How to Select a Manufacturer
One of the most common questions I receive from entrepreneurs, innovators, and start-up companies is about the manufacturer of their product. The question is typically something like “I found a great overseas manufacturer that says that they can manufacture my product for me. What do I do now?” or “How do I find a manufacturer that can make my product idea?” or “My manufacturer isn’t communicating well with me so what should I do?” Regardless of the exact question, the general topic of manufacturer management and procurement is a very important one to understand prior to venturing off into the world of product development and manufacturing. In this three-part blog series, we will discuss the steps required to ensure that you deliver a quality product to your customers and minimize the number of headaches along the way: (1) How to Select a Manufacturer; (2) How to Qualify the Product; (3) How to Manage Production Quality.
Here we focus on selecting the most capable manufacturer from the list of those identified as potential manufacturing candidates. It is expected at this point that initial communications have been made with the manufacturer and they have shown some interest in manufacturing your product. Before moving too far with one of the manufacturers, it is necessary to do some initial qualification of their capabilities to be sure they are the right fit to manufacture your product. It is also necessary to determine if they have similar working behaviors that fit well with your company’s culture and style. Below are three recommended steps to determine if the manufacturer is the right one.
How to do a preliminary manufacturer evaluation
The list of potential manufacturers for your product could be very long or short, depending on the amount of prior research. Either way, it is necessary to perform a thorough manufacturing supplier evaluation process to be sure that the manufacturer is the best for you and your product. The overall evaluation involves a preliminary evaluation and an in-depth evaluation. The reason for doing a preliminary evaluation is to quickly weed out those candidates that aren’t capable of manufacturing your product or aren’t a good fit for your company. Based on years of experience, here is a tried and true checklist to use for a preliminary manufacturer evaluation:
- Ask the supplier to provide the number of employees, machines, and annual product output of the manufacturer. (This helps determine if the manufacturer is willing to provide company information. If the supplier is unwilling to provide this information or any of the data seems to conflict to anything found on the web, then consider removing the supplier from the preliminary list.)
- Ask the sales representative how long they have been with the company. (This helps you determine if the representative knows much about the company and if employee turnover is high. If the company turnover is high, you should consider eliminating the supplier from the preliminary list of manufacturers since you might be working with too many people over the span of your product life cycle.)
- Ask the supplier to communicate their manufacturing capabilities and specialties. (This will help you understand if the supplier excels at the manufacturing processes you need to manufacture your product. If the supplier specializes in processes different than those you require, you should eliminate them from the preliminary list of suppliers.)
- Ask the supplier if they make any products similar to yours. (This will help you understand if they specialize in making products like yours. If the manufacturer doesn’t make similar products, then it is still acceptable to keep them on the preliminary supplier list but be sure to be diligent moving forward.)
- Ask the supplier to send you samples of products they currently have in production (This will help you understand if the product quality level matches your expectations. If any of the products you receive are of poor quality or don’t function properly, eliminate the manufacturer from the list of suppliers.)
- Visit the manufacturing facility if possible and eliminate any manufacturers from the list if they don’t allow you to visit their factory (Manufacturers typically put their best foot forward on these first visits, so take everything you see and hear with a grain of salt.)
How to get references for each manufacturer
It is always very difficult to properly do due diligence on suppliers, especially overseas manufacturers. Therefore, the best place to start is to ask the manufacturer to supply a list of customer references from companies who have used their services in the past to make custom products. Be sure to get a list of at least five references and check that the references are currently working with the manufacturer, are companies similar to yours in size, and have produced similar production quantities as you are planning. For example, it would not be appropriate to use a multi-billion dollar company producing hundreds of millions of parts as a reference for your start-up company that is expecting to make ten thousand parts in the first year. This wouldn’t be a valid reference since chances are high that this multi-billions dollar company is being treated very well. Ask each reference to provide insight into their experience working with the manufacturer. Be sure to ask the references to tell you both the good characteristics and the bad characteristics of the manufacturer. If the reference does not have anything bad to say about the manufacturer, then eliminate this reference from your list. Any customer who has worked with the manufacturer for an extended time will have some negative things to say about a supplier.
How to perform an in-depth manufacturing supplier evaluation
After the first two steps of manufacturing supplier selection have been completed, only two or three manufacturing suppliers should remain on the list. If a large number suppliers are still on the list, then go back and get more references to interview.
The final step in selecting the best manufacturer is to do an in-depth supplier evaluation. Large multinational companies have large internal teams to perform this task and some companies use consulting firms to do this final evaluation. If you don’t find it necessary to bring in external people to help you make the final supplier selection, follow the list of questions below to be sure that you address all potential issues and concerns prior to making the selection. Once each of these questions are answered for each of the remaining suppliers, it should be obvious which supplier should be selected as the final manufacturer.
- Where will the products be manufactured? The place of manufacture will impact the costs of shipping and potentially import duties.
- Ask the supplier to provide you with all the documentation that is followed for their internal quality processes. How do they ensure that the product is manufactured to specification?
- How are the manufactured parts shipped? Boat, air, land? Does the manufacturer have strategic relationships with logistics companies to ensure products get through customs without any issues? What happens if the parts get stuck in customs somewhere in the world?
- Does the manufacturer provide certifications of conformance of the products shipped including product measurement data, performance data, and raw material supplier information? Ask the manufacturer to provide certifications for products in manufacturing.
- Does the manufacturer outsource any of the work to a third part? If so, what processes are outsourced and how is the quality managed?
Can the supplier provide any examples of product quality plans for products produced in the factory? This includes incoming inspections, quality inspections on all parts fabricated, assembly process checks, finished product testing, audits, and outgoing inspections.
- What engineering documentation is required for the supplier to properly make the product? Typically this is a 2D dimensioned drawing done by a professional as well as a 3D CAD (computer aided design) file. Do not expect to get accurate quotations without these documents.
- Ask the supplier to provide you with cost quotations for the product based on the engineering 2D and 3D files. Make sure the supplier quotes the quantity you require as well as multiple ranges of quantities above and below your expected production volumes. Be sure to get all costs including non-recurring expenses such as production tooling and variable costs such as the part costs.
- What are the lead times for manufacturing the required quantities of your product?
This list provides the most important questions that should be asked when performing an in-depth manufacturing supplier evaluation. If the supplier selection process provided above does not result in a clear answer of the best supplier, then it might be best to bring in a professional who has years experience evaluating and selecting supplier.
Need more information on new product development or the manufacturing process? Please contact us with any questions or contact me directly at joseph.donoghue ( at ) leardon.com