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Why Develop a Product With a Contract Manufacturer

Originally Published on

The journey from idea to the actual launch of a new product is a long process that requires the collaboration of multiple parties. The manufacturing partner is quite often the party that fails to hold their own weight.

However, with due diligence and establishing a relationship with the right contract manufacturer (CM) will provide your company with a number of added strengths. Partnering up with a CM that provides development resources will free up more of your company's resources to focus on product sales and marketing.

Avoiding duplicating other people's work

In the past companies have sourced products from manufacturers that have pre-existing tools for that existing product. This lead identical products flooding the market, leaving those companies with low margins and high competition.

For example, companies you might find on Alibaba offer products you already have. However, strong trends are pushing some companies toward the development and manufacturing of a product that can be sold and distributed by one company, rather than multiple companies.

Deloitte has also stated that launching new products is the number one strategic objective for product based companies. Therefore, launching innovate products faster than before is the key for product based companies.

Common product development delays

In the traditional ways of developing a product there are multiple breaks in the chain that cause both time and financial delays. Here are the following areas that most often cause delays:

  • Poor engineering: This is the part that dictates the direction of your product. There is also a correlation with poor engineering and a high rejection rate, higher costs, decrease in customer satisfaction.

  • Budget and time management: There are financial costs with each step and sometimes certain steps are forgotten. Failing to manage time and money will lead to postponing product launch or having to kill the project.

  • Transfer of documents: It happens that people forgot to transfer appropriate files and files, or they get lost.

  • Pricing: Receiving a quote that would price them out of the market. This is usually due to poor engineering.

  • Additional engineering: Just because you have a sample doesn’t mean it can be made. When this happens the CM will need to re-engineer the part, which adds delays.

Why CM’s offer development services

The success of the CM is strongly correlated to the success of their clients. So, it's in the best interest for the CM to provide services that are geared toward improving the development and manufacturing efficiencies of their clients. The CM's offer services to make their customers happy while that frees up the time of the company to focus on sales and marketing which will improve the satisfaction of the final customers.

The contract manufacturer's edge

Speed is the most important part of bringing products to market. Developers see the importance of partnering up with a contract manufacturer to expedite the development steps and to have a smooth transition into production. The reason that developers are partnering with contract manufacturer's is because CM's are the most knowledgeable people with regards to production processes, materials, tolerances, specifications and the overall manufacturing process. Developers see the value of this and are starting to take advantage of the skill sets that these CM's can provide them with. CM's have also a proven track record of collaborating with companies to guide them and work with them through the development steps. Here are the development steps in which the contract manufacturer shows its greatest values in:

  • Product engineering: The company has seen an issue or problem in the market and they would like to develop a product to fill the void. A contract manufacturer is valued here because they can find solutions to the problems that the client is having. With engineering and manufacturing experience, the engineers from the CM can engineer a product that can be made efficiently and economically that also is a valid solution to the problem.

  • Functional sample: Sometimes referred to as PoC (Proof of Concept), a sample can help you check the functionality of the previous step, which is product engineering. CM's provide value in making the design into a prototype as quickly as possible. Most CM’s also have machine's that are used strictly for samples. Going this route will save the company time and high prototype fee's.

  • Reengineering: Quite often, the first sample will not be the last sample. There are engineering and design changes that usually happen throughout the development stage that look at continuously improving the functionality until the goal is met.

  • Golden sample: The golden is the final sample and on what production will be based. The CM can use the golden sample to build quality requirements, build production documents, finalize costing and much more. Also, since the CM has been a part of the development process then there is no need to worry about the transfer of documents.

  • Packaging design: Choosing a seasoned CM can also provide you with samples of packaging that can work within your respected industry. A CM will also have relationships with packaging suppliers that can design the outer cartons that keep your product and package safe during transportation.

  • Quotation: During the development stages pricing play an important part. The CM will understand your budget of the project and can design and develop a product that can be purchased at the price that the company has originally agreed upon.

  • Manufacturing documents: Since the CM has been working on this project, there is no need to share extra documents and run the risk of failing to pass off important documents. The CM can compile all of this for you.

  • Tooling: Designing tools to be fabricated can change from what the final CAD drawings look like. For plastic injection molding, there are a number of key areas to take into account when design the tool, such as shrinkage, walls, material flow rate, cooling time, etc. Finding a CM that can design tools as well is a huge benefit to make sure that the final product is what you have planned it to look like.

  • Production: The final step is to launch production. With the CM helping to develop the product for you improves the speed and efficiency from development to production.

The bottom line

Partnering up with a CM to collaborate on product development can provide your company with the speed and cost efficiency needed to give your company a competitive advantage. With partnering up with a CM that has a reputation in your industry and with developing innovative products will free up the time of the company to focus on the sales, marketing and distribution side of their company. Like always, it's best to complete due diligence of multiple CM’s before making a decision on which one to choose.


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