What is the meaning of “MOQ”?
MOQ is an acronym that stands for Minimum Order Quantity. In other words that is the lowest quantities of a product that a supplier will accept as an order. It is often specified on an commercial offer from a supplier and usually not further explained. It is possible to see different MOQ in the same offer, usually related to a different price.
Why there are MOQ’s ?
MOQ are can be requested by suppliers depending of different factors, below you’ll find details about possible reasons :
- Production contraints : For example for manufacturing plastic parts by injection, every time they need to manufacture your part, the related mold of the part need to be installed on the injection press and then warmed to reach production temperature, if the material is specific a cleaning of the injection route is also necessary. It is easy to understand that with these contraints injection suppliers don’t want to change a mold every now and then, when a mold is set up they want to produce the maximum out of it.
- Optimum quantity for manufacturing : For example for polishing optical windows in order to keep the polishing device well balanced 3 or 5 windows should at least be polished at the same time otherwise the quality will not be ok and it may even damage the equipment.
- Raw material availability : For specific raw materials suppliers need to purchase them for manufacturing your order. Raw material may comes in bags (plastic pellets) or other means but the quantity is not always flexible. Factories will quote to optimise the material they purchase especially if they have no other use for it.
- Component availability : Parts to be produced may necessitate other components to be assembled in the product that may have their own MOQ.
- Specific negotiated price : Some price may be optimized for a specific quantity therefore the factory specify their MOQ related to a certain price. They may produce with lower quantities but then the price don’t stands and need to be recalculated.
- Logistics constraints : If you are buying products that need to be exported, then it is very frequent that the MOQ is linked to the quantity that can fit into a container. Shipment of container have some costs that need to be bear by the supplier (see incoterms) therefore in their price calculation they consider a full container which will be the most effective.
What about samples quantities ?
Usually production MOQ don’t include sampling phase but it is not always true some process cannot be done only for a few quantities.
Furthermore, samples may also be available with their own sample’s MOQ, but usually samples are more concerned about quantities upper limit than lower limit.
Can I negotiate a lower MOQ ?
The short answer is yes, but it often comes at a cost. It all depends on the reason behind the MOQ, a supplier may still produce more parts than an order and stock them.
Price for lower MOQ is usually increased unless the supplier thinks he can sell the parts in the near future.
You may also negotiate to release an order matching the MOQ quantities and them ask for several deliveries.
Our advice : Be clear about your needed quantities so the supplier can chose the best production method for it and therefore the best order quantity / unit price ratio.