Streamlining and Winning in the Prototyping-to-Production Transition
Often, injection molding is considered the most cost-effective production option for SKUs with estimated annual usage in the low-thousands for volume. It comes down to economies of scale—you just set up once to run tens or hundreds of thousands of parts. The highest volumes often bring you the lowest per unit price tags. But, the production setting also typically carries something else with it if you’re thoughtful—cost control, and lots of it.
I don’t know about you, but I’ve never had a boss come up to me and ask me to make a product less profitable. “Let’s just erode our margin,” said nobody with a manager title ever. Well luckily, we’re going to talk about the opposite of eroding margin today, so buckle up and get ready to make some money.
One of the most costly milestones in the product development process tends to be the commercialization transition. You’ve gone through prototyping and optimized your product through iteration, and you’re at a point where you’re ready to produce at scale. This is where three things typically happen:
- You qualify, or often validate, your components
- You determine how many units you need
- Production methods need to be finalized, which may entail retooling with a production mold
This is where product developers might run into challenges controlling cost.
Qualification and Validation
The qualification or validation process that you choose may have direct or indirect cost considerations. For starters, these processes typically take more time and money to complete. The cost is easy to determine—you’re getting a quote for that. But it’s the indirect costs that you might incur for the time it takes to qualify or validate your product that are more difficult to predict. What does an extra few weeks cost you? Maybe it doesn’t cost you anything at all, and if that’s the case, then you should really be focused on the flip side of that question: How much extra revenue can I generate with a few additional weeks on the market? On-demand manufacturing at Protolabs helps you turn these traditional challenges into opportunities. At Protolabs, your qualification/validation comes with your unlimited life mold purchase and doesn’t add time. That’s correct, you get your parts in the same timeframe, with no additional cost. That lets you focus on what’s really important—generating more revenue and improving margins during what is typically one of the most costly transitions in manufacturing.
Managing Part Quantities with Digital Manufacturing
Another very common challenge in the commercialization transition is the dilemma of forecasting something that you may or may not be able to predict. Sometimes, your ability to forecast can come down to how innovative the product is. Do you have tons of previous iterations in the market that you can use as a benchmark? If so, this probably isn’t a huge challenge for you. But if you do have difficulty predicting how many units you can reliably sell, you may need to be wary of minimum order quantities (MOQ). Traditional molding and production companies use MOQs to guarantee that a given job or component quote will end up being profitable for them. In general, that means that you need to have a solid understanding of your sales potential before locking into a production method or vendor. This gets back to your ability to forecast. Many product developers get stuck in this phase due to large MOQ requirements.
Why is this a problem? Larger MOQs create not only inventory risk in the capital invested to produce the parts, but you also need to store and maintain those parts until you end up needing them. This is a large contributor to margin erosion for many companies, and it gets compounded quickly if you sell fewer products than you expected. Enter digital manufacturing. With our on-demand manufacturing model, we know that managing demand volatility is a key challenge that our customers face, and we’ll never lock you into an MOQ. That lets you ramp production with demand, and ultimately optimize margin by eliminating things like inventory and warehousing costs.
Let’s Get Those Parts Made Now!
We did it folks! We have a beautiful product that’s all validated, and we know exactly how many parts we’re going to need. Now comes the decision on how we should actually make the parts. Should we go traditional? Digital? Domestic? Overseas? Hard tool? Soft tool? Should we even injection mold it at all?
Don’t worry, these are all really common questions, and they all affect margin in different ways. If you’re at this point in the process, a lot of the decision-making will come down to what you’re done already. How did you prototype? Where is that manufacturer located? Do they offer production parts? It’s very common for product developers to be forced to work with different suppliers in the prototyping stage than they do in production, which certainly injects complexity and risk into this stage of the process. Switching suppliers may also mean that you need to re-tool your part now that you’re heading into a production. In and of itself, that could mean a new capital expense to the tune of $100K+ depending on process and complexity. I don’t know about you, but that sounds pretty expensive and slow to me.
We offer our customers the ability to seamlessly transition from prototyping to production, without large capital costs, or any hidden costs at all. Need to prototype? Great, we can do that! You say you need to move on to qualification, validation, and ultimately production? Great, we can do that too! In fact, when you go into production, we’ll give you your prototype tool for free, boosting that margin up even more. You win with the combination of speed, reliability, and quality—plus you only have to maintain one contact for both prototyping and production. Sounds like a win-win!
For more ways to streamline your development process, check out our design tip, Leveraging Low-volume Injection Molding, and our post, Bridging the Gap Between Prototyping and Production.