workers completing a vendor assessment facility tour

How to Evaluate a
Potential Product Manufacturer

Make Some Noise

Make Some Noise

Regardless of your business type or product you are developing, your suppliers and vendors are closely tied to your success. Comparing a small number of top candidates using similar, essential criteria, will shed light on their different strengths, helping you make an informed decision and move forward confidently knowing you’ve done your research.

We’ll quickly review the different types of manufacturers, and then share a concise checklist of key evaluation criteria.

 

Understanding different types of product manufacturers

Not all vendors are the same and they each have a specific purpose and strength. Here are a few flavors of contract manufacturers and some terms that you should be aware of:

OEM: Original Equipment Manufacturer

  • Design and build unique products based on customer specifications
  • Bespoke product design and engineering – usually comes with a significant up-front cost
  • Start-up retains total creative control and intellectual property


ODM: Original Design and Manufacturer

  • Also known as “white-label manufacturers” or “private label manufacturers”
  • Commonly found off-shore
  • Designs are based on existing products and the start-up may ask for slight changes to then sell under their own brand name
  • Very low design and engineering costs for the start-up
  • Start-up does not own intellectual property
  • Products can lack significant differentiation to competitors


Single Manufacturing Process + “Box Build”

  • Companies such as printed circuit-board manufacturers, injection molders, and sheet metal fabricators often expand their services to include some level of final assembly
  • They largely manufacture one commodity and then provide a small amount of value-added assembly (aka “box build”)
  • This combination is usually a good choice for simple assemblies where the majority of the product, or the cost of that product, is comprised of that manufacturer’s commodity


Full-service System Integrators

  • Integrators create turn-key manufacturing and assembly solutions to suit the customer’s exact needs
  • Most component manufacturing is typically outsourced to commodity vendors (stamping, PCB, molding, etc.) and final assembly and testing is done in-house by the integrator
  • Usually a good choice for higher complexity products with many suppliers, from multiple geographies, and large number of components to manage
  • A good choice for products that have stringent product testing requirements

 

Our experienced team have created a structured vendor assessment checklist to help you assess and compare vendors:

Introductory Meeting
  • Allow 2-3 hours for a company introduction, tour, and then discussion of your product and needs
  • Who is attending the meeting? Is it a sales representative or technical manager – both should be present
  • Have they reviewed any of the information you sent prior to the meeting?
  • Did they prepare questions about that information?
  • Do they state their genuine interest in your project?
 
Manufacturer’s Introduction
  • Do they offer a company introduction presentation?
  • What processes do they have in-house versus out-source?
  • What markets do they serve? Do they serve your industry or one closely adjacent?
  • What is their average sale size per customer per year? Is that anywhere near your needs?
 
Manufacturing Facility Tour
  • Assess general cleanliness/orderliness of facility, this may be an indicator of how well they take care of their products
  • Determine their focus: high volume/low cost, or high-quality development mindset
  • Assess level of automation vs. manual labor
  • Determine if the facility is fully utilized & busy
  • Look for signs of safety measures in place
 
Vendor Capabilities Exploration
  • What manufacturing processes do they have in-house
  • What are their in-house tooling capabilities?
  • Who do they sub-contract to for other manufacturing processes?
  • Ask them to explain their procurement and supply chain management process
  • Do they have an in-house engineering team to manage design changes?
  • Ask them to explain their design change control process
  • Ask them to explain their process change controls
  • What kind of in-line testing and end-of-line testing can they provide?
 
Intellectual Property Protections
  • Ask if the manufacturer works with any competing brands. Ask them by name to be sure. If they do work with competitors, ask what systems they have in place to prevent competitors (and you) from learning each other’s trade secrets.
  • The vendor should have a clear statement of intellectual property protection
 
Product/ Prototype Review and Preparation
  • Was the vendor prepared in advance for your meeting? Were they familiar with your company and content?
  • Did they inspect product samples or prototypes you brought?
  • What is the quality of their questions? Did they provide you with helpful feedback?
  • Did the manufacturer provide any design ideas to help improve the manufacturing quality or cost?
  • Do they express confidence to meet your delivery schedule?
  • Did they write notes and summarize action items for next steps?
 
Quality Systems and Standards Evaluation
  • What quality accreditations do they have?
  • Ask how they manage incoming product quality?
  • Ask them to explain how they plan to develop the quality checks for your product
  • Are conforming or limit samples made available to workers?
  • Do they publicly post their quality and delivery performance, customer service and customer complaints?
  • Do they have the ability to track and trace serial numbers, lot numbers, batch numbers, expiration dates?
  • Ask them to explain their corrective action, preventative action (CAPA) / Complaint procedures

 

As we’ve mentioned in our previous blog, 9 pitfalls to avoid when selecting a contract manufacturer, selecting a manufacturer to produce your new product is a high-stakes decision.

We’ll continue to release articles to help you in your product manufacturing journey. However, if you have specific questions, or feel like you’d benefit from our manufacturing strategy, vendor management or support services, please reach out to one of our manufacturing & supply chain
experts today.

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