High-Tech Manufacturing and Location, Location, Location
Here in Silicon Valley, we like to focus on the "coolness" of product design and the development of complex, high-tech hardware. But to really succeed in the marketplace, manufacturing is critical. After all, someone's got to make all that cool stuff work.
After you make those first few prototypes, but before you embark on volume manufacturing, there is an important process commonly referred to as "NPI," or new product introduction. This is where American manufacturing has an important role to play.
For many high-tech start-ups, it just does not make sense to raise the capital required to outfit a dedicated factory, which is just one of the reasons contract manufacturing has become so popular. Contract manufacturing also provides economies of scale and time-to-market that are just not possible in a dedicated factory.
Yes, I am talking about outsourcing, but, no, I am not talking about offshoring. There are plenty of specialty contract manufacturers right here at home, where your intellectual property is protected, and where you can find a wealth of expertise in highly regulated areas such as medical devices, biotech equipment, and defense.
(Read more: Made in the USA: More Consumers Buying American)
Here are five considerations to keep in mind when mapping out your manufacturing strategy:
1. Proximity In the rush to offshore high-tech products, we've often overlooked the cost of flying engineers to Asia and back. Your engineers, of course, developed the product. The manufacturing team is going to adapt your design so that it can be manufactured at scale. It's critical that these two groups of people are able to easily interact and communicate with each other. Don't be surprised to see the development of new intellectual property during this process. You don't want to miss out on this critical part of your product's evolution.
2. Teamwork in the NPI process Selecting the right contract manufacturer is crucial. Look for a true partner, and make the commitment to work together. Throwing prototype #5 over the fence to manufacturing, and telling them to make 100 or 1,000 copies, is unrealistic. Not only will the teams need to be working together to get the assembly steps correct, but you'll also need to develop test protocols to determine practical parameters for volume manufacturing. A good manufacturing partner will help the team reduce the time it takes to actually make your product, and will ensure that tests are accurate.
3. Expertise with technology and regulations For complex hardware products that combine electronics, mechanics, optics, and fluidics, experience is critical to successful manufacturing. For some stages of production, you may need a cleanroom to minimize contamination. A specialty manufacturer that understands medical devices, for example, will understand what the U.S. Food and Drug Administration will require. You want a manufacturer familiar with regulations that apply to your industry.
4. Cost A high-quality manufacturing partner will know how to knock cost out of a prototype design and will partner with your engineering team to make sure this doesn't compromise the product performance or quality. Proximity is a factor here, too: the cost of shipping parts over an ocean has escalated to the point that going to Asia is no longer necessarily the cheap solution.
5. Roadmap A true manufacturing partner will be able to grow with you and meet the needs of your product roadmap. Your next-generation product will benefit from the lessons you learned getting the first generation out the door, and a lot of those lessons will be in manufacturing. You may even make product improvements based on feedback from your contract manufacturer.
The right choice for manufacturing depends on the details of your business. Make sure you consider what is right for you instead of blindly following a trend. The five considerations above should give you a clearer idea of which is right for you.