Hey there,

Here's the question I hear constantly:

"Should we move our manufacturing out of China?"

It's the wrong question.

The right question is: "Which products should move, and which should stay?"

Because here's what most founders miss: sourcing is a product-level decision, not a brand-level decision. You might have 20 SKUs where 4 are perfect candidates for domestic manufacturing, 6 should be dual-sourced for risk mitigation, and 10 should absolutely stay overseas because the economics don't work any other way.

Treating them all the same is leaving money on the table — or worse, making moves that hurt your business.

This week, I'm giving you the framework to decide which products should move in the first place.

I recorded a YouTube video showing exactly how to use this framework — including a live scoring session for a brand with 15 SKUs.

You'll see how we scored each product, where the surprising decisions came from, and how the final sourcing mix shook out. If you're a visual learner, start there.

If you'd rather read, keep going. I'll break down the entire framework below.

Not all products are created equal when it comes to sourcing risk and opportunity. Here are the four factors that matter:

Factor 1: Complexity — How many things can go wrong?

This is about manufacturing difficulty and quality control requirements.

Low complexity (score 1-2): Simple products with few components. Basic textiles, single-material items, standard shapes. Hard to mess up. Easy to quality-check. Your supplier could train a new worker in a day.

Medium complexity (score 3): Products with multiple components or moderate precision requirements. Need some QC but not constant oversight. A few things could go wrong, but they're predictable.

High complexity (score 4-5): Precision manufacturing, many components, tight tolerances, electronics, or anything where quality issues multiply. These products benefit from proximity — being able to visit the factory, catch issues early, iterate quickly.

Why it matters: Complex products are better candidates for domestic or nearshore manufacturing because the cost of quality failures (returns, replacements, brand damage) often exceeds the labor savings of offshore production. If something can go wrong, you want to be close enough to fix it.

Factor 2: Margin — Can you absorb transition costs?

Moving manufacturing has real costs: new tooling, qualification runs, transition inventory, potential quality issues during ramp-up. Higher-margin products can absorb these costs. Lower-margin products can't.

Low margin (score 1-2): Sub-40% gross margin. Every dollar of cost matters. Transition costs would destroy profitability for 6-12 months. These products should stay where they are unless there's a compelling non-economic reason to move.

Medium margin (score 3): 40-55% gross margin. Can absorb some transition costs but need to be strategic. ROI timeline matters — you need to see payback within 18 months.

High margin (score 4-5): 55%+ gross margin. You have room to invest in better sourcing. Transition costs are absorbable. These products give you flexibility to optimize for factors other than pure cost.

Why it matters: High-margin products are your move candidates. They fund the transition and benefit most from reduced risk and faster iteration. Low-margin products need to stay put — the economics of moving don't work.

Factor 3: Volume — Will the supplier prioritize you?

This is the factor most founders underestimate. Suppliers — domestic or overseas — prioritize their biggest customers. If you're 0.5% of a factory's output, you're not getting the best service, the fastest turnaround, or the most attention to quality.

Low volume (score 1-2): Under 5,000 units/year per SKU. You're a small fish everywhere. Finding suppliers who will even take your orders is the challenge. Domestic small-batch manufacturers might actually give you better service than overseas factories who don't care about your volume.

Medium volume (score 3): 5,000-25,000 units/year. You matter to some suppliers. You can negotiate. But you're not a priority — you need to choose suppliers where your volume is meaningful to them.

High volume (score 4-5): 25,000+ units/year. You have negotiating power. Suppliers want your business. You can demand quality, get better pricing, and expect responsiveness.

Why it matters: Low-volume SKUs often do better with domestic suppliers who value small relationships. High-volume SKUs have options everywhere — the question becomes what other factors matter most.

Factor 4: Lead Time Sensitivity — Does speed matter?

How much does time-to-market affect your business?

Low sensitivity (score 1-2): Evergreen products with predictable demand. You can forecast 6 months out and be reasonably accurate. Ocean freight timelines are fine. You're not racing to market. A few extra weeks doesn't change anything.

Medium sensitivity (score 3): Some seasonality or trend-responsiveness. You need to react to demand changes within a quarter. Long lead times create risk — but you can manage with better forecasting and safety stock.

High sensitivity (score 4-5): Trend-driven, seasonal, or rapid-iteration products. You need to respond to what's working within weeks, not months. Being 3 months late to a trend means missing it entirely.

Why it matters: Lead-time-sensitive products are strong candidates for domestic or nearshore sourcing even if unit costs are higher. The ability to react fast has value that doesn't show up on a cost sheet — but it shows up in sell-through and margins.

This week in the Supply Chain Founders community, we're doing a sourcing scorecard challenge.

Post your top 3 SKUs with their factor scores. I'll give you feedback on whether your scoring looks right and what the results suggest about your sourcing strategy.

One founder posted last week and realized she'd been overweighting "complexity" — scoring products as complex because they were important to her brand, not because they were actually hard to make. The community helped her recalibrate, and her sourcing strategy completely changed as a result.

Sourcing decisions are high-stakes. Having other founders and me review your thinking before you commit? That's valuable insurance.

The community is free. It's where DTC founders talk supply chain with people who actually get it.

For each SKU, score it 1-5 on each of the four factors:

→ Complexity (1 = simple, 5 = complex)

→ Margin (1 = low margin, 5 = high margin)

→ Volume (1 = low volume, 5 = high volume)

→ Lead Time Sensitivity (1 = can wait, 5 = need speed)

Add the scores. Here's how to interpret the total:

16-20: Move candidate.

High complexity, high margin, good volume, and speed matters. These products benefit most from domestic or nearshore sourcing. Prioritize these for transition. The economics work, and you'll see real benefits.

11-15: Dual-source candidate.

Mixed signals. Some factors point to moving, others to staying. Consider dual-sourcing to get benefits of both without full commitment. This is your hedge-your-bets zone.

6-10: Stay.

The economics don't support moving. Keep these products where they are and focus your energy on the move candidates. Don't fix what isn't broken.

4-5: Definitely stay.

Low complexity, low margin, low volume, no time pressure. Moving these would cost more than it saves — probably much more. Don't touch them.

For products in the 11-15 range, dual-sourcing is often the smartest play. Here's how it works:

You maintain two suppliers for the same product — typically 70% from your primary (usually lower-cost overseas) and 30% from your secondary (usually domestic or nearshore).

Why 70/30?

It builds capability. Your secondary supplier is qualified, tooled, and making your product regularly. If you need to shift volume, you can do it in weeks, not months. They know your specs. They've worked out the kinks.

It creates leverage. Your primary supplier knows they're not your only option. That changes negotiation dynamics. Quality slipping? Lead times extending? Prices creeping up? You have a credible alternative ready to scale.

It provides backup. Port strike? Factory fire? COVID lockdown? Political disruption? You're not starting from zero. You have a supplier already making your product, ready to absorb volume.

The catch: Dual-sourcing only makes sense for high-volume, strategic products. The overhead of managing two suppliers — two relationships, two quality systems, two sets of specs to maintain — isn't worth it for a SKU that does 2,000 units/year. Reserve this for your hero products that drive real revenue.

Let me walk you through a real example.

$4M annual revenue. Consumer goods brand. 28 SKUs. 100% sourced from China. The founder came to me asking, "Should I move manufacturing to the US?" She'd been reading about supply chain risk, tariff uncertainty, and the marketing benefits of "Made in USA."

I told her to slow down. Let's score every SKU first.

Here's what we found:

Move candidates (scored 16-20): 4 SKUs

These were her highest-margin, most complex products. Quality issues had been a recurring problem — she'd dealt with three batches of defects in the past year. Lead times mattered because they were trend-responsive.

→ Revenue share: 35% of business

→ Decision: Move to domestic manufacturing

→ Timeline: 6-month transition with overlap period

Dual-source candidates (scored 11-15): 6 SKUs

High volume, good margins, but not complex enough to justify full transition costs. Lead time mattered for some seasonal spikes, but not year-round. These were her workhorses.

→ Revenue share: 40% of business

→ Decision: Establish domestic secondary supplier at 30% volume

→ Timeline: 9-month supplier qualification

Stay candidates (scored 6-10): 18 SKUs

Simple products, lower margins, predictable demand. The economics of moving didn't work. China was the right answer — the suppliers were good, the costs were competitive, and there was no pressing reason to change.

→ Revenue share: 25% of business

→ Decision: Stay in China, focus on supplier relationship management

→ Timeline: No change needed

The outcome after 12 months:

Before: 100% China-sourced

After: 55% China, 30% domestic primary, 15% domestic secondary

She didn't "move out of China." She built a diversified sourcing strategy that matched each product to its optimal manufacturing location.

Results:

→ Quality issues dropped 40% on the moved products

→ Lead times shortened by 6 weeks on average for domestic SKUs

→ She had backup capacity ready if anything disrupted China supply

→ Total cost increase: ~3% (offset by reduced quality failures and better inventory turns)

That's the power of thinking product-by-product instead of brand-wide.

Score your top 10 SKUs using the 4-factor framework.

Be honest. Don't score based on where you want things to go — score based on reality. High complexity doesn't mean "important to my brand." It means "lots of things can go wrong in manufacturing."

Once you've scored them, sort by total score. Look at your move candidates (16-20). Look at your stay candidates (6-10). Does the distribution surprise you?

Reply with your findings. I'll tell you if your scoring looks off or if there's something you're missing.

Sourcing strategy is one of the most consequential decisions you'll make — and one of the hardest to get right on your own. The framework helps, but having someone review your specific situation is even better.

If you're wrestling with sourcing questions and want help applying this framework to your SKUs, that's exactly what the Accelerator is for.

The Supply Chain Accelerator is a 12-week program where we build your supply chain systems together. Not theory. Actual implementation — including sourcing strategy, supplier evaluation, and transition planning.

What you get:

→ All 11 modules (including the complete Sourcing Scorecard with templates and benchmarks)

→ Weekly live calls with me — bring your SKU list, your scores, your questions

→ Direct Slack access for async support

→ Hot seat coaching where I review your specific sourcing situation

→ Community of 9 other founders at your stage

That $4M brand from today's case study? She was in Cohort 3. We scored all 28 SKUs together over two hot seat calls. Six months later, she'd executed the transition plan and built a supply chain that's both more resilient and more responsive.

Q2 Cohort is open. If you're doing $200K-$3M in revenue and want help making smart sourcing decisions, this is your path.

Not ready for the full cohort? Self-paced is $500 — same modules, same templates. Just without the live calls and direct access.

Week 1: The China+1 fantasy vs. reality (done)

Week 2: The real math — domestic vs. overseas cost comparison (done)

Week 3 (this week): Which products to move vs. keep — the framework

Week 4: The successful 30% move — complete transition playbook

By month end, you'll have everything you need to make smart sourcing decisions — and the confidence to execute them.

Until next time,

Lara

P.S. "Should we move out of China?" is a question that generates strong opinions and weak analysis. The founders who get sourcing right are the ones who ignore the noise and do the math, SKU by SKU. Now you have the framework to do exactly that.

P.P.S. Sourcing is a product decision, not a brand decision. Write it on a sticky note. Put it on your monitor. It'll save you from expensive mistakes.