Making a product involves blending creativity and systematic execution. It’s a process that demands visionary thinking and meticulous planning to cut through design, development, and production complexities.
Navigating through product manufacturing complexities requires a strategic approach. Read on to discover six critical stages to transform your idea into a profitable marketplace offering.
What’s product manufacturing?
Product manufacturing involves transforming raw materials into finished and ready-to-sell goods. This process covers every developmental phase, from design to delivery.
The 3 main types of product manufacturing
There are three core methodologies in product manufacturing: made-to-stock (MTS), made-to-order (MTO), and made-to-assemble (MTA). While the objective to transform raw materials into market-ready goods unites these strategies, their operational approaches differ significantly, with each offering distinct benefits and challenges.
1. Made to stock
The MTS strategy focuses on manufacturing goods in advance. It hinges on precise demand forecasts, making it ideal for products with stable sales cycles like gifts during the holiday shopping season. If predictions suggest you need 1,000 units, production aims to meet or surpass this figure to ensure ample supply.
But this strategy can falter in markets with unpredictable demand, potentially leading to excess inventory and tied-up capital. You might produce 1,000 units based on a forecast, for example, only to discover that the actual demand was for 500, creating surplus stock and frozen funds.
A manufacturer for small businesses might use the MTS strategy to produce popular toys ahead of the holiday season, ensuring they meet the surge in demand. By analyzing sales data from previous years, they can forecast the quantity of each toy needed to avoid stock outs during this peak shopping period.
2. Made to order (MTO)
In MTO or “built-to-order” manufacturing, customization takes center stage. This approach tailors products to individual customer specifications, making it a valuable strategy in sectors like heavy equipment and automobiles. MTO’s advantage lies in offering a level of personalization mass production can’t provide.
The downside of MTO is its longer lead times compared to MTS. While the latter offers quick turnarounds, the former may stretch from weeks to months based on product complexity and customization. That’s why MTO is best when creating high-value, bespoke items, since customers are more accepting of longer wait times.
A custom computer company might use the MTO approach to allow customers to select components like processors, graphics cards, and RAM. While waiting for a custom PC may take longer than purchasing a pre-built model, the customization’s value makes the wait worthwhile for many buyers.
3. Made to assemble (MTA)
The MTA strategy is a hybrid between MTO and MTS. It’s a modular manufacturing approach where companies produce and stock basic, interchangeable components based on demand forecasts, but final assembly doesn’t start until a customer places an order. This tactic lets businesses offer quicker lead times compared to pure MTO production while still providing some customization to meet customer preferences.
But the MTA approach can be labor-intensive, especially when scaling up to meet a purchase surge. If you get a large order influx, you might need more components and labor resources to keep pace.
A furniture company specializing in modular office setups might operate on an MTA basis, maintaining a stock of standardized parts like table tops and drawers. Upon receiving an order, the company quickly assembles these components according to the specific configurations requested by the customer.
How to manufacture a product in 6 steps
Effective product manufacturing harmonizes creativity with precision — and collaboration is the best way to manage this balance.
Production managers are pivotal, effectively managing the entire development cycle — including facilitating team collaboration. Beyond overseeing the factory line, they’re also responsible for finding the right manufacturers to bring initial ideas to life. They’ll also help source raw materials, calculate optimal order quantities, and ensure all manufacturing process steps unfold seamlessly.
By involving leaders and subject matter experts from various departments, nothing’s left unaddressed. Your product considers every team’s needs, from design and production to marketing and sales.
This integrated approach also reduces end-result disappointment and communication errors by considering all perspectives early on. It aligns objectives, harmonizes expectations, and streamlines feedback loops, effectively minimizing misunderstandings and optimizing the product’s market fit.
Here’s a six-step guide that highlights the importance of cross-functional collaboration.
1. Conceptualize
This is when your product begins its journey from an idea to reality. It involves brainstorming and refining your concept to ensure it resonates with your intended audience. It’s not just about creating something new — it’s about meeting a genuine market need.
Key considerations include:
- Identifying a need: Check that there’s demand for your product. Without a clear desire, even the most innovative ideas can falter.
- Understanding your market: Know who you’re designing for. A deep understanding of your target audience’s preferences and challenges is crucial to creating a product that resonates.
- Evaluating production feasibility: Assess whether you have the necessary resources and infrastructure to bring your product to life. This includes manufacturing capabilities, supply chain logistics, and technological requirements.
- Gauging cost-effectiveness: Evaluate your production costs and assess market competition to determine if selling your product is profitable.
2. Prototype
Once your product passes the viability check, it’s time to create a prototype. This functional model, whether digital or physical, is a tangible representation of your vision, allowing for real-world testing and refinement.
- Digital prototypes can be cost-effective and quickly altered, making them effective for initial design adjustments and virtual testing. These models are excellent for visualizing the product and running simulations to identify potential issues.
- Physical prototypes provide the advantage of hands-on interaction. Stakeholders can feel, use, and evaluate the product in a way that’s not possible with digital versions. And these physical items are invaluable for detailed testing of multiple key factors, including ergonomics and user experience. They also enable direct consumer feedback, offering insights that can significantly influence the final design.
Consider a scenario where you’re developing an innovative camping stove designed for efficiency and portability. After digital modeling highlights optimal airflow and heat distribution, develop a physical prototype. This approach allows testers to experience the stove’s lightweight design and ease of setup in actual camping conditions.
During this process, feedback might reveal an unintuitive fuel connection system, leading to further design modifications. This iterative prototyping and testing process ensures the final product not only meets but exceeds market expectations, setting you up for a successful launch.
3. Obtain quotes
After finalizing your prototype, you’re ready to find manufacturers and suppliers. It’s crucial to gather multiple quotes, not just for cost comparison but to evaluate factors like proximity, reliability, and reputation.
While there’s no magic number for how many quotes to request, starting with four or five gives you a solid basis for comparison. If initial quotes don’t meet your expectations, don’t hesitate to look for more.
4. Order samples
Once you shortlist your manufacturing partners, it’s time to order product samples. These samples, representing your design’s final form, play a key role in evaluating the quality and accuracy of what your manufacturing partner plans to mass produce.
While these samples allow for minor adjustments on your end, significant modifications might require extensive changes by your manufacturer, impacting both time and budget.
5. Negotiate terms with your manufacturer
When you’re satisfied with your manufacturer’s samples, you can negotiate contract terms. You’ll have a foundation for negotiations based on the unit price, but it’s essential to address these key aspects:
- Payment terms: Deciding whether invoices are due on receipt of goods or within a set period (like 30 days) influences cash flow management.
- Order quantities: Understanding the manufacturer’s minimum order quantities (MOQs) ensures alignment with your production needs and demand forecasts.
- Logistics: Determining the shipping method and delivery timelines helps you plan warehouse logistics accordingly.
- Contractual details: Specifying the dispute resolution terms in contracts helps ensure they’re favorable and protective for all parties involved.
6. Start mass production
With every agreement secured and all resources prepared, you can put your product into production. From a production management standpoint, there isn’t much else to do at this stage other than communicate with your manufacturer and wait for your order.
While you’re waiting, make sure your marketing and sales teams use this time to prepare for the product launch. This involves running ad campaigns, updating your store’s website, and generating hype about the upcoming release. If everyone has done the proper prep work, your new product should enjoy a warm reception from consumers.
The relationship between manufacturing and inventory management
Effective inventory management serves as the backbone of manufacturing. Knowing what to create and when — whether that’s to accommodate customer demand or available resources — guides the entire manufacturing process. And aligning stock counts with product production prevents surplus inventory and shortages.
While businesses with smaller operations and lower transaction volumes may still rely on manual counts to manage product inventory, this conventional approach lacks efficiency and scalability. As businesses grow, they require sophisticated inventory management solutions to maintain productivity and accurate inventory records.
Implementing a modern inventory management system like Fishbowl revolutionizes how you track and manage products. Features like real-time tracking capabilities mean you’re always informed about incoming orders and new shipments, ensuring you never miss a beat. These details are critical for maintaining optimal stock levels and making informed production scheduling and material procurement decisions.
Turn your product dreams into reality with Fishbowl
Contrary to popular belief, real-time inventory management is an option for small businesses. All you need is the right tool. That’s where Fishbowl comes in.
Fishbowl is an all-in-one inventory management solution that includes robust manufacturing capabilities, aiding in material management, production oversight, and capacity forecasting.
To harness the full power of the Fishbowl ecosystem, try Fishbowl Warehousing, which includes automated purchasing, vendor management, and order approvals. Book a demo today to see how Fishbowl can transform your inventory and manufacturing management.