Mission Possible: Getting Crowdfunded Hardware to Manufacturing

Hardware is back in a big way—and innovative designers are starting to realize that getting funding is perhaps the easiest part of the puzzle. Putting an effective supply chain in place is a much harder hoop to clear

“Hardware platforms are surely back in vogue for the last two years, which is a major change and development,” Pat Meagher, executive vice president of product realization at Riverwood Solutions, a manufacturing and supply chain consultancy, told EBN in an interview. “However, the whole process of developing hardware is notoriously difficult.”

Especially in the quickly growing categories of wearables and Internet of Things (IoT), may designers use Kickstarter or another crowdfunding platform to get a project going. Getting from design to production, though, has bigger challenges than simply funding. 

“Most of the companies fundamentally don't understand how to do this,” said Meagher. “This is not a criticism, but rather an acknowledgement of a lack of experience and visibility into the process.”

The process of developing, testing and deploying a product in manufacturing is very different than creating a prototype. It takes deep planning and a clear timeframe. “A young company might bring me a reference design of a new product and think he can build a million of them. When you build million, though, you need to resource and localize, and you might have to build tools,” said Meagher. “Do you know how much it takes to take a product through that process? A million and a half dollars and nine months to build a supply chain that is flexible and tested.” 

Reference designs are not production ready, but rather show the possibility of a product.  To get a product into production, designers also have to build a realistic  bill of materials (BOM) that brings the product in at the right price. “Often, the BOM equals what they think the sale price is,” said Meagher. “They can make the product but they can't make money.” 

Next, designer needs to think about how to scale and localize the supply chain. “Often, designers think the manufacturer will do it but most don't have the capability to address form, fit, and function in the country,” said Meagher. “A local plastics company may have built 20 pieces that look good and work fine, but that doesn't mean you can transplant that to a low-cost country and scale it.”

When choosing suppliers and manufacturers, a myriad of issues must be considered. Consider how potential partners are managing the risks inherent in the electronics supply chain, including counterfeit components, supply chain disruptions, manufacturing scalability, and more. In addition, ask about the potential manufacturers quality systems and consider whether they are adequate or need to be enhanced.  Put clear supply agreements and an audit system in place. “When you are using low cost countries for manufacturing, you don't get what you contract for but what you manage for,” cautioned Meagher.

To succeed, designers need to consider supply chain concerns in the very earliest stages of product development. “You have to intentionally design in the supply chain and if you don't do it early, you will have to do it later and double or triple the cost,” said Meagher. 

Let us know the biggest stumbling blocks that you've seen when taking products from design to production. What's your best supply chain advice?  

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