What’s the process of sourcing a factory & manufacturing?

By Ashton Udall, Global Sourcing Specialists (www.productgss.com)

QUESTION:  I’m developing a new hardware product.  What is the general process of sourcing a factory and manufacturing my product?

ANSWER:  If you’re developing a product with hardware, how you manufacture the thing is going to be a key consideration early on.  Hardware products, consumer packaged goods, and durable products are considered more capital intensive than your typical web startup, and you need to determine how you’re going to make it, when you can ship it, and how much it will cost.  Generally, the process might look like this:

A) Product design and development (Depending on your needs, you may begin conversing with production sources at this stage)

B) Factory sourcing

C) Review of product design package and documentation with sourced factories

D) Initial quotations submitted and reviewed

E) Factory selected based on assessment of quotation and ability of the factory to reliably serve the project.

F) The capability of the supplier to produce the product is developed.  This may involve building molds or tooling, material sampling, sample production, packaging production, testing, etc.

G) Final costing and contract negotiation

H) Production and assembly

I) Quality inspection

J) Shipment

The general steps of sourcing and manufacturing your product(s) above are simplified for discussion purposes.  But in the real world, the steps are typically not linear and they differ between products and project.  As you move through the stages, you will gain feedback that may require you to return to earlier steps and adjust your plan.  The process is iterative, particularly during the product design and development stages.  But it’s important to recognize, as anyone who has launched a product will tell you, as you get further in the process, the changes tend to get more expensive.

The key then, is to get through as many of the iterations, cheaply and quickly, as you can early on—just like building a web startup.  To do this, you should be incorporating feedback from the market side of the equation into your design, but it’s also immensely helpful to find a resource on the manufacturing side that can help you make feature/cost trade-off decisions to ensure your product can be produced within your cost targets and in a factory setting.

Reliable information at this stage may come from a product designer well-versed in manufacturing, a consultant, or an actual factory that is willing to spend the time to work with you.  Once you’ve solidified your product design and can make a well-founded conclusion that your design can be produced within your cost targets, you can then submit requests for quotations to other manufacturers and begin the more formal manufacturer sourcing process.

Depending on your resources, the kind of product, and your market, you may be able to begin promoting, marketing, and submitting your product for reviews with prototypes.  As you begin to scale these activities, you will likely want to do a small production run to supply you with inventory.  At this stage, you’ll begin navigating issues of manufacturers’ minimum order volumes, payment terms, and production schedules.  The only way to make a sound decision on whether to produce the product in-house, locally, or overseas, is to obtain data for the costs and implications of each, and decide what makes sense for your business.  Some think you can only approach mass manufacturers overseas when you’re ready to run very high volumes.  That may be true in many cases, but I’ve worked with overseas factories that have helped design, prototype, and manufacture low volumes of products.  The truth is, it all depends on the production processes involved in your product and the manufacturer you source.