Wednesday, August 26, 2009

Contract Manufacturers

After much explorations I made my first outreach to contract manufacturers. While I found several on the web, it was old fashion paper that helped me out the most. I went to the local library and found a manufacturing directory. Don't discount your local library's reference section. This was in a local township library that I found it, not a huge big city library.

I proceeded to look up the companies and see if they have the ability to create my product. I have a lot of faith in one as on their website they have link directly to OEM/ODM services. You have all heard about OEM's, Original Equipment Manufacturers, think companies like Dell and Apple that make a product. What most people don't realize, is many times behind that OEM is an ODM.

ODM stands for Original Design Manufactuer. Ever notice that a lot of your electronic products look very very similar? That is because they are all made by the same "Original Design Manufacturer" in China. Foxconn makes a majority of the cell phones as well as the ipods and iphone. Quanta makes a majority of the Laptops for companies such as Apple, Dell and Acer.

ODM's are different than a contract manufacturer, because the ODM will actually take your drawings or concept and design your product for you. A contract manufacturer will just build to particular specifications. ODM's are key for those of us starting out early in business.

I will be calling the manufacturers over the next couple of days to ascertain whether they can build my product and for how much. Currently I have asked the question of:

Do they provide contract manufacturing services?
Can they build and develop protoypes off drawings?
What is the cost per prototype development?
Material costs?
Manufacturer value added if not included? (MVA is a fancy term for labor and B & C components like wired and solder.)
Set up and tooling costs and whether existing tools can be adapted? (If they can adapt your tooling and set up costs should be less.)
Minimum lot sizes
Pricing on small and large lots?
Acceptance of payment through the use of credit card? (Important since they would not provide trade terms for a "new company". Might as well get the points.)
Shipping (Understand how they will ship your product and when you take risk of loss. Especially important if shipping internationally.)

Other questions I will ask is whether tooling and set up can be amortized over a particular production run. I will let you know what I find out so you can ask the same questions of your contract manufacturers. Wish me luck!

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