Advice for start-ups: How to choose an electronics contract manufacturer

Z-AXIS participated in the recent “Scale For ClimateTech” panel for start-ups on how to choose an electronics contract manufacturer (CM). The discussion ranged into design services as well, since electronics design and manufacturing are inextricably linked and should never be considered separately.

Here are some highlights.

What a CM looks for in a start-up

At Z-AXIS, we like working with start-ups. We enjoy the high level of engagement between the customers’ engineers and our design and manufacturing teams. This can be more fun and rewarding than working from a detailed statement of work that is typical of larger companies.

We like the flexibility to optimize the manufacturing process and provide advice on what works.  And we thrive on helping start-ups find the sweet spot between what they want and what’s feasible.

That said, start-ups are riskier than established companies. They shouldn’t be a large percentage of our customer base, so we engage with perhaps one in three of the start-ups who approach us. A few things we look for are:

• • Are they filling a business need?
  • Do they know their market?
  • Can they market and sell the product?
  • Do they have capital to support the product launch?

What a start-up should look for in a CM

The panel of start-ups who have taken products to market using a CM in New York state had the following advice for other start-ups:

Know what is critical, and what’s NOT, about your product. For example, one company explained that they knew their product didn’t have to “look” great, since it would be inside an industrial machine. So they didn’t waste time or money specifying the housing.

Know where you need help. One start-up knew they needed help with the high voltage circuits, and looked for partners with that experience.

Connect with a CM early in your design process. “I wish we had connected sooner with a competent CM,” said one start-up. “Some of the design aspects that I spent a lot of time on could have been done better and sooner by Z-AXIS with their skills and experience.”

Document what you know, and understand what you don’t know. Good documentation can help you communicate with the CM, but “if you’re not careful, the documentation can obscure what’s important,” said one start-up.

Look for a CM that is making products similar to yours. Consider end markets, size and complexity of the design, and special areas such as high-power circuity or high-density use of LEDs. Get as much information as you can online about what they make, and then…

Tour the facility. See what products the CM is currently making. And assess the culture fit. Do you like the way they work? Do they seem like a company you want to do business with long-term?

Review the equipment list. Can they meet your needs today, and can they also handle coming technologies (for example, smaller components)? You don’t want to have to change CMs on your next product update. Be aware that two manufacturers can use the same machines and get vastly different results, so look at the processes and outcomes as well.

Ask about in-house testing capabilities. These include things like environmental stress screening and EMI testing. If they don’t have these in house, you will pay more and take longer to have the tests done at a separate testing facility.

Look for a CM that has design and manufacturing under one roof. The electronics design team can serve as an extension of yours, filling in the special skills that you lack. They can be available when you need them vs. hiring a full-time engineer, which makes sense when you only bring a new product to market every few years.

Don’t take agency approvals for granted. Focus on it early in the process. A company with design and manufacturing under one roof will streamline the process with faster prototype turns, testing and calibration.

Know who will own the design. Some start-ups start with a design house or CM, only to find that they don’t own their own design files and they can’t easily move to a new partner when it becomes necessary, such as when the manufacturer has quality problems or lacks capacity to keep up with demand for the new product.

Know who will own the IP. Under patent and copy right laws, simply paying a designer to create a work for does not mean that you own the resulting work. The inventor or designer maintains ownership of the IP until they officially assign it to another party, but they have no obligation to do so. At Z-AXIS, our president has 22 patents for electronic product inventions and only one of them belongs to Z-AXIS. All the others are assigned to Z-AXIS customers.

Ask your network. Seek out people you trust to recognize good work. Some start-ups won’t work with a supplier unless someone in their network can vouch for them.

Remember that everything will take longer than you think. Be flexible, know what’s important, and communicate regularly.

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