9 Pitfalls Startups Should
Avoid When Selecting Contract Manufacturing Companies

Make Some Noise
Contract Manufacturer - Insertion of electronic components on circuit board assembly in a electronic production plant.
Make Some Noise

There’s a reason many startups choose to use contract manufacturing services. It’s a fast, flexible and economical way to get their product to market without having to build their own factory.

The problem is selecting the right one – which can make the difference between a smooth launch and a crash & burn. Your business is too valuable to run the risk of losing it by depending on a contractor who may not deliver.

From our experience, here are nine of the most common mistakes you’ll want to avoid, in search of the right contract manufacturing company who will help your product soar to success!

1. Seeking Incompatible Partners

Selecting a contract manufacturing partner is more than making a purchase, it’s a partnership and needs to be mutually beneficial, where you are aligned in terms of culture, cost, speed, quality and potentially size. Especially for startups, where there are many uncertainties, a strong contract manufacturing partner will help avoid traps and overcome unexpected huddles.

2. Going Too Big

You want the best for your business so why would you not simply search “how do I find a manufacturer for my product” and select the best, most well-known contract manufacturer out there? A few reasons.

  • Some of the larger contract manufacturers could be too busy, financially incompatible or not aligned on any of the factors previously mentioned.
  • Your initial order sizes may not be large enough to satisfy their business needs, or if they accept your business, they may not put their best team on your project.

If your project doesn’t get the attention it deserves, this may result in delays or quality issues. When evaluating contract manufacturers, look for one that is of a size and scale that matches your needs. Ask for examples of where they have taken on clients of a comparable size and stage in their business and ask if you can contact them for a reference check.

3. Underestimating Your Involvement

Anyone who expects that contract manufacturer outsourcing will be as simple as “placing an order”, will likely be disappointed and caught off guard. If you’ve never entered into the world of custom product manufacturing before, it’s easy to underestimate the effort it can take to successfully bring a product from the computer screen into the physical world.

4. Overlooking Project Management Procedure

What is the makeup of the contract manufacturing team that will be working on your project? Is there a dedicated point person? How many projects do they typically manage? What systems or controls do they use to track timelines? How do they track and manage issues? How do they manage design changes? How do they manage input costs? They should have a formal process to both communicate and gain your authorization for any changes that might impact product function, performance, safety, cost, and schedule.

5. Inconsistent Communication

Ask the contract manufacturer about their progress reporting cadence, and ensure you’ll receive weekly check-ins, if not more frequent. Try to understand how transparently they operate. During a manufacturing launch, hundreds of issues can arise, despite being well prepared. That’s the nature of product launches. By having intentional communication systems in place, your manufacturer will be able to communicate the challenges so that you can participate in the decision making to solve these challenges. Miscommunication and misalignment on deadlines and expectations can occur if you’re not experienced in communicating with product manufacturers, and this can be exacerbated where native languages differ.

6. Manufacturing Process Blind Spots

Contract manufacturers are experts on the processes they use (e.g., CNC Machining) but can overlook cost reduction opportunities that alternative processes may offer. To ensure that the lowest overall product cost is captured, a broader scope of processes should be considered which may involve more than one type of contract manufacturing. Why find the lowest cost CNC machining cost when it might not be the best process available?

7. Undefined Quality Expectations

What is the definition of acceptable or unacceptable quality when manufacturing a new product? Your expectations will vary from those of others, and this cannot be left to chance. Often, start-ups don’t know how to accurately define quality, which results in product quality experiences for their end-users, complaints, bad reviews, and ultimately a ton of time and effort to resolve those issues. Having a professionally prepared design release package (or a Device Master Record in the medical device industry) will clearly communicate to your manufacturer what is, and is not, acceptable from a product performance and quality perspective. Your design release package will form the foundation of your contract with the manufacturer.

8. Relying on the Manufacturer’s Engineers

Most contract manufacturers claim to have in-house engineering capabilities, and while that might be true, you must understand their role. Most manufacturers will be able to provide feedback about the manufacturability of your product and will suggest design changes to improve their ability to make the product more easily. What they often aren’t looking for are the impacts that these suggestions have on the design intent – the function, the performance, the safety, regulatory impacts, and so on. Manufacturing feedback that violates design intent can waste your time, cause delays, cause confusion, at a sensitive point in time for the project. A fully integrated design & manufacturing partner will alleviate these issues by designing for manufacturing and assembly.

9. Overlooking Process Documentation

Is it critical to capture changes made as your product moves through the new product introduction (NPI) process? Does your contract manufacturer have design control systems like revision controls? How are those manufacturability changes reflected back into the design? Will they be responsible for capturing those changes, or is it up to you? A lot of value is left on the table if you don’t fully understand exactly how the end-product has been redesigned for manufacture during the NPI process.

Intellectual Property (IP) doesn’t end design and utility patents of your product, but the knowledge created (but not patented) during the NPI process is invaluable. Failing to capture this knowledge (through design changes, drawing updates, etc.) risks losing ownership of the manufacturing “recipe” and thus, the ability to produce that product elsewhere. While it may be tempting and cost effective to just let the contract manufacturer “figure it out”, if they don’t capture the knowledge and share it back with you, you may be stuck with them forever, or risk having to go through the entire NPI process again at a later stage, without the benefit of past learnings.

Proceed with Caution

As a busy founder, you don’t want to spend your days micromanaging production. You need to strike the perfect balance that makes sense for you, to ensure the production is documented, supervised, stays on track, and keeps you informed and involved as necessary – allowing you to focus on the things that really matter, and not get bogged down in the details.

This list may not cover everything you’ll want to consider when choosing a contract manufacturer. However, by understanding these common problems and pitfalls, you can increase your chances of finding the ideal one.

Still not sure where to start? Our manufacturing and supply chain experts are developing a series of helpful resources to share their knowledge and experience. Subscribe below ⬇ to be first to know when those resources are released!

In the meantime, if you’re looking for experienced support right now to find manufacturing companies in Canada or beyond, we’re here to help you get to production – fast and pain-free no matter what size or type of project. Contact our manufacturing experts today!

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