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What hardware manufacturer shall a hardware startup go for?

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A manufacturing Myth – Hardware Manufacturer

Hardware startups are hot nowadays! It is believed that having a innovative idea running is easy, but scaling a concept from prototype to production can be difficult. There are various manufacturers one can choose, either locally or overseas, but the majority are based in China. From a multinational manufacturing company with global presence to a small workshop near your home; to ‘’moulding & manufacturing hub’’ in the Far East. How do startups identify whether any of these companies can meet their needs and offer a smooth production experience?

ATOM’s creator Sean Connell shared his belief in searching for the manufacturer for his multitool key that was pledged over $80,000 in Kickstarter.

Sean said: ”In an attempt to mitigate potential risk associated with production, I have selected a manufacturer led by industry veterans with over 150 years of combined experience. The manufacturer specialises in product development and has established a global presence based on quality and reliability. Experience, solid design and a strong relationship with a successful manufacturer will help create a quality product in a timely manner.’’

Hardware Manufacturer
The multifunctional tool key ATOM, successfully pleaded in crowd funding sites but is failed to continue delivering the product due to manufacturing issues. Photo credits ATOM.

It was a very firm and confident statement left on his profile on Kickstarter site, where he had belief in the type of the manufacturer he decided to go for.

Such a simple product with a great design that brings a big convenience to our daily life!

A year later, regrettably, Sean had to announce that the project CANNOT be continued due to a number of difficulties during the production which include the issue from the multinational manufacturer itself. He identified a few concerns associated with the manufacturer and explain why the project has to put on hold.

Concern 1: ATOM was manufactured by a multinational corporation better suited for mass producing goods on a larger scale. The company did not invest the required man power or attention to completing the smaller order of ATOM units.

Concern 2: The initial ATOM prototypes that were used to market the product were machined by hand in the USA by the manufacturer’s development department. However, the final units were produced overseas with metal injection molding by an entirely different department. The disconnect between processes and departments introduced a number of previously unforeseen manufacturing issues that severely delayed the project.

Concern 3 : The company that produced ATOM was headquartered in the United States, but the production was outsourced to overseas contractors. The distance  made it difficult to solve problems in a timely and efficient manner.

The above stated concerns were noted on his profile. Due to the above issues along with the product’s manufacturing complexity, ATOM has to stop and Sean is developing his next project. What a shame!

Thanks to Sean’s experiences-sharing, ATOM’s story has taught us some lessons when it comes to selecting manufacturer, no matter domestic or overseas, and we believe this could be some useful advices for hardware startups.

Advice 1 : If your order is relatively small, which most startups do, be cautious when you go for the large multinational companies with global presence for prototyping or production. It is undeniable that these companies show proven record to provide quality parts and services. But most of their clients are major companies in FMCG, aviation, medical and electrical appliance industries; their purchasing order is normally 100k plus a year. Compared to startup’s order, we can somehow understand why the importance of your project comes second to your manufacturer. Though it does not mean that all the large companies are not the right fit for the startups. It’s more about the nature of the business services the company provides. There are companies are focusing on providing services for startups. This then would be another story.

Advice 2: If you can find a manufacturer who is specialised in building both prototype (for manufacturing) and production, that would be the most ideal situation.  As when a shop is working on the prototype for you, they can foresee the potential issues when the product is going to be mass-produced. You can then study the issue, physically and functionally,  at early stage and apply engineering change to develop another prototype until no potential problem can be found. Fortunately if your product is committed to be mass-manufactured, the same shop who has been working with you on your prototype can right away pick up all the critical elements in your product and implement the production process in a most effective way.

This continuous working process greatly ease the communication and minimise the possibility of misunderstanding etc. between the two parties. At the end of day, you can’t imagine how much benefits you would get from the smoothness in this manufacturing process.

Advice 3: Even though you look for a great, reputable and reliable, industry leader for making your parts, after all they are most likely NOT the actual body who makes your part; exactly what happened to the ATOM product. They normally outsource the parts to overseas contractors which generates two drawbacks for the startups – one, as mentioned in the manufacturing Myth – cost, the price will be at least double than finding an overseas manufacturer on your own, second, one more layer of communication passed on through which means you are not getting the first-hand feedback plus possible language barrier due to outsourcing overseas.

Really, at early stage of a startup, how much can you loss?!

Looking for a suitable manufacturer is the key to the whole startup process. A great idea won’t present without a right maker, in fact, it could die because of a unsuitable manufacturer. Seeking help from the large corporation is not always the only solution. If these companies after all are going outsource your job to oversea manufacturer, is it possible for you to have direct contact with them?

We believe it is a critical moment when it comes to picking a manufacturer for your product. Here listed the pros and cons regarding approaching manufacturers domestically and overseas. As a startup, you can then consider which factor matters to you the most, then make the vital decision!

Domestic manufacturers 

Pros –

  • Great convenience geographically
  • Common business culture awareness
  • Short lead time (with geographic advantage)

Cons –

  • More pricy option compared to China
  • The feedback you got could be NOT the first-hand information (if the company outsource to a contractor)
  • Possibly limited resource

Overseas Manufactures (most likely in China as it has the largest manufacturing hub in the world)

Pros –

  • Extensive resource (component, raw material sourcing and supplier networks )
  • A lot more solutions/options available to you
  • Cost-saving (not only in terms of  the production cost itself, but mainly referring to that there are no 3rd parties involved, no extra contracting fees will occur)
  • No intermediary (You have direct contact with manufacturer)
  • First-hand info and feedback  (direct communication helps avoid misunderstandings in the manufacturing process )
  • Shorter lead time (Due to more resource to produce your parts at one time)

Cons –

  • Possible language barriers
  • Unfamiliarly to Chinese business culture
  • Disagreement in quality control management

What other factors would you consider when choosing a manufacturer? Feel free to tell us in the comments. Read more articles about what are the myths when you are looking for overseas manufacturer in our blog.

We are always here to help if you have any questions regarding the Far East manufacturer! Speak to us at info@shapeprototype.com

 

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