How Do You Find a Manufacturer for a New Product?

[0:00] hi and welcome to another episode of

[0:02] startup Chuck today we are going to talk

[0:04] about choosing a

[0:06] manufacturer this is going to be mostly

[0:09] overseas but could work for domestic

[0:11] manufacturing as

[0:13] well what I would suggest is uh try not

[0:18] to be your own manufacturer it is quite

[0:22] exhausting you can for sure do it um

[0:25] I've met a few people who have taken

[0:29] their product and started manufacturing

[0:31] it themselves and then eventually turned

[0:34] that into very successful companies so

[0:35] it can be done you can scale it depends

[0:38] on the type of product you're trying to

[0:40] do and if the price points are right

[0:41] then maybe it does make sense to

[0:43] manufacture it yourself but and for this

[0:47] this is going to mainly talk about

[0:49] external

[0:50] manufacturing so the first thing is if

[0:53] you want somebody to make your product

[0:56] you are going to want to make sure that

[0:59] it

[1:01] is in a state where it can be made uh

[1:05] that's a big problem if you have

[1:06] prototypes and not a final product

[1:09] designed so first step is getting your

[1:12] prototype to a what we want to call

[1:14] Golden sample pre-production level for

[1:19] Asian manufacturing for example you

[1:22] typically will send them in the mail a

[1:26] perfect copy of what you want them to

[1:28] make and they will just make it you can

[1:30] then provide drawings and things like

[1:32] that after the fact that have specifics

[1:34] on them tolerances and whatnot but most

[1:37] of the time they will not go off of your

[1:40] drawings right up front they'll go off

[1:42] of what they see and then look at the

[1:44] drawings if they have to figure

[1:45] everything

[1:46] out uh with that in mind it's important

[1:49] to sign your golden sample sign all the

[1:53] parts on it with a sharpie so that if

[1:57] there's ever concern that the sample

[2:01] they have on the Shelf there isn't the

[2:02] original you know because you can

[2:04] recognize your signature another thing

[2:06] is that you don't want to mail it via

[2:08] the US Postal Service it's best to just

[2:10] ship it via UPS if you're worried about

[2:12] shipping costs I found that pirate ship

[2:15] is actually the cheapest shipper I've

[2:17] ever found and they can save you a lot

[2:20] in shipping things internationally plus

[2:22] it'll get there in three or four days as

[2:24] opposed to um a few weeks if you do the

[2:27] Postal Service sometimes so

[2:31] also when you are getting your golden

[2:33] sample it's it's really good if you take

[2:37] the time to manufacture a small run of

[2:42] prototype parts that are in the final

[2:44] manufacturable configuration so that

[2:47] then you sit down and you assemble it

[2:50] yourself because you will catch more

[2:53] manufacturing problems doing it that way

[2:56] than you would ever wise do so case in

[2:59] point on the Chuck rack uh ski rack that

[3:02] I developed I had wanted to do a welded

[3:07] bucket design instead of a riveted

[3:09] bucket design and so in order to see how

[3:13] difficult that would be I sat down and

[3:16] actually welded a couple myself and it

[3:19] was eye openening how much more time

[3:22] consuming it was how difficult it was to

[3:26] be consistent and then lastly how much

[3:29] warpage I got in the material after I

[3:32] welded plus then you have weld cracks

[3:35] due to uh if you have poor Weld and

[3:38] they're not clean things like that which

[3:40] could lead to catastrophic failure so

[3:41] now the bucket is actually um riveted

[3:44] together and then powder coated speaking

[3:47] of Chuck Rak uh this episode is

[3:49] sponsored by Chuck

[3:52] Rak and they make a hitch and ski hitch

[3:56] Mount ski rack and also bike rack track

[3:59] that goes on your hitch and it swaps

[4:01] between the two on one main post and so

[4:06] that is my company that is sponsoring

[4:08] this video uh check them out if you're

[4:10] interested in that sort of thing and if

[4:13] not back to us talking about now that

[4:16] you've got your golden sample and you've

[4:19] tried manufacturing it and haven't gone

[4:22] back to the drawing board because it

[4:24] manufactured fine it went together okay

[4:27] um which you'd be surprised chances are

[4:30] you go to put it together and you

[4:32] realize oh the snap fit isn't the way I

[4:35] thought it was it's way harder to get

[4:37] these two parts together or this finish

[4:40] isn't the way I want it to be um then

[4:43] you go back and you modify all your

[4:46] drawings and change everything and it's

[4:49] great because instead of making 5,000 of

[4:51] something that isn't the way you think

[4:54] it should be now it's going to be just

[4:57] the way you want it to be um um also

[5:00] it's good to put these pre manufacturing

[5:03] samples through lots of testing because

[5:06] you might find that you have to beef up

[5:08] things or make things stronger um or

[5:12] maybe like certain things get worn more

[5:14] than you thought so anyways you've got

[5:16] your golden pre-manufacturing samples

[5:18] now the thing is finding a company that

[5:22] makes the product so you can go to trade

[5:25] shows uh and talk to companies that

[5:28] might manufacture certain things it's

[5:31] good if you go to trade shows that are

[5:32] in your specific industry so if you

[5:35] wanted to go

[5:37] to oh I guess there's probably like a

[5:39] kitchen gadget company uh Expo out there

[5:44] then you could do things like walk

[5:46] around with your golden

[5:48] sample and uh find a manufacturer of

[5:52] kitchen gadgets and say I I'm wondering

[5:56] if you can make this for me you know

[5:58] this this plastic injection molded part

[6:03] and they might be willing to do that uh

[6:06] they might be willing to license it from

[6:08] you um you could also go to a lot of

[6:12] mechanical like manufacturing

[6:14] conventions and just look for people

[6:15] that do injection molding and you can

[6:17] come up to them and say hi I've got this

[6:20] tuna strainer with a magnet on it I was

[6:22] wondering if you could injection mold it

[6:26] and uh over mold this magnet in there or

[6:29] press it in there for me um and then

[6:32] they could probably help you you know

[6:35] get pricing and whatnot but if you're

[6:36] going to do it

[6:37] overseas then the easiest way to find a

[6:40] company is you look on Alibaba or a

[6:44] similar website and find a product

[6:46] that's similar so Spork is a great

[6:49] example so let me go here now I'm on

[6:54] Alibaba and I typed in Spork and I got a

[6:59] Spork company here looks good so then

[7:03] you go to that company and you come over

[7:06] here and you say oh okay this is the

[7:08] shinen horon Plastics and molding that

[7:12] sounds promising and then you come over

[7:15] here and you look at what they do and

[7:19] the services they offer and the

[7:21] equipment they

[7:23] have and the

[7:25] products and uh so you get all sorts of

[7:29] ideas and then you can hit um send

[7:33] inquiry and you can say

[7:37] hey I am trying to make this product and

[7:41] you send them a drawing and then they'll

[7:43] get back to you and give you a

[7:44] quote um typically they'll have some

[7:47] sort of minimum order quantity and a

[7:51] tooling cost and they can do it two ways

[7:53] they could either give you both a

[7:54] tooling cost and a lower minimum order

[7:56] quantity or they can give you tooling

[7:59] included and a higher minimum order

[8:02] quantity so for

[8:05] example um company ABC here they might

[8:10] have tooling of $4,000 you might think

[8:12] that's low but that's actually pretty

[8:14] reasonable I mean I think that the tool

[8:16] for this was about 3500 or less I had

[8:21] 5,000 of these made for about a 75 cents

[8:25] each and then the packaging and then

[8:26] they zip tied the packaging to the part

[8:29] put them in bags put them in boxes and

[8:32] so complete

[8:33] TurnKey um and then I think I had this

[8:36] graphic design

[8:38] done

[8:40] via it wasn't on Fiverr but some some

[8:42] consultant and they did it for $125 for

[8:45] this design which was great and so I

[8:47] just sent the design file over to them

[8:49] and I got these back by the case load

[8:52] actually I filled an entire UPS truck

[8:56] myself which I'd never done before and

[8:59] and uh have way too many of them but

[9:02] either way so minimum order quantity

[9:05] let's say is 5,000 this is where you'll

[9:08] go through and you'll find these

[9:09] companies and you'll want to

[9:12] find five 10 companies Etc and then

[9:16] you'll want to send requests for quotes

[9:19] out and they're going to have all these

[9:20] questions and you'll go back and forth

[9:22] and you're going to want to create a

[9:24] spreadsheet like this where you put in

[9:28] information on each one of these

[9:30] companies like the tooling cost and the

[9:33] unit price they're giving you and the

[9:34] minimum order quantity and then you'll

[9:37] get an idea of the total cost it's going

[9:39] to be and then the unit price including

[9:43] both the tooling and your minimum order

[9:46] quantity and then if you were to

[9:48] eventually buy 10,000 units now that the

[9:50] tooling cost is already baked in what is

[9:53] that equal out too but then there's

[9:55] other important information here like

[9:57] communication how good good was their

[9:59] communication with you were they

[10:02] constantly giving you feedback back and

[10:04] forth did you have a difficult time

[10:06] talking with them and you feel like it's

[10:08] going to be an

[10:10] issue uh other items here like TurnKey

[10:13] do they have TurnKey manufacturing can

[10:15] they only make a single injection molded

[10:17] part and you have to do the packaging

[10:19] yourself or can they do turn key where

[10:24] they put it all together and print it

[10:26] and ship it and you get it ready to ship

[10:28] to ly to Amazon or something like that

[10:31] there's that's an important

[10:33] factor uh another important factor is do

[10:36] they have a similar

[10:38] product because if they don't have a

[10:41] similar product then maybe they're not

[10:43] going to know how to manufacture what

[10:45] you're trying to do you wouldn't go to a

[10:47] rubber strap company and have them try

[10:49] and make you sheet metal boxes for

[10:52] example right so they could have uh

[10:56] adjacent products so someone who does

[10:58] urethane injection molding which is soft

[11:01] rubber straps they might be able to do

[11:02] hard plastic injection

[11:04] molding um and in which case maybe they

[11:07] could send you some samples of things

[11:09] they had done but you take all of these

[11:12] and the reason I'm using zeros and ones

[11:14] in this area is because it makes it

[11:16] easier for me to then do conditional

[11:19] formatting and so I'll come in here and

[11:22] I'll set up a color scale between

[11:26] um oh like red and green and like green

[11:30] is good and red is bad and yeah here

[11:33] there's no gradients but if I come over

[11:35] here and I'm looking at unit

[11:37] prices and

[11:42] uh I add more formatting in here let's

[11:46] see here think I got to

[11:50] go format

[11:53] conditional yes

[11:55] done ah got to add it over here

[12:06] right so this way I get a at a a

[12:09] moment's glance I can kind of get an

[12:11] idea of which of these will be a good

[12:16] company to look at working with so it's

[12:20] hard for injection molding to get

[12:24] samples um because you have to pay for a

[12:26] mold so here it's more important to get

[12:29] something up front good but if you're

[12:33] doing something to where it's like uh

[12:35] machined parts then what I like to do is

[12:37] ask for five prototypes of

[12:41] each um so you go to the machine Park

[12:44] company and you say okay you know I'd

[12:47] like you to make five so I could assess

[12:50] your quality and it's the same deal you

[12:52] go on to

[12:54] Alibaba and you look up uh aluminum

[13:01] parts right and then you would

[13:05] find an aluminum parts manufacturer like

[13:08] this custom aluminum or maybe like this

[13:12] and you

[13:13] find you find five 10 however many

[13:17] companies you send them the parts that

[13:18] you want to get quotes on you look at

[13:21] the quotes and then from there you can

[13:24] decide um which of the companies you

[13:26] want to get prototypes from like

[13:29] selecting you know three or five

[13:30] companies and then trying to get five

[13:32] prototypes from each and have them ship

[13:34] to me but uh communication here is

[13:37] really key you really want to find a

[13:39] company that has good

[13:40] communication and then uh you basically

[13:44] will either set it up through Alibaba or

[13:48] wire them money directly uh you might do

[13:52] better to do it through Alibaba a lot of

[13:54] times you'll actually save money in fees

[13:56] that way it might be a 2% fee on a loan

[13:58] amount of money or 3% fee compared to

[14:02] typically wiring money is a minimum of a

[14:03] $50 fee at the local bank so that's

[14:07] something for you to look into there as

[14:10] well and that's kind of it in terms of

[14:14] choosing a manufacturer you'll then get

[14:17] the samples in decide which of them is

[14:19] the best and then you

[14:22] will place your order with that

[14:25] manufacturer typically you don't want to

[14:28] give them all the money up front you're

[14:30] going to want to give them half up front

[14:32] and then half when they're ready to ship

[14:34] and then I'll have a whole another

[14:36] episode on freight terms and conditions

[14:39] and receiving your product in so one

[14:42] thing you do want to consider when you

[14:44] are looking at where they're going to

[14:45] manufacture your product where these

[14:47] companies are located and that might be

[14:49] another tab

[14:51] is where in the country are they located

[14:55] like are they on a port that'll make it

[14:57] a little less expensive than than if

[14:59] they're

[14:59] Inland if the products are small maybe

[15:02] it's easier to Airship it so it doesn't

[15:04] matter if they're Inland but it can add

[15:07] up if they're far inland and then they

[15:08] got to truck it all the way to Shore and

[15:10] then it's got to go from Shore to you

[15:12] you're adding cost and it's just going

[15:15] to make your product more expensive you

[15:17] can also take all these quotes and this

[15:21] is where you get pricing so now you have

[15:25] a rough idea of how much pricing is

[15:26] going to cost for your product and that

[15:29] can be used for your Kickstarter

[15:31] campaign it also can be used to

[15:33] determine whether or not you can even

[15:35] manufacture your product for a price

[15:37] point that people will be willing to

[15:39] pay so again 4X markup from your price

[15:45] here is kind of what you're going to be

[15:47] looking at for

[15:49] MSRP if that MSRP value is outside of

[15:53] the range of what people are willing to

[15:56] pay then you might not be able to sell a

[15:59] bunch of them something to consider all

[16:03] right well that is about all I got for

[16:06] this

[16:07] episode if you like what you've heard

[16:10] please like And

[16:12] subscribe and if you have any questions

[16:14] please leave them in the comments and

[16:15] I'll try and answer them thank you