Your production strategy is vital to the economic viability of your business. This is the process of:
- Putting both product and production process through a series of tests and refinements to ensure you can produce the product with reliable quality.
- Determining the optimal way to manufacture your product at a price that permits you to sell it profitably.
- Securing a reliable supply of resources – whether talented programmers for software or raw materials for hardware.
- Establishing production controls and quality checks to ensure adequate product quality and quantity.
Moving Beyond Prototype to Alpha and Beta Production
In the early stages of launching your business, you have to resolve many unknowns. For production, you now have to develop a viable production prototype of your innovation. You may need to go through several iterations to produce a quality prototype that you know can be produced repeatedly with consistent quality.
In the process, you’ll refine the mechanics of the production process to a point where you can fully design every aspect straight through to production control.
Completing this work involves moving the product and process through a series of critical production tests. The first, alpha testing phase, is internal. Its goal is to identify and eliminate the most glaring flaws in the process and resulting product. Once this is done, a beta test phase involving a small group of actual users who really “kick the tires,” can help to further refine the product’s quality and identify production issues to be resolved.
Once you’ve completed the design and test phase above, you must further refine the product or service into a form that can be manufactured and produced as cost effectively and efficiently as possible. This is a critical stage in validating the true productivity of your business – can you produce value at a profit over the long term?
Depending on your product, you may be able to handle production internally. But many startups rely on a contract manufacturing company to provide one or more services they cannot afford themselves. Contract manufacturing companies exist for every specialty. You may even have to contract with more than one if you need to outsource multiple operations. Examples include:
- Prototype development
- Injection molding
- Supply chain management
- Logistics, distribution
- Order fulfillment
Depending on your product category, you may be forced by cost considerations to use an offshore contract manufacturer. If you are manufacturing a hardware device dependent on sensors and other electronic parts, for example, your manufacturing ecosystem will be heavily dependent on China. Asian countries also offer price advantages for high-volume manufacturing in many other categories. Software companies often outsource production to low-cost suppliers in India, Russia, and Eastern Europe.
Outsourcing your production affords an easy pathway for startups. But it also involves multiple risks, including loss of quality control, potential theft of intellectual property, and the inability to get priority service if you are one of the manufacturer’s smaller customers.
Securing reliable sources of affordable human resources (for software products) or raw materials (for hardware and consumer goods), is such a complex topic that an entire industry has grown up around it. In this short introduction, we can only caution you to consider the following questions as part of your strategic development:
- What are the critical resources required to produce this product or service?
- What is the supply chain for these resources currently? Who are the major suppliers and users? Is there adequate supply to support my needs currently?
- What factors in the larger environment could imperil supply in the future? What alternatives, if any, could I have ready in the event of supply disruptions?
You may find some interesting idea-starters for this planning in the white paper library of the Supply Chain Resource Cooperative (SCRC), which address sustainable supply considerations in various industries.
REGISTERED EVE BUSINESS MENTORS & PROFESSIONALS
- Gary Yau Chan, China Business Facilitator
- Todd Scheski, Product Design, Prototyping, and Manufacturing
CAPITAL REGION PRODUCTION ASSISTANCE
- The State of New York’s Manufacturing Empire
- Center for Economic Growth (CEG): Strategies for Increasing Revenues
- Tech Valley Center of Gravity