It is hard to find a suitable manufacturing partner for your new product. The process is complex and costly as it involves many levels of analysis. Each manufacturer has their own speciality and they may not cover all your needs. You need to qualify a particular category of manufacturing partner to match your product and its industry. You also need to define the entry and exit elements. Do you enter only raw materials or do you have subassemblies coming from other manufacturing partners? You will also decide if you wish to work domestically or using an overseas partner. It is required to identify the proper fit for your product, business model and expectations.
Make sure to select the right ‘Tier’ of production partners. Use one with a size comparable to your needs and to your market scale. It is not wise to aim at using the biggest and highest production volume factory if you have a small project. Your very limited usage of their production capacity will translate into very high setup cost as you will be in the way of high-volume production projects. If you make 1000 units a month and use a line that can build that volume in a few minutes, you’re just out of your league.
A particularly important step to understand is the type of business model you wish to establish with your manufacturer:
- OEM allows you full control of your design and intellectual property. However, it is the most complex and costly and it takes a long time to create a product since you will define everything according to your plans.
- ODM is less involved for a novel product even if you are starting with low volumes. In this model, the manufacturer adapts an existing element to your specifications and makes it unique to your market. However, on the market, many of those manufacturer’s products are similar to yours. Your uniqueness is mainly on the branding and possibly specific tweaks. You will not know exactly how it is built and have little control over its intellectual property. It is a good model for common items like battery packs, wall adapters, cables and even more complex devices if you can accept the limitations and lack of ownership of the IP.
- Fully In-house provides a custom product with the most flexibility. An internal process of development and production is set up in a large industrial space and you have full control of the production process and quality. Labor cost is a big portion of this model and the equipment can represent significant capital cost. It’s best reserved for highly specialized products if you have the volumes to support the overhead. It can also be a good idea if you wish to maintain a tight level on the secrecy of the process and components
Motsai will accompany you in the selection and discuss trade-offs with manufacturing partners. We can help you to identify the proper fit. It will be easier for you to discuss with a partner for a long-term, beneficial relationship.