What is MOQ?
MOQ (Minimum Order Quantity) is the minimum amount of product a Customer must order for the Vendor to produce the order.
These are standard MOQs for reference (China):
• Tablets/Capsules: 1,000,000 pcs
• Injections: 300,000 ampoules
• Powder for Injections: 50,000 vials
• Oral Suspensions: 30,000 bottles
• Syrups: 10,000 bottles
Note: Some Vendors can require lower or higher MOQ depending on the product or pack size. India MOQs are significally lower.
• Veterinary Injections: 5,000 boxes (50ml/100ml)
• Test Kits: 50,000 pieces
How to handle Customers which cannot accept product’s MOQ?
There are times when a Customer cannot accept the MOQ for the reasons below:
• Country is small
• Distributor is new and does not have the Customer base to sell such quantities
• Distributor does not have money
• New product for the Customer
The goal, if possible, is to always try and help a Customer to order a product. Here are some tips which can help:
Purchasing Dept.:
1. Ask Purchasing Dept. if Vendor can agree to produce the Customer’s required quantity. If a Vendor agrees to produce lower than the MOQ, usually the price is at a higher cost.
2. Make sure the MOQ actually applies to the product itself, and it is not the packaging MOQ. For example, the MOQ for Disposable Syringes with the packaging of 100 pcs/box is 1,000 boxes.
However, Vendor can agree to produce 500 boxes and charge an additional fee to cover the packaging expense.
Sometimes, the packaging has to be prepaid as per the packaging MOQ:
Let’s have a closer look at the situation where the customer sent an inquiry for ‘Hairball Relief Paste’ at the quantity of 9,000 tubes.
Hairball Relief Paste: MOQ: 5,000 tubes of product and 15,000 tubes as a packaging MOQ.
Vendor can agree to produce the requested 9,000 tubes as it meets the product’s MOQ requirement, however, the tubes MOQ is higher. In this case, Purchasing Dept. will provide a cost per tube, which Customer will pay for in the current order to meet the MOQ. The Vendor will hold the tubes for the Customer and when the Customer orders this product again, the Customer will receive a refund for the quantities of tubes used for that order.
15,000 tubes – 9,000 tubes (current order) = 6,000 tubes (to meet MOQ)
6,000 tubes x $0.10 (cost per tube) = $600 (tube fee to be paid in the current order, will be refunded with the next orders)
3. If Customer absolutely cannot accept standard China MOQ, discuss with Purchasing Dept. Manager and Sales Dept. Manager possibility to send the RFQ to India Purchasing to check.
Sales Dept.:
1. Check ongoing orders of the company to see if there is any production run scheduled for the same product which will allow to add the Customer’s quantity.
2. Check if any other Customers may be interested in ordering the same product and offer a quotation. When combining quantities of a product for another Customer(s), Salesperson must check that the packaging design can be adjusted to each Customer’s requirements and the batch information can be different from one Customer to another.
3. If there are no ongoing orders for the same product and no other Customers are interested in ordering the requested product at this time, Salesperson will inform the Customer that in the future when the requested product will be scheduled for production, Salesperson will inform the Customer so the Customer will be able to add his quantity without a necessity of meeting the product’s MOQ. Set up an activity under the Customer Contact Card and come back to check every time when Purchasing Dept. Manager sends a task ‘Orders Starting Production’. Salesperson must inform Sales Manager as Manager oversees the entire department orders and can advise on possible schedule.
4. Another time to catch when other Customer orders the same product is to see a notification in SO ‘Notification of lower prices’, which will be automatically sent by Odoo when there is a product in SO/PO quoted from a Vendor on criteria ‘Product + Packaging’. Salesperson is to check the SO created by other Salesperson and make sure the specifications of the product comply.