The hardware product development process is done in stages and it’s difficult to go backwards once key components, manufacturing and architecture decisions are made. Here is best practice advice to ensure supply chain issues minimize the impact of your new product development lifecycle.
Get connected to your Manufacturing partner. For most early-stage companies, the suppliers for the components that go into your new product have not all been identified. A Contract Manufacturer is an important partner to help find these suppliers and build your product. Consider the location of where you’d like to build your product, the annual volume of product you are forecasting for the next 2 years and how you will get your product from the factory to customers. Most new products have hundreds of parts to be identified, purchased and supplied. Your selected CM fortunately has a supply network for most of your parts. Engage one or more interested CM’s and choose your manufacturing partner right at the start of the design. To do this you will need introductions and credibility. Product Design partners can provide the access to CM at no cost and can guide the CM selection and management with you. There are sourcing firms that charge for introductions and management of the CM for a percentage, and some charge a finder's fee. In each case you are relying on the pre-existing relationships to offset the risk these CM’s see in an early-stage company with no history, lots of pre-production effort on their part and typically low first year production volume.
Consider designs that keep unavailable and risky supply chain parts away from your product. Plan for supply chain issues existing for the next 12-18 months. It typically takes eight months to conduct the new product parts selection process. Think about supplier selection early in the product design lifecycle and consider embedding a manufacturing specialist into the design team. Many times, it is a strategic electronic part that is identified as a high supply risk. They do not have drop-in replacements, are selected early in the product development lifecycle, and if supply issues are not identified early the affected elements of the design must be redone with new components and circuit designs, resulting in several months delay. There are often 18-month lead times on strategic part delivery. For the next year, consider using off the shelf parts and more expensive circuit design to eliminate supply risk. The key takeaway here is know the list of risky supply parts your product will need as early as possible using a supply team to review the design. Challenge the design and manufacturing teams to look at lower risk and likely more expensive alternatives, have back up plans in place, and re-design immediately to minimize the supply risks as soon as they are identified, the earlier the better.
Plan for the Unexpected. Everything continues to take longer, and part supply availability of certain components and materials change week to week. Your design team ‘supply strategist’ should identify at-risk components and monitor their supply regularly during the design and prototype stages. In many cases companies are purchasing their first-year supply of at-risk components months before the design is completed, knowing that there is a small risk these parts will be modified and obsolete as the design is finalized. Low predictability of first product build schedules is leading to last minute delays in product shipments to your customers, and the employee return to work has additional delay effects on the distribution and delivery of your product to end customers. Part selection, manufactured goods and supply chain delivery uncertainty can and should be monitored but in many cases the unexpected is last minute and a backup plan for the riskiest elements should be discussed and in place wherever possible.
Kevin Bailey, CEO at Design 1st.