Is it Time to Use a Contract Manufacturer?

  •    Tim is a freelance business writer. He writes about the business of innovation, comics and genre entertainment on The Full Bleed.

Every entrepreneur wants to dream up great, salable products. Bringing that big idea to life is another matter entirely. From idea to prototype to production, winning products can take years of expensive trial and error, especially if you try to do all the manufacturing yourself.

What do you do if giving up is not an option? Try a contract manufacturer. The idea is simple: you supply the designs, material specifications, and perhaps a desired price point for the final product and the contract manufacturing company does the building and assembly.

Before You Hand Over the Designs

If that sounds enticing, it should. Contract manufacturers can be a blessing for makers aiming to enter tight markets. Just don't rush the process, says Peter Holtgreive, a process improvement expert who consults on contract manufacturing and other production issues.

"3D printing has become so cheap that it's usually best to prototype in-house until you have a firm design," he says. That can mean years of tinkering and testing before sending a product to production.

At the very least, Holtgreive says, you should have a complete grasp of customer requirements for the final design. "You don't want to engage a contract manufacturer and then find out you've designed a product your intended customer won't buy."

Say you're trying to enter the remote control toy market with a new boat that jumps in the water. Six-year-olds might love watching your boat but their parents might not appreciate having to always take them to a lake just to use your product. Your audience is likely older and may be interested in more advanced features.

How to Get the Most From a Contract Manufacturer

So when is the right time to enlist the list of a contract manufacturing company? "The more you have finished before engaging a contract manufacturer, the better the experience," Holtgreive says. "Your designs should be final, your requirements fully defined, and your prototyping all but done."

Also, try not to indulge small orders. You'll waste time, pay more, and risk annoying the contract manufacturer who's trying to help you. Ordering 5-10 mockups at a time and then changing the requirements to suit a small shift will add up fast. Stick with a 3D printer for that kind of work. Or if that's not possible, make friends with a neighbor with a garage full of tools and ask if he'll let you tinker. You'll need that access if you hope to improve your product before paying for production.

Let's return to the RC boat example. Surveying customers to find what they'd most want in a boat can inform your prototyping, which you'll want to do as cheaply and frequently as possible (you can use an online poll or an email campaign to solicit feedback). As Holtgreive puts it, more iterations and testing increases your long-term odds of striking a good partnership with a contract manufacturer.

Choosing a Partner Over a Provider

Holtgreive uses the term partner deliberately. While many contract manufacturers consider theirs to be a bare knuckles, the lowest-price-gets-the-business industry, the best make qualitative judgments about which clients to work with and take an eye to the long term. But don't expect a good deal or a warm welcome if you show up to negotiations unprepared.

Also, be open to feedback. "A good partner can show you where to improve designs to reduce the amount of tooling required to build your product, which saves money," Holtgreive says. He also advises to "expect at least one or two iterations" before you go into production. A contract manufacturer that's willing to partner with you will do what it takes to help you scale up, Holtgreive says, "betting you'll keep them on to keep making your product as volume increases." Everyone wins, in other words.

Finding partners takes time of course. Your best bet may be a middleman who can find the right match for your manufacturing need. Global Sourcing Specialists has been working with startups for years while Maker's Row claims connections to 10,000 different manufacturers.