With the general economic slow-down and the startup bust, the biggest trend in the past several years has been the increased difficulty in obtaining funding for new companies. Venture capitalists and investors are more selective. The amount they are willing to commit and the parameters, precisions and demands they make in return have changed. Previously, investors were more flexible in terms of time-to-market and spending, today companies that receive funds must be very explicit in terms of their manufacturing strategy, processes and deliverables. And they must respect them.
The decision to outsource or produce in-house is critical. While outsourcing may be the smartest manufacturing decision for certain projects, it is more difficult and can be time-consuming to work with a contract manufacturer. Investors need to understand the strategic and monetary rationale behind such a decision and be on board before they release valuable funds. Companies must commit to careful prioritization and laser-sharp project management as there is no room for error.
In the case of startups and young companies, and even in established organizations, exceptional talent has come to mean the capacity to credibly wear several hats at the same time. Within manufacturing, in addition to the responsibility to design, develop and produce, it is important that engineers and operators have a broader business understanding.
The ability to identify with the customer experience and to approach and understand a project from a sales, marketing and financial perspective represents precious added value.
Finding these multidimensional, multitalented engineers with the right mix of experiences is hard to do, and it is becoming increasingly difficult because everyone wants them. As soon as they arrive on the marketplace, they are snatched up as a priceless company asset.
A company's manufacturing strategy needs to own this requirement if it is to remain competitive. The most important thing a company has is its people, people who can work across functional lines, and understand the stakes and challenges far beyond their core expertise.
With software programs and accessible tools, companies have the ability to innovate faster, and to rapidly change the features and designs of existing products. This presents an advantage for companies to meet customers' needs and desires in a matter of days instead of months.
The downside is that speedy iteration creates a very challenging product cycle. It can discourage manufacturing and the supply chain from putting the right controls and validation processes in place to maintain discipline in product development because they simply cannot keep up.
Manufacturing must understands the advantages and disadvantages of an accelerated innovation cycle. Manufacturing needs to be able to benefit from the tools and the speed without compromising on product quality or customer satisfaction. In response to iterations, it must be able to pull back and say, "Here is the risk if we make that change before completing a full validation." To do this, it must remain flexible and in constant communication with other functions to understand and align with the needs, expectations and dynamics of the market and customers.
Organizations have ridden the outsourcing learning curve and many have mastered its challenges. Outsourcing continues to be a growing and viable option as a way for many companies to remain competitive and widen the gap with competitors.
This is particularly true given the geographic expansion and global dimension of manufacturing today. There are many local contract manufacturers, but also a growing base of quality manufacturers in low-cost countries, from Mexico to Eastern Europe, from Northern Africa to Asia.
With more outsourcing experience and the ability to know what does and does not work, companies now approach outsourcing as a matter of finding the right partner for a specific product via a set of questions:
Because of the speed of product innovations and iterations, it is becoming critical to decide which innovations and iterations are the most important to pursue. These decisions are no longer made solely by the manufacturing team behind closed factory doors. They depend on fluid communication with other functions and departments, and on processes that continuously evaluate and prioritize product options based on key criteria – cost, differentiation, time-to-market and competitive advantage.
The days of operating in silos where information was hoarded and treated as private property are over. Product, manufacturing, sales, marketing, finance and other functional teams now reach out to one another with the objective to share the same information about the same product at the same time.
Transparent communication and well-defined, diligently implemented processes are what allows them to collectively make sound manufacturing decisions that are aligned with the company's business goals.