tech-company, startup-costs, ideaWe have a tech company and we’re starting a new branch working on home security and automation. The problem we’re facing is whether we should *design and manufacture our product or just buy it “final product” from a manufacturer or should we even design the product and manufacture it through a manufacturer?
What should i consider when taking a decision?
*Designing the product is designing the schematic of the devices we need and actually create it.
The problem with buying something “off the shelf” from a manufacturer is that you have no intellectual property rights to it, which means that anyone can fairly easily copy what you’re doing and compete with you.
There are plenty of custom manufacturers out there who will take your design and make it to your specs, which allows you to retain full control of your product’s look and features, plus you retain all of the intellectual property rights to it. This is also an opportunity to maybe introduce something you think your competitors have overlooked or which could be done differently or better, and that might give you a bit of an edge in marketing.
A custom manufacturer can also make suggestions for ways to improve your design and make it less costly. Many of them offer this as an added service, because they want your repeat business, and your success keeps them busy too, so it’s in their best interests to work with you.
I hope this helps.
Good luck!
If you have a design you can get your product manufactured by some other manufacturers.Or if you don’t have a design then you have a chance to buy right product from manufacturer.i.e,already made product from market and sell it..
The question I would focus on when beginning the development of a new product is initial inventory size and costs. If this is a wholly innovative product where there is not a comparable item being manufactured you are forced to do the initial production yourself. However, if there are products in the market that would serve your need, you have options.
Manufacturing is an expensive process, usually prohibitively expensive if you aren’t producing a steady turnover rate. I worked in the automotive aftermarket industry for a major manufacturer. The theory behind manufacturing required the following considerations:
1) What was the cost/requirements for tooling? “Tooling” is the process of creating the manufacturing procedure and tools needed to create the end product. This include prototyping and development, but then you will need someone to produce it in mass quantity. This requires a devoted manufacturing process. Designing this process requires developing special tools to perform the specific actions needed to create your process.
2) How much product do you expect to need in inventory? A factory won’t want to tool up to produce a product for a single run, and then turn the machines off until you need more. That down time is lost capacity, which amounts to lost income. If they are willing to do this, the associate costs are usually much higher and the output amount is usually lower. Oppositely, ending up with excess inventory puts the costs onto your company. Inventory that doesn’t sell, costs you money in addition to the costs of the product themselves.
Therefore, if there is an existing product that you would like to use, my suggestion is to work with an existing product being manufactured while you test the market and assessing the potential added benefits of creating a customized product or vertically integrating (acquiring the manufacturing process within the umbrella of your own company). It is usually easier to extend and grow than to contend with being overextended in a process.
Working with existing products doesn’t prohibit you from customizing it. Labeling, coloring, and other superficial changes are much easier to accommodate compared to a ground up custom design.
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