One of the toughest problems people in small businesses face in getting a product to market is finding a manufacturer that will run smaller batches of product as needed instead of big runs according to the manufacturer's schedule. It's hardly worth it for a domestic manufacturer with a relatively high cost per piece to change its production line at irregular intervals to accommodate a smaller customer. The cost is too high and the margins too low.
Ashe Archery is a great example of a company that overcame this problem through perseverance and a little luck. It's a hunting equipment wholesaler that sells its product to retailers at trade shows and has a retail Web site. In looking for a manufacturer to produce finished product from a rough prototype, Chuck Ashe, CEO, scoured the Internet for the right manufacturer. According to Ashe, "I had several manufacturers call me back, but they could only produce the product in large quantities like 100,000 to 200,000 to start, and the cost was phenomenal."
Then he came upon Metrotech. Because it outsourced design and manufacturing to plants offshore in China, Metrotech could produce small runs as needed for a substantially lower cost per piece than domestic manufacturers. It offered Ashe a turnkey solution for making a product that he named the Shot Spot-R. The solution was turnkey because Metrotech refined the prototype, manufactured it, packaged, and mailed it to Ashe's business within four months and agreed to production runs of 10,000 as needed.
The evolution of the product's design
Ashe designed the prototype to direct a laser at game and mark the spot where the arrow or bullet landed. This way the hunter could easily locate the game if it was killed or track it from where it was wounded. The prototype, says Ashe, "was a cheap laser pointer that pointed up to 100 yards, linked to an all angle ball joint and an alligator clip welded to the other end." The hunter simply clipped the laser to his rifle or bow and the beam followed his aim.
Ashe did not design the prototype for in-field use, as hunters can shoot up to 500 yards. Ashe wanted Metrotech to find a stronger laser to begin with, but the company also ended up making several refinements to the original design.
According to Kevin Watley, vice president of American sales at Metrotech and Ashe's liaison on the project, "the prototype really wasn't functional the way Chuck wanted it manufactured. He'd taken existing components in the industry and put something together by hand to indicate how he wanted it to work, and then he had a list of other requirements that he wanted to change from the prototype."
For instance, it took some time to find the right type of laser. According to Watley, "The laser pointer needed to be on continuously, so we had to reengineer an electrical relay switch to operate the way Chuck wanted it to. Then we had to find a metal casing for the laser."
Refining the packaging
Because the product had to fit into specific retail packaging requirements and go on point-of-purchase display stands, Metrotech had to refine the original packaging also. Ashe says, "I gave them my artwork for the packaging, and they manipulated it to hang well on pegboard and other displays." The supplier added things required like "Made in China." The supplier put a bar-code on the back of the package. This helped Ashe because it made bigger companies start looking at the product because the bar-code routed the product into the supply chain for large retailers.
Metrotech had several types of packaging it could use. Originally, the engineers created a fancy package. Ashe rejected it because it enclosed the product and he wanted everybody to see it." Metrotech promptly redesigned the packaging to transparent blister packaging to meet this requirement.
The offshore operation
The Shot Spot-R required both electrical and mechanical engineering. Watley says Metrotech did the electrical engineering work in its Hong Kong facility and the mechanical engineering in its Shenzhen, China plant. Watley sat in on weekly meetings to review the various stages of design and manufacturing. "I always knew what step of the process they were at," Ashe adds.
Watley was the single point of contact for Ashe and interacted with him by phone and the Internet. This insulated Ashe from the technical jargon and broken English of the Chinese engineers. Watley supplied Ashe with CAD drawings of the product as they evolved and Photoshop files of the final packaging over the Internet. Ashe was free to provide feedback.
A satisfied buyer
Because it was made offshore, Metrotech manufactured the Shot Spot-R for about $20 a unit. Ashe sells it for different prices depending on whether he sells it wholesale or retail through his Web site. The finished product comes packaged in cardboard boxes in blister packs ready to sell, so Ashe does no assembly.
In the beginning, Ashe admits he was so skeptical of manufacturers that he was afraid one would steal his idea and produce it on its own. In fact, he says "I didn't tell Metrotech what the product was going to be used for until way into the process." Now he's changed his tune. He estimates he's getting 150 percent ROI on the Shot Spot-R and has two other products in the works with Metrotech.
Lessons from the Outsourcing Journal:
- Because of lower costs, offshore manufacturers can often make products at a significant discount and in lower quantities, which is a big benefit for small companies that can't afford large production runs.
- Some offshore manufacturers provide turnkey solutions that refine the buyer's prototype, manufacture it, package it and mail it to the small business -- a real plus for small businesses with limited personnel.
- Much offshore manufacturing is a collaborative process between a supplier and a small business. Often the supplier recommends refinements to the prototype, which the small business lacked the experience and equipment to accomplish.