5 Things to Consider When Starting Manufacturing

So, you’ve worked out the perfect product design. You’ve done the prototyping and the testing, and you’re pretty confident that you’ve got a commercially viable product on your hands. You’re ready to start manufacturing! Or are you? Shitfing into manufacturing is one of the most exciting phases of the product development process, but it is also the stage where things can really start to go wrong.

Before you press “go” and start the wheels turning, there’s some things you want to take into consideration. Avoid costly mistakes with proper planning and realistic expectations. And take some time to consider the following.

1. Know Your Manufacturing Company

One of the most significant decisions you’ll make when moving into the manufacturing stage is whether to manufacture overseas or domestically (in the U.S). There are advantages and disadvantages to both strategies.

The primary reason why people choose to manufacture overseas in places like China or Taiwan is the reduced costs which result from the lower cost of labor. This is the main advantage to hiring overseas, and it can be a pretty appealing reason for entrepreneurs looking to make the most of limited budgets. There are obviously downsides, though, and they include:

• Overseas factories often are set up for high-volume production runs, which don’t suit all products
• Your project is unlikely to be a priority.
• Without being able to easily meet with or monitor the factory, quality control can be an issue.
• Longer shipping times can push back delivery dates.
• Language barriers can get in the way of efficient and open communication.

The manufacturer you choose to build your product is an important partner in your business venture. A lot of things can go wrong in manufacturing, and you need to have a certain level of trust in the manufacturing firm you choose to work with. While manufacturing overseas can mean a reduction in costs, it also makes it a lot harder for you to know your manufacturer.

Delays, damages, and mistakes can cost you big time. So you want to pick a manufacturer that is well suited to your project. Things you’ll want to know about your manufacturing company include:

• The types of product they specialize in making. Do they specialize in consumer-grade electronics, or in heavy machinery, or in cheap plastic toys? Knowing what they’re mainly concerned with producing can help you determine whether or not your product will be a good fit with their operation.
• The production volumes they typically work with. If you’re looking to produce a luxury fashion accessory in small batches, a company that does most of their business producing hundreds of thousands or millions of units for major international retailers might not be the best fit. They may be able to handle your project, but you will be such a low priority for them that it might run into difficulties.
• Their track record. You want to know if they have a good or a bad reputation. This is relatively straightforward to find out for domestic companies. For overseas companies, you may need to find someone you can trust who lives in that country who can help you do scouting.

For what it’s worth, we connect our clients with manufacturing firms based in the U.S. This helps to avoid the pitfalls of hiring overseas and gives you the advantage of being able to say that your product is manufactured in the U.S, which can add considerable appeal for certain consumers.

According to a white paper from the U.S government, U.S manufacturing is more competitive than it has been in decades. Between the 2008 recession and 2014, U.S manufacturing increased it’s output by 30%, with nearly 650,000 jobs in manufacturing being generated between 2010 and 2014. And, in a recent article in IndusryWeek, a senior partner with the Boston Consultation Group is quoted as saying that “a revival of American manufacturing is underway.”

All things to consider when choosing a manufacturer.

2. Packaging Design

In the excitement of designing your product and preparing for manufacturing, it’s easy to overlook a crucial element of the design process: the packaging. If you’re developing a consumer product, packaging design is almost as important as the design of the product itself. Whoever says you can’t judge a book by its cover has apparently never been to a bookstore: every book going back to the Gutenberg Bible has carefully designed covers for a reason: people judge things by their covers.

Your packaging is going to be the first thing that your potential customers are going to see, touch, and respond to. You can have the sleekest, most stylish product in the galaxy inside the box, but if the box is frumpy and sad, no one will ever get to that luxurious gem of a product hidden inside of it.

You need to put the same level of diligence and preparation into your packaging design as you do to the design of the product itself. This means materials testing and prototyping. You aren’t ready to start manufacturing your awesome new product until you’re ready to go with your stellar packaging.

The manufacturing firm you’ve chosen to work with should be able to produce both your product and the packaging in the quantity and quality that your project demands. And they need to be able to deliver it to you in a clean, undamaged state. Which means that your packages should shipped inside another, bigger package! Make sure the factory doesn’t send your precious, expertly designed packages through the mail naked. Put those boxes into bigger boxes.

Sounds obvious, but as they say: if something can go wrong, it will.

3. Storage and Shipping

When launching a new product there are all sorts of little costs that add up here and there — especially if you’re also launching a new startup company alongside it. One of the costs which is easy to forget about until the last minute is storage. The day the factory has made and shipped out your first batch of product is one of the most exciting days of the whole process — finally, you are the owner of… thousands of things!

And you have to put those things somewhere! So plan ahead. Will you work with a fulfillment company, or rent a warehouse? Ideally, you want to have planned and budgeted for this from early in the process. You probably don’t want to fill your apartment or house up to the ceiling with boxes. That won’t be good for you or for your business.

If you’re going to be renting your own warehouse space, make sure that you give yourself enough time before your product arrives to get the warehouse inspected and set up. Be certain that there are no leaks, no mice, no obvious fire hazards, etc. Will the climate in the warehouse be suitable for your products, or will you need to bring in some climate control? These are all things you definitely want to figure out before your shipment arrives!

You also need to be prepared to pay for shipping costs. Depending on the nature of your product, and the distance from your storage location from your factory, shipping costs can easily creep up into the $5000 range. Do your research and try to get a realistic estimate of your shipping costs before production begins, and then budget for more. Because…

4. You Must Expect the Unexpected

This is one of those things which everyone always says but which sounds impossible, and yet it is very important. Things can and do and probably will go wrong. The only way you can be prepared for unexpected problems is by budgeting yourself more time and money than you expect will be necessary. If that means you have to wait a few weeks or months before launching into the manufacturing process, then that’s something you should consider.

If you cut things too close to the wire in terms of delivery time or budget, then you can run into serious problems. Be prepared for anything from unexpected delays to damaged products to faulty manufacturing, and give yourself enough maneuverability to deal with these potential problems as they arise. Do not expect that everything will go according to plan, because when it doesn’t, you’ll be left staggering. If you prepare for problems, then you can take the hiccups in stride.

Of course, if everything does go according to plan, only so much the better for you. Fortune favors the prepared, so be the ant, not the grasshopper.

5. Figure Out the Finances First

Most of the considerations above come down to one central thing: money. Hopefully, your new product will generate a healthy return on investment. But for that to happen, you need to make sure that you’re managing that investment properly.

Before you begin manufacturing, you need to have worked out your budget in detail. In order to make the right decisions — including the critical decision of whether you should begin manufacturing at all — you need to have developed a detailed and realistic analysis of the costs it will take to transform your prototype into a manufactured product.

Three important figures you want to take account of are:

1. Minimum Order Quantity.As mentioned above, different factories will work with different minimum orders. There are usually price breaks associated with higher orders, but can you afford the extra upfront cost? Can you afford the space to store higher volumes?
2. Upfront Purchase Order Costs.  The purchase order (PO) is the document which will officially initiate the manufacturing process. You can expect to pay up to 50% of the total cost of the production run up front. The remainder will be due when the finished order ships. This is going to be one of your most significant costs, so be prepared for it.
3. Your Business Costs. It’s easy to forget about things like the cost of maintaining a website, workspace, and accountant, as well as things we’ve already gone over like shipping and storage. Make sure you leave room i your budget for the peripherals.

Before you begin manufacturing, you need to lay out the costs you can expect to face, and weigh these against the funding you have available and the returns you can reasonably expect from your product launch. The more time you spend crunching the numbers, the better equipped you will be for making the proper decisions that will eventually lead to a successful product.

Whatever stage of the product development cycle you’re currently at, Cad Crowd’s design services are available to help yo realize your project’s goals. Whether you’re looking for CAD design, manufacturing, or patenting services, our network of product design experts is at your service.