Manufacturing 101: 3 rules for all the right moves

First of all, congratulations for making it to the manufacturing phase! That means you already got enough great feedback on your very first product prototype so you made a preproduction prototype and KILLED IT—impressing potential consumers, investors and even buyers (who can take on various forms depending on your situation). Now it’s manufacturing time.

Okay, first thing’s first. Manufacturing a product is no easy task, but there are ways to make it much, much easier on yourself in the long run. The manufacturing decisions you make are going to have a huge (and hopefully positive) effect on your product’s overall quality and reputation, as well as your potential profit. If you stick to these three rules, you’re going to be in good shape:


Itemize the Details. Yes, All of Them.

Going through every single detail that plays into manufacturing your product is an absolute must. Why? Because every step is going to have some kind of expense attached to it—and those costs add up quick! Here are just a few that you should be calculating:

1) Shortage

2) Packaging

3) Fulfillment (boxing, labeling, shipping)

4) Postage

5) Freight

6) Customs or duties/tariffs

7) Insurance

While everything you are going to do to manufacture your product will have a price tag, some of them won’t be monetary. Think about other ways you’ll be spending, like for lead time—how many hours does it takes to make your product and have it ready for shipment? And what about your inventory safety stock? If your product shipments get held up for a week, do you have enough stock in a factory to tide you or your retail partners over?

The bottom line is this: Manufacturing your product needs to still make economic sense after you’ve added up all the costs. Believe in your numbers. If the margin’s too slim, you need to rethink your plan.


Find the Right Manufacturing Partner—It’s Worth It

The right manufacturing partner for you is not going to be the right one for another entrepreneur. There are so many factors here, especially depending on your demand needs. Whether or not you’re looking at potential overseas candidates, you need to get answers to these critical questions:

1) Can the manufacturers you’re considering readily obtain the right materials to use?

2) Do they know how to handle the product materials? Are they experts in your category?

3) Do they have capacity to manufacture the amount of product you’re asking for?

4) Can they offer insight that complements the product insight you can offer?

Finding the ideal manufacturer is a little like buying a car. You need to research it, and then go check it out. You’re typically able to get a better sense of it when you see the facilities in person. Look at how production is organized and ask about how quality control is handled. The key here is to know that you don’t need to be an expert at building your product, you just need find an expert who is.


Nurture Your Business Relationships

Effective communication with your manufacturer is necessary. And the best way to do that? Build and nurture your business relationship. Convey your product ideas to your partner through in-depth product spec guidelines, and then spend some time talking about it. Understand you aren’t just placing an order, you are developing a business. You can help your partner recognize this by discussing your intentions.

Also, don’t become a commitment breaker. If you promise you’ll get back to the manufacturer on Monday, do it.

If you’re working with a manufacturer outside the U.S., learn a little about the culture and the common style of negotiation you can expect. And try not to over-negotiate. Find a happy medium between price, quality and delivery deals or you just might end up wearing out any good will you’ve built up.

Remember: Time spent developing your relationship with your manufacturing partner will never be time wasted.


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