The process of going from creating one of a product, to a thousand, to a million and more is one of the core challenges any supply chain or production team faces.
Unlike the computing world (where there's next to zero marginal cost of growth), the manufacturing world has a large set of requirements for managing growth and continuous production.
In discrete production (the type of manufacturing used to produce mass quantities of individual items in modern retail), several challenges emerge when trying to scale operations. These challenges can be lumped into three categories: (1) quality control, (2) project management & production planning, and (3) production efficiency.
We'll dive deeper into each challenge below and highlight exactly what you need to know to successfully ramp up your manufacturing operations:
1) Quality Control
Quality control (QC) is the means for creating a consistent and high caliber product. QC can be broken into two parts: (1) validation and (2) verification. The purpose of quality validation is to ensure that you're designing products to appropriate criteria. This product criteria is determined by way of market research, customer surveys, as well as by performance standards provided by engineers and designers. Quality verification conversely, is the process of determining if your product meets this criteria. Being able to verify quality at scale is both challenging and critical to growing a physical product business.
Implementing quality control begins as soon as you start to create prototypes in the pre-production phase. During this stage, the criteria for quality is initially defined. Quality verification begins at the tail end of product development, when the first product prototypes near completion. At this stage, you have the ability to start verifying the constraints set forth by your product designers (physical durability, reliability, molded part quality, usage testing, etc.). As you begin to scale up production from one unit, to a thousand, to ten thousand, implementing a multi-stage quality control plan can help you effectively scale without losing quality.
This quality control plan may look different depending on what your product is and how your supply chain is configured. For this article, let's imagine we are a furniture company with an in-house manufacturing operation. Our quality control plan can start with inspection of incoming raw materials or upstream supplied parts. To save time, it's only critical to know that on average, the material quality we're producing is good. After our products have finished assembly, a similar quality inspection process can be repeated for the final outsourced finish good. This is the final quality check that matters before a product gets packaged and shipped out to the final customer. Managing quality checks can be done either in a project management tool or, in more regulated industries, (medical device manufacturing, pharma manufacturing, etc), can be facilitated with a full scale QMS (quality management system).
2) Project management and production planning
The goal of any new product introduction is to bring a new product to market, in mass quantities, as efficiently as possible. You run the risk of losing out on potential profit from an effective new product launch if you miss a new product launch window, go way over budget, or have loads of quality defects. Building and enforcing project plans for managing NPI programs is crucial for avoiding these and other critical failure points.
Project plans help both brands and their vendors get aligned on the series of milestones. Milestone completion is critical to ensure a successful product launch. A project plan becomes particularly useful when trying to coordinate schedules, launch dates, and work with manufacturers based in a different time zone than you.
At scale, a project plan can also be a very effective way for you to ensure your vendors have the resources they need, when they need them. For instance, an effective project plan can help track all of the moving parts of your upstream supply chain to make sure raw materials and upstream inventory arrive at your CM's factory at the right time. Depending on your relationship with your CM, the responsibility for managing upstream supply chain can vary. More of that responsibility might fall on the brand for complex products and companies that desire supply chain visibility. Conversely, for simple products, brands may be completely removed from the material supply chain coordination.
In either case, a project plan can ensure that your vendors are never slowed down in their production because you weren't able to coordinate effectively. Upstream supply chain bottlenecks are consistently within the top 3 reasons for delays in production and manufacturing. When ramping up and producing thousands to millions of units of your products, making sure that poor planning and management doesn't cause bottlenecks to your production is critical to effectively scaling. If possible, getting vendors and suppliers onto your project management platform can help ensure all parties are on the same page and there's a singular, central, source of truth.
3) Production efficiency
The third critical portion of scaling manufacturing efficiently is making sure that production efficiency isn't compromised. Production efficiency can be characterized as the rate at which production happens during steady state manufacturing. For example, if you have a shipment of a 5,000 widgets due by the end of the week, you have to produce at the rate of 500 widgets per day. If you have a machine go down for a mechanical issue one day, you immediately fall behind your production by 20%. Investing upfront in a preventative maintenance plan and OEE monitoring software can help circumvent unscheduled downtime and keep production up and running on time.
Production efficiency can quickly lead to delayed product launches and dissatisfied customers. Ramping up production however without implementing good quality control practices in place might lead to quotas being hit, but worse end product finish or quality.
After achieving product market fit, scaling up contract manufacturing is the next big hurdle any company launching physical products face. With these three basics in place: implementing quality control, a project management plan, and monitoring production efficiency, you'll be ready to effectively scale contract manufacturing and successfully launch and scale new products.