Finding the Right Manufacturer

Unless you plan on manufacturing your product yourself, or plan on licensing your product, you will need to find a quality manufacturer to handle production of your product. So whether you are contract manufacturing, private-label selling, or forming partnerships, you will need to find someone who can cheaply and effectively make your product. Of all the inquiries I get from inventors, finding a manufacturer is probably the inquiry I get first.

Step 1. Be sure you know the production term for your product. For example, is it extruded plastic, thermoset plastic, machined, stamped and a host of other terms that distinguish different ways to make products. You will have trouble finding the right manufacturer without being able to describe the production process accurately. If you don’t know the process name itself try contacting these groups:

  • Your local inventors club, which you can find on the Inventor’s Digest website. These groups typically have monthly meetings and they often have protoypers or other engineers who attend who can help you understand the process needed to make your product.
  • Your local SCORE (Service Corps of Retired Executives) organization. This organization typically has several retired plant engineers or related people that can help recognize the type of production you need to make your product.
  • Your local small business development center. If your local group can’t identify the process they normally can direct you to someone who can.

Step 2. Find potential manufacturers. I found the best ways to do this are by:

  • Check the MacRae’s Bluebook which lists manufacturers by state by category.
  • Check the Thomas Register which also list manufacturer by category.
  • Look for trade associations for the industry which will typically have a membership directory. For example do an Internet search for plastic injection molding manufacturing trade associations. Most of the time you find a trade group that most of the manufacturers belong too. If that doesn’t work you can also search for trade shows for your type of manufacturing. These are typically run by the trade association, where you will find a member directory. If those tactics don’t work, you can also check at larger libraries in your area who might have the Book of Associations to find the right group for your product.

Step 3. Shortcut – Rather than contacting companies and evaluate whether or not they could make your product, I’ve found it useful to contact instead companies that make the equipment needed to make your product. For example, if your product requires injection molding equipment, contact manufacturers of injection molding equipment and ask the salesperson there to recommend people in your area that have the right type of equipment. You can also tell the person that you are looking for companies that would produce small run. The salespeople selling the equipment you need a manufacturer to own often give you the best list of manufactures to contact.

Step 4. Call companies, see if they can produce your product and get an estimate for small and medium volume production appropriate for your part. If could be an order of 500 and 2500 parts for one product, and 50 to 5,000 for another. This way you can see if the companies might be a good fit for you. Don’t be discouraged if companies don’t want to quote you. Just keep calling till you find one that wants your business.

Step 5. Try to determine if a manufacturer has an underused plant. Every manufacturer has overhead, or fixed, costs (i.e. salaries, rent, and phone bills) that they need to pass on to the products they produce. So the fewer products they produce, the higher overhead cost per product. Usually these will be the manufacturer that can offer you the shortest lead time to fill your order.

Now it may seem that you will want a manufacturer that is running their plant near capacity to have the lowest overhead cost per product, but what is good in finding a manufacturer with an underutilized plant is that they will want your business and should be willing to make concessions. For instance, if you can have extended terms for the first six months to a year you will need much less operating capital. Or you could get whatever start up costs they have amortized, which mean that for the first run of your product, the start up costs are spread out on each product produced as a small fee. All of these concessions can make a big difference for an underfinanced inventor.

Step 6. Consider the manufacturer’s financial status. While you want a manufacturer with an underused plant to offer you concessions, you don’t want a company that is about to go bankrupt. Request a financial statement from all of your potential manufacturers. Then find an experienced business person to review this document with you. If the company is in financial trouble, it is probably too risky for you to produce your product with them.

So in a manufacturer you want to find a plant with all of the right equipment that is not running near capacity, but not so slow that they are in financial trouble. This may seem difficult to ascertain, but by following the above steps you should be able to find out all of this information from them. Don’t be shy in calling companies, they usually tell you much more than you would expect.