Portfolio executives at electronics hardware startups would be remiss not to consider evaluating a contract product design or contract manufacturing partner during the early stages of product design and new product developing for startup company product.
Startup and early stage companies outsource many services to conserve the rate at which they burn cash while on the path to reaching break even or becoming cash positive. Startup product portfolio companies are often encouraged by venture capital investors to increase scope and depth of expertise but not to put much of the required investment to do so ahead of earning revenues.
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Typically, by the time Series B startup funding occurs, many portfolio company executives focused on the objective of bringing a manufacturing product to market have finished most of their product prototype work and are beginning to think about product manufacturing and related work-in-process (WIP) production issues. (Read: Questions for startup founders to consider when seeking funding)
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As tariffs and supply chain compliance play greater roles influencing companies, some OEMs interested in obtaining knowledge for enhancing their ASEAN supply chain strategy with non-China contract electronics can request a list of non-China EMS provider locations and capabilities here.
Below is a tech product startup company rolling operations plan. While not comprehensive, the plan does include many startup company product manufacturing activities and components for executives to consider when bringing a hardware-based product to market while targeting bill-of-materials (BOM) best pricing for components. For simple product costing try this Outsourcing Calculator. For more advanced product costing and total landed costing optimization, you can try to build you own costing modeler. Learn more here and read about pros and cons of standalone vs systems integrated costing modelers here.
Startup executives can refer to this plan to help them review internal depth and scope capabilities against anticipated company capability requirements so they may then determine at what point it may make sense to consider evaluating and engaging a contract product design partner or contract manufacturing partner.
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Startup company inception to first three months (critical period)
- Determine cohesiveness of startup’s product development teams
- Gain clear understanding of startup executive team and what near and long-term goals are
- Weekly status-to-plan review (followed by setting up monthly budget-to-plan review)
- Coordinate product assurance group strategy to ensure field requirements are met
- Ensure printed circuit board assemblies (PCBA) are laid-out efficiently for integrated circuit test (ICT) with clearly-defined test points and verify whether the test software can troubleshoot?
- Ensure startup is well-positioned to sell its operational capability to startup customer base
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I. Manufacturing infrastructure needs (mid-term):
- Establish product manufacturing and operations strategy
- Review current contract manufacturing contract agreements in relation structure for alpha, beta, and new product introduction (NPI) requirements
- Identify product quality control strategy
- Establish component tracking system, including determining what components need to be tracked and how they are tracked; create and learn to manage an approved vendor list (AVL)
- Identify startup support needs; align startup strategies accordingly to ensure timely implementation of manufacturing and quality control strategy
- Define and help install document control system and engineering change order (ECO) system
- Budget planning process to help establish the correct basis budget for startup operations
- Identify additional team members required against startup company needs
- Guide testing strategy for product printed circuit board and module and systems level (where applicable)
- Develop product quality focus group
- Review existing suppliers and target alternate suppliers – to establish supplier fit
- Identify list of strategic suppliers for the product (meet with each, where appropriate, to evangelize the product to establish ‘mind-share’ with strategic vendors)
- Review current contract design or contract manufacturing partners low-volume contract service agreements
- Define twelve to eighteen month timetable more clearly
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II. Long-term manufacturing needs: (all long-term needs in parallel)
- Begin relations with contract design house or contract manufacturing providers. Search global directory of services and read about the differences between CM, CEM, EMS, ODM, JDM providers
- Begin request for proposal and request for quote (RFP and RFQ) process; developing quote kits for contract design and contract manufacturing providers to be considered
- Begin on-going development of scope and depth for program management activity for efficient management of eventual program migration
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Startup to within six months
- Heavy activity with product assurance processes, product test, product field service group
- Parallel activity evaluating a contract manufacturing partner for mid-term and long-term needs
- Set up order entry and enterprise resources planning (ERP) integrity (this also a good time to think about end-of-life management)
- Capture manufacturability and design for manufacturing (DFM) of product
I. Mid-term manufacturing needs:
- Implementation of final and mature product manufacturing plan close to completion (review of final documentation for preparation for volume manufacturing)
- Determine the structure of bull of materials (BOM) and product cost model in conjunction with finance
- Product-test plan in place (including working with vendors to build test fixtures
- Discuss developing cost-reductions program with current contract manufacturing partners
- Depending on production build requirements, oversee transition to alternative mid-term and long-term contract manufacturing partners to enhance Company’s ability to execute internally and in anticipation of increased product demand in the marketplace
II. Long-term manufacturing needs:
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