An attempt at a guide to manufacturing for new players

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bdubbs
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An attempt at a guide to manufacturing for new players

Post by bdubbs »

So I've been playing this game for about 6 months and I've put enough time in that I think I have enough understanding to help a new player, so this is my attempt at a guide write up to manufacturing for new players. This game has a steep learning curve from the beginning so if you're a Day 1 player this might not be very helpful, but its more aimed at a player who has already gotten the hang of retailing from seaports, turning a tidy profit and moving into manufacturing. It's worth noting I'll be speaking from a custom game situation where the game starts and what you do is up to you, instead of being directed by a scenario. So without further adieu here is my strategy and opinions on the best way to move into manufacturing.

My early game strategy is to try and get a discount mega store in every city before I move on to manufacturing. There are occasionally situations where you can start the game, open a factory first, turn off internal sales and turn a profit by selling to AI retailers, but this is rare for a few reasons I've identified. The first is seaport products are typically better quality than what you can produce initially which means that retailers will want to sell those first, and the second is it takes time for the AI to build a retail presence which means there just isn't a ton of demand for new products to retail from the beginning of a game.

From my experience the best profits in year 1 and 2 come from retailing the seaport goods. I use those profits to set up new stores and R&D centers which I use to research whichever product class I specialize in.

So if I random leather goods as my expertise then I R&D wallets, leather bags, belts, and briefcases first because of the bonus tech I get. Typically I will pick one of the products that is not being sold by a seaport and R&D for 1 year as I will be producing that product first and R&D the rest for 2 years. I want my first R&D center about 6 months into the game, and all of my initial R&D centers (in this case 4) built by 18 months. My favorite way to play is with 7 cities and I target the cities with the cheapest land first. So I typically use my initial investment to open 2 discount megas, use the profit and a little debt to open a third a few months later, then build my first R&D center, build my next 4 discount megas and then open up 3 more R&D centers.

I want to note that the retailing is to build consistent profits and cash flows to support entering the market as a manufacturer. In a 7 city game it is not necessary to build that much retail for this purpose but it has been a very strong opening from my experience and gives me the cash I need to do everything else without feeling a pressure for cash.

Next is on to manufacturing which can be tricky in this game because much like real life entering the market as a manufacturer often means operating deep in the red for a period of time. When the 1 year R&D product finishes (not necessary but it helps lessen early losses) I open up a large factory to produce that product, lets just say leather wallets. Then I start opening up a specialty retail store (in this case leather store) in all my available cities to sell only wallets which serves a few purposes. (opening all these stores AND absorbing their losses early is why you need a strong infrastructure)

The ultimate goal is branding, if I adopt a range brand then any brand I build on wallets in each city will carry over to the rest of the products in the class when I begin manufacturing. The secondary goal is getting a feel for the local markets. Some cities with low wage rates offer retail products so cheap that it is not worth competing in them early and its good to recognize this early in the game. So now that I offer my product in every city and have an idea for which markets I want to focus on and which I want to initially avoid I start my advertising campaign.

This stage is tricky because it can be counter intuitive, in every one of my specialty stores I set the advertising budget to 500,000 / month and link it to one sales unit of leather wallets. (make sure you have corporate or range brand) The result is every retail store loses money as they build brand. However as your brand rating goes up so does the overall quality of your products. As your overall quality rating goes up you must keep adjusting your prices up to keep your overall quality rating just slightly above local competition. Eventually you will raise prices to the point your retail stores are either turning modest profits or at least coming close to breaking even without advances in quality.

Once this happens things start getting easier, every time you raise prices from gains in brand rating it simply increases your profits and if you left the price your factory sells at alone it will probably be generating $3-4m / month in profit as well. At this point you should also have a strong cash reserve to play with. At this point I follow the same strategy I did with wallets to sell everything in the class, so in this case its leather bags, leather belts, and leather briefcases. These factories and retail stores should be instantly profitable because of your established brand rating and more importantly the fact that you don't need to spend any money on advertising in these stores unless you want to keep pushing your brand. You keep adjusting your prices up to match local competitors and I typically see huge profits in my retail stores by the time I hit 75+ quality on my products.

After all your products are established you keep building more retail stores as 1 leather goods store or other specialty store will consume less than 25% of the retail market even with level 9 purchasing and sales units.

After that the key is backward integration. My biggest mistake in manufacturing when I was getting the hang of it was that when demand was greater than supply I just built more factories when the problem was usually that I didn't have enough component goods to get the most of my manufacturing units which is grossly cost inefficient. Always check the supply line to your factories, often when supply outpaces demand at a factory its because your purchasing units cant buy enough raw materials to keep up with your manufacturing units. I typically backward integrate into all of my raw material and component goods to avoid this problem. As an example the seaport might sell leather, but if you have 4 large factories like our example above where leather is the main raw material there's probably not enough leather available that all of your factories can operate at max output and so you need to build a large leather farm to supply yourself.

The important thing about backward integration is choosing when to do it. If you need to set up a natural resources firm you should already have a strong established product line. The way I play if I'm going to mine chemical minerals or set up a timber mill I don't care if those firms ever make any money, they simply exist to supply my factories so I can make my money there and in my retail stores. My rule of thumb is to backward integrate only when I have to in order to keep my factories at max output, and I take advantage of AI that sell raw materials and component resources whenever possible.

The only time I've had a challenge getting my game started this way is against very aggressive AI with very high starting capital and very high expertise ratings because they generally get a tech advantage on me early. I typically dominate my first industry by year 5 or 6 at which point I usually have $500m in free cash flow. From there the world is your oyster, you can implement the same strategy to be the first to break into a new product class, buy tech to compete in an existing product class, or buy out an existing AI company with a tech lead in another class and use them to transition into the new business. If you can master a 5 year plan of dominating 1 product class in manufacturing and retailing and backward integrate to keep your supply lines from being disrupted then you will have enough cash that you can play the rest of the game in whatever style you want really.

Hope this helps someone because I remember it took me hours and hours to have my first game where manufacturing was a success, for me the missing component was brand rating which after established allows you to charge that extra premium you need. Anyone with more experience than me also feel free to add in any advice you think I missed or was unclear!
acamar
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Re: An attempt at a guide to manufacturing for new players

Post by acamar »

Good advice, just want to add some things.

If you can afford it think about labeling. If I see a product with a high rating and low cost in early game, I'll get it and put my company label on it either at the store or if I can afford it, at a small warehouse. If I have to use a store, yes I will only have 3 products selling, but the long term brand rating benefit offsets what little I might lose early on. I can raise my brand rating faster and get more brand loyalty for when I start putting my products on the market.

I also use warehouses if I'm going to sell to other companies. If you are just selling what you make in your stores it isn't that big of an issue, but having a central warehouse where AI companies can buy from gives you a small extra markup income, and lets you better manage supply and demand. So instead of having to worry about why two factories have no demand/high supply, and your other two factories are burning up with high demand/low supply, all you have to do is look at your warehouse inventory. Makes it a lot easier to manage multiple factories and the supply chain and most important, maximize profit potential.

And don't forget the semi-products. If you have a product that uses glass, plastic, electronic components, or steel, definitely start making that stuff on your own as soon as possible. I start with a small factory and grow it as my factories grow. I've seen massive shortages of those in some games. Sometimes just making semis and setting up a warehouse to sell your surplus can become a nice cash cow.
bdubbs
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Re: An attempt at a guide to manufacturing for new players

Post by bdubbs »

Good points, personally I've never made use of private labeling and I'm going to keep an eye out for opportunities. As far as warehouses go they can definitely be handy to have to sell manufactured goods to the AI but outside of that I haven't found myself finding much of a purpose for them outside of being a place to consolidate certain goods.

For example with livestock products I often find myself having large farms where the entire farm produces lets say, frozen chicken. Eventually each farm will produce much higher volumes as its sbu's level up but for the majority of its growth a single farm producing nothing but frozen chicken will struggle to keep up with being sold by a single sbu at a discount megastore.

For this reason as much as I'd like to at times I typically won't start building farms until after I've developed a strong retail presence and started doing some manufacturing. This gives me the ability to build 3 farms at a time and hook them all up to a single warehouse.

The caveat is that if supply exceeds demand at your warehouse by enough your third sales sbu rarely gets used, which means you have a farm that is basically idle. Aside from upkeep cost that means its quality isnt going up over time and can disrupt overall quality and value.

However as I was writing that I thought the idea instead of running the warehouse with 3 Purchasing > Invty > Sales sbus you can instead run the warehouse with only 2 inventory or 2 sales sbus and this may fix the problem. I'm going to test that out at some point.


I'm not sure if I've overlooked private labeling because I truly don't need it based on my game environment or if its just an oversight. Typically I play with seaport goods being medium or high quality with local competitors being at medium or low quality to lower the barriers of manufacturing a bit. With those settings you could probably start manufacturing almost immediately a turn a razor thin profit.

Most games I give myself medium starting income, with the competition getting very high, with high aggressiveness and very high expertise. What this does or at least what I'm trying to do is make it so everyone specializes and I can't beat the R&D of a company whose CEO specializes in furniture if my CEO specializes in jewelry.

This forces me to stick to my own random expertise early on, and from there I can look to expand into any product classes that get overlooked. With these parameters I can typically start the game with a discount megastore, build another in a different city, and then set up R&D centers for every product in my expertise within 6 months. Set all the R&D to 1 year and spend the next year developing a retail presence in the cities I want to sell in. 18 months into the game I can start building factories which will typically be able to produce goods of at least 65 quality and I have enough of a cash reserve to pump brand rating. The opportunity cost of private labeling over starting to advertise my own goods that early in the game doesn't seem worth it to me.

As far as semi goods though I always end up manufacturing the semi goods I need in the long term. Typically I start researching them after successfully launching my first manufactured products. In the long run seaports can't keep up and it takes too long for AI companies to start producing them. In many cases though this can be what allows you to compete in an out of expertise class, even if you can't be the tech leader in a certain product having better inputs can help you compete. This is of course more valuable if you want to sell food / apparel than computers or something else that is highly tech leveraged.
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eleaza
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Re: An attempt at a guide to manufacturing for new players

Post by eleaza »

Before patch 3.5.08 I was able to use warehouses to inflate my company's revenue for 10s of billion of dollars. But it's sort of a bug, and get fixed. However we can still use warehouse to inflate the total sales volume and revenue a little bit, and sometimes even get profit out of it using the stock market, since the company market value is overestimated when revenue and assets are inflated.

I generally feel that 2 input to 1 output is about the right ratio, but practically probably closer to 3 input to 2 output. And I do feel that private labelling is quite important to not just building up brand rating early on, but also reducing the competitor's ability to get the same product from the seaport. And in the mean time training up the sales and purchasing unit level before the tech is enough to switch to my own manufacturing goods. This is quite crucial to get a head start from the seaport as retailer using private labelling, with my own brand rating pushing the sales price up, while my competitor's selling with original seaport 0 brand product won't be able to get as much profit as I do. However this only apply to my own planned out goods in the future, otherwise the advertising expenses most likely will cancel out the extra profit earned. Private label is quite useful for tech oriented products like you mentioned.

I was running a test game just the other day to check customize goods and CTO vs R&D subsidiary management (with 4 chronical save files), and I happened to use private labelling in the first 1992 save, and able to limit my main competitor's profit, as well as boost my own product quality when mixed in retail store. Hence in the next save in 1993 I was able to merger the competitor's company and gain full product class control. And with the integration, I have to use warehouses to spread out and joined factories to provide all my retail stores with nearly full monopoly in cosmetic products. Also since this is about testing CTO tech management vs R&D through subsidiary using subsidiary CEO expertise, hence I deliberately choose the wrong class and high tech oriented products to cut in (my person's expertise is watch, and I never ventured into farming). My company competed on the market just fine, even against high level expertise competitors of that class. In the final save in 1996 I even dominate jewelries (later on I plan to help my watch producing subsidiary to selling its products with my jewelry stores)
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Timofmars
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Re: An attempt at a guide to manufacturing for new players

Post by Timofmars »

I never use discount megastores because they are harder maximize your sales and use efficiently. Basically, they sell 4x as much stuff as the smallest stores, and they cost 4 times as much in every way (building, upkeep, employees, and land required), but their customer demand is the same as any other store. To get enough customers to reach your maximum sales capacity, you've got to build on the most expensive land with very high customer traffic. With specialty stores, you can build just about anywhere and fully utilize your sales units. Plus specialty stores have a bonus demand for having more of the same type in the city.

I also maximize the efficiency by having 2 sales units connected to each purchasing unit, and I sell only 3 products in each store. That gives you six maxed out sales units instead of 4.


Another really important point for manufacturing that a lot of people don't consider is the labor cost difference between cities. In cities with low real wages, everything is cheaper. A city with 30 real wage should cost half as much in salaries, upkeep, building costs, and land cost compared to a city with 60 real wage. So for most products, it's cheapest to produce the goods in a low wage city and then export to the high wage cities. The cheap costs more than make up for extra freight charges except for perhaps something like frozen foods and eggs.
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eleaza
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Re: An attempt at a guide to manufacturing for new players

Post by eleaza »

Timofmars wrote:I never use discount megastores because they are harder maximize your sales and use efficiently. Basically, they sell 4x as much stuff as the smallest stores, and they cost 4 times as much in every way (building, upkeep, employees, and land required), but their customer demand is the same as any other store. To get enough customers to reach your maximum sales capacity, you've got to build on the most expensive land with very high customer traffic. With specialty stores, you can build just about anywhere and fully utilize your sales units. Plus specialty stores have a bonus demand for having more of the same type in the city.
I think the advantages of discount stores are their "flexibility" and initial high throughput at low level. When focusing more in retail game plan, I might need to change different sales-slot to various products quite often, and they may not align nicely within the same product classes. Sometimes some products just not worth the competition with AIs, hence you end up with just one or two extra products in certain class. The flexibility of discount store combined with the high initial throughput, make it a perfect candidate for hit-and-run retail tactic, change what to sell quickly and not worrying losing the training level.

And normally I'll have to surround discount stores with apartments, just to raise their traffic flow to reasonable value.
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Timofmars
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Re: An attempt at a guide to manufacturing for new players

Post by Timofmars »

eleaza wrote:I think the advantages of discount stores are their "flexibility" and initial high throughput at low level.
Sure, discount megastores give easy flexibility on what you can sell there, but I don't think there is a throughput advantage if you account for the cost of that throughput. It's a 4 x 4 building that does 4x the output of a 2x2. You can just have 4 2x2 specialty stores at the same cost to get equal throughput. But with the megastore, you'll have to use expensive land and perhaps even sink money into apartments to raise the traffic further to try to fully utilize the store's capacity.

Also, if flexibility is the issue, I'd suggest just using department stores and supermarkets instead. They should give plenty of options without as much of the issues of customer traffic.

I'd say the advantage of discount megastores is mainly to reduce micromanagement and information overload on the map and product detail screen, etc.
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eleaza
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Re: An attempt at a guide to manufacturing for new players

Post by eleaza »

Timofmars wrote:
eleaza wrote:I think the advantages of discount stores are their "flexibility" and initial high throughput at low level.
Sure, discount megastores give easy flexibility on what you can sell there, but I don't think there is a throughput advantage if you account for the cost of that throughput. It's a 4 x 4 building that does 4x the output of a 2x2. You can just have 4 2x2 specialty stores at the same cost to get equal throughput. But with the megastore, you'll have to use expensive land and perhaps even sink money into apartments to raise the traffic further to try to fully utilize the store's capacity.

Also, if flexibility is the issue, I'd suggest just using department stores and supermarkets instead. They should give plenty of options without as much of the issues of customer traffic.

I'd say the advantage of discount megastores is mainly to reduce micromanagement and information overload on the map and product detail screen, etc.
Actually discount store location isn't that hard to find, we don't need tons of discount stores, just a few per city (and with multi-floor, start with one will be enough), and we don't need super high traffic index, above 50 is good enough. Just search near the big 4x4 commercial buildings, even multiple of them close together (or just near some high value buildings). The initial investment isn't as high as you think, and with a retail focused strategy, where initially the product quality isn't high enough, we really need quantity over quality almost from the beginning where you know the demand will be through the roof with very cheap price. Of course 4 specialized store probably has the same capacity, however they usually need some training and that takes time, and the higher stockpile capacity in each unit in discount store without any training, normally makes supply fluctuation less of a problem for a quantity of quality strategy.

About using department store, or supermarket, they are not actually that flexible, especially when you produce food/farm related stuff mixed with electronics based stuff, the initial cost might be higher for 1department + 1 supermarket than just 1 discount where not many products in multiple product classes are available to you. With multi-floor, department and supermarket usually have lots of wasted space at 2nd or 3rd floor where players simply don't have the product capacity to fill them all. You should really try discount store with strategies that you don't rely on quality, but simply outproduced AIs from the start, and still able to make a low profit margin, but high overall total profit corporation.

I do agree discount stores can reduce a little micromanage, but certainly has its uses in legit gameplay. In CES DLC, it's even more useful, when players can artificially "create" economic boom for decades, some newly developed products might need 3 to 4 discount store floors per product to fulfill a near 2 million population city's demand, it's practically not feasible to find 12 to 16 2x2 specialized stores spots for each product class, you will simply run out of high traffic index area and seriously slow down the game (a dozen stores per city compare to hundreds of them). And can build apartments with city funds.
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Timofmars
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Re: An attempt at a guide to manufacturing for new players

Post by Timofmars »

eleaza wrote:Of course 4 specialized store probably has the same capacity, however they usually need some training and that takes time, and the higher stockpile capacity in each unit in discount store without any training, normally makes supply fluctuation less of a problem for a quantity of quality strategy.
I don't know why you'd need training for the 4 smalls stores to be equal to one big store. It should be the same. And supply fluctuation is not less of a problem in a discount store except if maybe you aren't selling everything as fast as it can come in like you would in small stores (and I use 2 sales units for each purchasing unit, so it's very efficient, selling 3 products at double output instead of 4 at normal output).
eleaza wrote:In CES DLC, it's even more useful, when players can artificially "create" economic boom for decades, some newly developed products might need 3 to 4 discount store floors per product to fulfill a near 2 million population city's demand, it's practically not feasible to find 12 to 16 2x2 specialized stores spots for each product class, you will simply run out of high traffic index area and seriously slow down the game (a dozen stores per city compare to hundreds of them). And can build apartments with city funds.
I just buy cheap land and create my own high traffic index areas just by having a few stores together. This lets you get a quick start for minimal cost. In the game I started recently on the hardest difficulty except for having 4 cities instead of 1, I already have stores buying up all of the available supply of all consumer products offered by the 4 seaports in the game, and annual profit shows 60 million so far in October of the 1st year (though that doesn't count my profit from increases in assets values, which is $200 million, and that's something you probably don't get much of by buying expensive land in the city center).
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eleaza
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Re: An attempt at a guide to manufacturing for new players

Post by eleaza »

Timofmars wrote: I don't know why you'd need training for the 4 smalls stores to be equal to one big store. It should be the same. And supply fluctuation is not less of a problem in a discount store except if maybe you aren't selling everything as fast as it can come in like you would in small stores (and I use 2 sales units for each purchasing unit, so it's very efficient, selling 3 products at double output instead of 4 at normal output).
In theory perhaps, but in practice not that clear cut. And you cut off the assumption from the first half of my paragraph, it's under quantity over quality strategy. In specialized store, a lot of time as you noticed with demand beyond supply situation, there will be a constant shortage from time to time, and usually for a 4 small stores supplied by a single source, they will compete with each other to get goods. You might find you are in a situation where 3 of 4 stores is idle at one time, it would be rare for all 4 to have supply (otherwise this won't be a quantity over quality strategy). Unlike a large store, the irregular supply in 4 small stores will make their sales units' utilization stay low value. So under this situation and assumption, training 4 small stores are usually less efficient and take longer to reach the same overall throughput. It's nature of more chaos caused by different traffic indexes, different initial conditions, even the order of stores built, make the "fluctuation" worse for 4 small stores. (you can also use one purchase 2 sales in discount store anyway. The layout is really irreverent).

For a supply over demand, with higher quality over quantity strategy, then maybe in most cases it would be not much of a difference in training, and perhaps even easier to divide sales in small stores than an capacity-excessive discount store. My point is there indeed is a use for discount store in strategy than simply easier for management. The tall and high profit margin strategies suit specialized stores well, on the other end, low profit margin flat retail strategies, as much throughput as possible is the way to go.
eleaza wrote: I just buy cheap land and create my own high traffic index areas just by having a few stores together. This lets you get a quick start for minimal cost. In the game I started recently on the hardest difficulty except for having 4 cities instead of 1, I already have stores buying up all of the available supply of all consumer products offered by the 4 seaports in the game, and annual profit shows 60 million so far in October of the 1st year (though that doesn't count my profit from increases in assets values, which is $200 million, and that's something you probably don't get much of by buying expensive land in the city center).
Maybe you can share the save files, with one from the beginning of the game before building anything, as well as the one you said to reach 60m profit, and we can compare with pure retail from specialized stores or a better location discount store make easier early profit. Each game has very different import goods affecting profit margin, there's no point comparing profit without the same initial condition. And players certainly don't need to stick to the highest difficulty. There are strategies for all kinds of setup under all kinds of different conditions. This post is supposed to be a strategy guide, it ought to encompass more situations and strategies.
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