hey, you local fashion heroes out there! You are running your own clothing store. You are different, because you are independent. You know what is selling and what is not. Now imagine the advantage of being able to do clothing production like the big guys do!

The Manufacturing Club Purpose Clothing stores team up with each other to form a global network. Club members design and produce their own clothing line, which is sold directly from the factory to the retail stores – no wholesale in-between. Many small enterprises become one big enterprise and profit from a low-cost production infrastructure. However, unlike chain stores, they remain independent and keep their individual edge.

History For several years, a few people, all owners of small-scale fashion ventures around the world, have been meeting up in Thailand’s clothing wholesale district Pratunaam, supporting each other in various projects.

We have learned a few lessons: Having your own business means doing things your way. It means working together is not always easy. Neither is clothing production, if your quantities do not please the factories. As a consequence, we have purchased our own garment factory and founded the Manufacturing Club.

Membership Join us! All you need is a cooperative mind and at least one retail store. Let’s create buying power! Take your business to the next level with us. Complete the application form, read the club’s manual and become a part of something bigger.

Attack plan This is how you participate in designing our clothing line: Combine your stores’ best selling items with your own ideas and submit the results into a pool. Club members decide by online voting what is going to be produced, thus we create a low-risk safe selling clothing brand: A basic brand, which is meant to complement your stores’ other labels. However, other than regular labels, our profit margin is exceptional.

Worbstrasse 189

CH – 3073 Gümligen

www.manufacturingclub.com

Manufacturing Club

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The same thing again in detail The Manufacturing Club Constitution 1.0

Objectives and purposes Individuals combine their strengths and organize clothing production on a professional level.

Club members can purchase products at factory prices. No middleman in-between to reduce profit margins.

1.1

Name The name of the club is “Manufacturing Club”, hereafter referred to as “MC”.

1.2

Location The club’s home base and mailing address is: Manufacturing Club Worbstrasse 189 CH-3073 Gümligen Switzerland mcinfo@manufacturingclub.com

1.3

Legal status The term club is no legal term; it is a general term that includes any kind of group whose members interact for a purpose. Therefore, the Manufacturing Club is not an incorporated business. (However, the factories involved in production are registered businesses). All members remain independent and self-governing companies.

1.4

Gentleman’s agreement No contracts will be signed. No legal actions can be taken. The club is entirely based on trust and mutual cooperation. MC is a non-profit company. The aim of the club is to benefit its members, linking retail stores around the world together and to the manufacturing units in Asia.

2.0

Membership Anybody, who owns or represents an independent retail store anywhere on this planet is entitled to join the club.

2.1

Exclusivity Each club member is granted exclusive retail rights for a specified sales area.

2.2

Entry fee There is a nonrecurring entry fee of EURO 400.00, which has to be paid together with the invoice on the first delivery. This amount is credited to the club’s safety net account and will be used to cover expenses in case of unforeseen events. Furthermore, it is proof of the applicant’s sincerity: Business owners unable to come up with this amount are not the kind of members we target for MC.

Worbstrasse 189

CH – 3073 Gümligen

www.manufacturingclub.com

Manufacturing Club

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2.3

Utilization of entry & membership fee a) Production disasters in case the factory cannot be held accountable b) Shipping or customs issues in case the shipping companies cannot be held accountable c) Similar unforeseen events, which require sufficient funds to keep up the business d) Financing the club’s annual meeting

2.4

Open bookkeeping policy The club’s use of funds can be inspected on request by any member and at any time.

2.5

Application procedure a) The online entry form on www.manufacturingclub.com must be completed. b) The MC board considers the application and deals with cases of potential objection, e.g. where exclusivity for the specified area is being claimed by another member. c) If a positive decision is taken and the entry fee is paid (30 days after receipt of the first order), the new member is given the club websites’ password and is officially granted membership with the club’s member card.

3.0

Production Club members participate by submitting samples. However, club members are not expected to invest time and energy in the actual clothing production. This will mainly be taken care of by the club’s employees, under the supervision of the club’s committee. Clothing production is preferably taking place at Astra Garment Ltd., MC’s own garment factory in Bangkok, Thailand. For technical reasons this might not be possible for certain products. In such cases another factory will be chosen.

3.1

Design and production procedure a) Store managers quarterly collect their best-selling products and upload pictures along with own ideas and suggestions for modifications onto the club’s website. Samples are being sent to the factory. b) Members’ non-binding pre-orders decide whether samples are to be produced. c) Production samples are displayed online along with all necessary details (size specs, colors, artwork, prices, lead time). d) Production samples will be sent by courier, if actual “feel” is required (costs covered by buyer). e) Members place their orders. If the order quantity reaches the required minimum, production will be started.

3.2

Shipping MC takes care of export and shipping according to the buyers’ requirements. We forward actual shippers price quotations and proceed according to the buyer’s preference (sea freight, air freight or UPS courier for small quantities).

3.3

Warehousing MC stores goods according to the buyers’ requirements, free of charge.

3.4

Production cycle There will be four production cycles per year. There is no specific distinction of summer and winter seasons (due to northern and southern hemisphere retail locations). Lead time after approval of sample is generally 3 to 4 weeks.

Worbstrasse 189

CH – 3073 Gümligen

www.manufacturingclub.com

Manufacturing Club

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3.5

Minimum order quantities There are no minimum order quantities. However, members are expected to place at least two orders per year (see also point 5.9 Activity level).

4.0

Finances MC is a non-profit company. Its expenses will be covered by the members’ orders.

4.1

Open price policy MC transparently communicates all costs and charges. Members can overlook actual factory and shipping invoices. For goods produced at Astra Garment Ltd., members can check the factory’s costing sheets stating all expenses (material cost, labor cost, overheads), on request.

4.2

Prices For each product the factory will quote a FOB price. MC adds 20% to it. This surcharge covers all expenses such as material sourcing, sampling, quality control, packing, warehousing as well as all administrative costs.

4.3

Deposit payments and terms of delivery MC requires a 60% deposit payment, which has to be transferred prior to production start.

Orders without proof of deposit payments will not be included into production quantities. 40% balance payment plus shipping expenses (CIF) have to be transferred prior to releasing the shipping documents (As a non-profit company, MC does not have the funds to pre-finance orders).

4.4

Claims and rejects MC takes responsibility for defective goods. Members can fill in the online complaints form and attach pictures of the faulty goods. There will be a discount on the next order or the rejected goods will be replaced.

4.5

Other liabilities All liabilities with external companies are to be settled exclusively by MC. No member has any personal obligation to meet any financial commitment of the club.

5.0

General meeting and committee The highest authority of the club is the annual general meeting of its members, where the club’s committee is elected. All participants attending the meeting are entitled to vote.

5.1

Location of the general meeting The general meeting is taking place in rotation, according to the countries of origin of its members. Each year, another member will be responsible for organizing the general meeting.

5.2

Side-effects of the general meeting Next to its official purpose, the meeting is mainly a social event. Members get to know each other as well as each other’s business approaches. Ideas will be exchanged and revolutions started…

Furthermore, members get the opportunity to visit a foreign country under local guidance.

They can also drink beer together.

5.3

Committee The committee of the club consists of the following officers: Chairman, vice-chairman, secretary and treasurer.

Worbstrasse 189

CH – 3073 Gümligen

www.manufacturingclub.com

Manufacturing Club

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5.4

Elections The committee remains in office for one year. The officers are eligible for re-election at the next annual general meeting.

5.5

Resolutions By majority vote, the committee is authorized to change the constitution and adopt new resolutions. This will be recorded in the minutes.

5.6

Acceptance of new members By majority vote, the committee is authorized to accept new members, provided that the conditions under point 2.1 are fulfilled and payment has been received.

5.7

Expulsion of members By majority vote, the committee is authorized to expulse any member of the club, if it is considered necessary.

5.8

Reasons for expulsion a) Unpaid invoices b) Insufficient cooperation c) Insufficient activity

5.9

Activity level All members are expected to actively participate in the designing and ordering process. MC insists on a minimum of 10 submitted samples per year and at least two annual orders (However, no minimum quantities are required).

6.0

Additional benefits MC works on a number of additional benefits, which all serve the purpose of creating useful tools for its members. Therefore, members can also seek online advice from other club members, regarding any related issues such as shipping and duty, store administration, legal advice, etc.

6.1

The Manufacturing Club marketplace Members can use the club’s database without restrictions. All contacts will be displayed online. Members can sell any other product to each other at any price, e.g. any other clothing label, dead stock, etc.

7.0 7.1 -

FAQ – How does the club differ from any other wholesale business?

No intermediate traders between factory and retail Members participate in the process of developing products Members cannot be occasional buyers: Either they are in or out.

FAQ – Why a club?

There is the social aspect. You either belong to the club or you don’t. A club is exclusive.

There is no opportunist in-between. We want commitment. Stores who don’t participate will be replaced by another store from the same area.

Mission statement: Together we create a powerful tool to fight the big guys.

Worbstrasse 189

CH – 3073 Gümligen

www.manufacturingclub.com