Choosing the Right Contract Manufacturer

Step 1: Consider the Threshold for the Contract Manufacturer

The EMS (Electronics Manufacturing Services) industry is commonly broken up into different tiers depending on the threshold of work that they typically provide. From low volume, mid-range and high production runs, contract manufacturers typically specialize within a specific threshold. For example, a higher-level tier may only work with people or companies who are ready to manufacturer at a higher scale and dollar amount, and not an individual only interested in building a few prototypes.

If you’re in the market to produce a large volume of your product, be sure get multiple quotes to ensure the best pricing. If you’re in the market to produce a smaller run, consider the CM’s location, as well as the time commitment of looking at multiple manufacturers.

Step 2: Do Your Research and Visit the CM (if You Can)

A physical visit to the CM may save you from future headaches. A reliable CM should welcome a visit, and if they don’t, it may be a red flag. Seeing firsthand how the CM operates can be a good indicator of how your production process will turn out in the long run.

As with all business partnerships, good communication is key. Consider these questions when you review CMs:

>> What types of machines do they have and what manufacturing techniques do they implement?

Understand how your product is made. What capabilities do they have? How fast will they be able to produce your product? Sometimes a CM will have to outsource parts of production. Ask the CM if this is the case and make sure to get all of the outsourcing details upfront. It’s important to have full transparency into how your product is made. 

>> Does the manufacturer have the accreditation you need?

Accreditation varies between industries and geographical regions. Medical devices, food and drug consumer items, industrial or harsh environments are just a handful of the products that could require accreditation from the manufacturing facility. Some examples of common accreditation include the ISO 9001 for quality management and the ISO 13485 which is needed in the medical industry. Make sure you understand the accreditation requirements for all the markets you want to work with. Medical devices in particular are heavily regulated, so plan ahead to ensure your product can be sold into different markets.  

>> Are they following health and safety codes?

Get a sense of how a CM’s operation works. Not every CM follows best practices when it comes to health and safety and a visit can provide insight into their machinery and the treatment of their workforce.  

>> Can they assemble and/or package your product for you?

Some CMs will assemble portions of your product, and some may be able completely assemble your product, including the finalized product packaging. 
It’s easier to use a CM that can deliver a product that’s ready to be stocked on the shelf, but that convenience comes at a cost. If you want to save money, you can project manage the run yourself by finding multiple CMs to create all the different parts and assemblies you need. 

>> Do you need to provide your own parts?

Not all CMs can provide every material you need to make a finished product, especially if your product requires an uncommon part.  A detailed Bill of Materials (BOM) will help you communicate your needs with the CM and find out if you need to source items yourself. Arrow’s Online BOM tool is a great way to get started with putting your BOM together. 

>> Ask to do a trial run.

Start small. Order a small quantity of your product to inspect the quality before committing to a larger production run. This will allow you to test your boards without added expense. You can inspect the work to make sure your product is working as expected and with the right specs. You can also see if the CM does in-house testing, but we advise you to test your product yourself before making a large order. Another low-volume option is to leverage a shop that specializes in quick-turn prototyping, or on-demand manufacturing. This is a great option to receive high quality prototypes quickly, so you don’t lose time getting to market.

>> Is the price too good to be true?

You can upload your engineering doc and receive a product in the mail from some CMs, but an on-site visit is usually out of the question in that scenario.  Part of the appeal of an online CMs is the exceptionally low costs, however this can often result in a lower quality outcome. Boards produced by these CMs often fail, and communication with the CM can be lacking. We advise using them for nothing more than a proof of concept, if at all. 

>> Have you had a qualified engineer vet your CM?

Consider hiring a qualified engineer to review any CM before you begin working with them. An engineer will be on the lookout to make sure the CM can deliver on its promises and meet all your needs. Entrepreneurs that are part of the Arrow Certification Program can enlist an Arrow engineer to set up time with your CM to go over their capabilities and help vet them for you. 

Step 3: Understand the Pros and Cons of Going Abroad

Manufacturing overseas could save you money in the short term but consider whether it’s the right choice for you in the long run. Before you decide whether to do your production locally or not, here are some areas where issues might come up.

Transparency: Time difference and language barriers can complicate communication channels. Add that to the fact that it’ll be difficult to visit the facility on a regular basis, and you might find yourself lacking transparency around your product manufacturing.

Shipping: Tariffs and international shipping fees might take a big bite out of any savings you’d enjoy from manufacturing internationally.

Accreditation: Where is the manufacturer in relation to your market? Make sure you won’t run into any accreditation issues if you’re using a CM that doesn’t usually manufacture for your target market. 

Volume: Balance cost savings with the size of your project. Don’t go abroad for a small project or to make a prototype, since it’s more important to focus on building a relationship with your CM than it is to save a nominal amount. This is also important to consider even if your target market is ultimately in a different country. It can still be beneficial to do your prototyping locally before embarking on a larger production run. 

 

Step 4: Ask the Experts

It’s important to check in with engineering and manufacturing experts as you move through the product development journey. Experts can help you get more detail on things like sourcing components, understanding tariffs, labor and manufacturing costs and more. 

That’s why entrepreneurs have free access to the Arrow Certification Program. The Arrow Certification Program is a partnership between Arrow and Indiegogo that gives entrepreneurs the necessary tools and services to bring their product ideas to life. Participants in the program can get assistance from Arrow engineers on any stage of their product development, from design through prototyping, to materials sourcing and throughout manufacturing processes.

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If you’re an entrepreneur building a tech product, join the Arrow Certification Program today.