How Hardware Startups Can Save Time and Money by Outsourcing Design and Manufacturing
The electronics manufacturing industry is booming. This is good news for hardware startups since they can capitalize on this industry boom turn their ideas into new products by outsourcing design and manufacturing. In order to do that, hardware startups have to ensure two things: One, their product should be of high quality, and two, it should reach the market on time so that the risks of competition or obsolescence can be reduced.
There are certain steps that have to be taken so that hardware startups can save time and money on new product development and launch. A product owner generally has the following three options:
- Designing the new product in-house and outsourcing only the manufacturing and packaging parts
- Completely outsourcing design and manufacturing of the new product
While self-manufacturing offers total control over the manufacturing process to the owner, it requires a considerable amount of financial, material and human resources for setting up a production line, buying components from a reliable supplier, hiring a skilled and experienced workforce, and implementing well-established manufacturing and quality control processes. These factors increase your costs and risks and lengthen the product time-to-market substantially.
Another alternative is to outsource only the manufacturing part of the product production process in order to avoid the disadvantages described above. However, this requires the startup to handle the design for manufacturing of the product in-house. Many startups are newly established small companies with the single goal of developing and marketing a single innovative product, and although some preliminary prototyping can be performed by these companies, they generally lack the professional staff and resources for conducting a design for manufacturing and assembly operation.
This brings us to the final and most effective option of all:
Outsourcing design and manufacturing to a contract manufacturer
There are several reasons why hardware startups can save time and money by hiring a single contract manufacturer for designing and manufacturing their new product. Let’s take a look at the main ones:
- Cost Savings
Outsourcing design and manufacturing processes to a single manufacturer help a new product developer who is strapped for cash since virtually eliminates the fixed costs involving factory, machines, and labour. Additionally, the operational costs are also reduced since the contract manufacturers (CM) can achieve economies of scale which may not be possible in self-manufacturing.
- Time Savings
Since most contract manufacturers can facilitate rapid prototyping, developers can easily test early models of their products for and improve upon it. Due to this, hardware startups can save time and money on testing and ensure that their new product reaches the market before competitors’ products do.
- Increased Capabilities
By choosing a CM with complementary skills and resources hardware startups can save time and money which is crucial for new product launch. Many CMs have good design capabilities and can help create a custom design or a completely new design from the scratch. Most manufacturers also have a good distribution and logistics setup, which can be further utilized after the product launch.
- Better Management
Outsourcing design and manufacturing
By outsourcing design and manufacturing to a single CM, vendor management, and supply chain management becomes much easier for the product developer. Also, since there are not many parties involved, delays are reduced and turnaround time is increased.
Apart from the above benefits, outsourcing design and manufacturing can also help startups avoid the hassles of labour management, safety, certifications, volume scaling up or down getting new components, etc. Thus, by smartly choosing their outsourcing partner, hardware startups can save time and money and stay ahead of the competition in the fast-paced electronics industry.