Tag Archives: Scale-up

How Do You Scale Up a Product That Is Taking off! Four Points

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Situation: Demand for a product produced by a company has increased dramatically. The CEO realizes that they need to scale up production quickly to meet this unexpected demand. The company is small and the CEO wants advice as to how his company can accomplish this without killing the product. How do you scale up a product that is taking off?
Advice from the CEOs:
• This represents a major change of both mentality and culture. Essentially, the company needs to move from a “handmade” process to a commodity volume process. This may also mean moving from low volume/high margin production to high volume/lower margin production. This shift will significantly change the company.
• If there is high confidence that the company will land a contract for long-term production consider establishing high volume production at a new site. Rent or lease another facility. Alongside this hire a set of experienced people who understand the challenges of scaling up rapidly. Consider giving this facility a new name to suit the new team. This will help to establish a new culture suitable to the new opportunity.
• While negotiating a lease, ask for an option for additional space to be included in the lease. If things don’t pan out, look at this new space as the eventual location for your existing team.
• Two other options to consider: (1) Outsourcing to a 3rd party manufacturer. This is an option unless the company is an OEM outsourced producer itself. However, be careful – you could be telling your customer that they could go directly to your OEM source at a lower price. (2) Establishing an overseas production capability – one where you own the facility and manage quality control. This will be a challenge if the customer wants to specify “Made in US”, or where quality concerns are essential.

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How Do You Generate Scalable Manufacturing? Four Suggestions

Situation: A company has built a strong prototype line capable of handling projected volume for the near-term as they scale up production. Their long-term plan is a fabless model through manufacturing partners. They have solid IP counsel and protection. What are the most critical elements of scale-up? How do you generate scalable manufacturing?

Advice from the CEOs:

  • The answer will depend on the product strategy, if the near-term focus is on quick tactical wins.
  • The most critical elements of the scale-up will be:
    • The planned speed of the scale-up. A tactical approach, which will make limited demands on production near-term supports a prudent scale-up plan.
    • Having the right business development talent to generate quick wins with smaller volume opportunities to feed the scale-up.
    • When you are ready for larger volume – and your scale-up capacity can support this – hire an experienced sales professional who is known in the industry and who can bring you some relatively quick higher volume contracts.
  • Que near-term contracts according to the sales cycle.
    • Design cycle – build awareness of your capacity among significant market players and focus on quick turn-around to respond to their demand.
    • Qualification cycle will be longer, perhaps 6 months. As your brand awareness builds push for qualification orders which will be larger, but still within near-term capacity.
  • Focus business development efforts on building strong awareness across your target companies. Some companies tend to limit early knowledge of vendor capabilities between their divisions until they have confidence in the vendor’s ability to deliver. Optimize customer awareness by:
    • Cultivating business partners who can facilitate a high-level approach within your target customer companies.
    • Start creating a small forum of industry savvy individuals who can become your champions. Leverage this forum to spread your message and bring you opportunities.

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OMG – our Product is taking off! Two Considerations and Two Options

Situation: Demand for our product has increased, and we need to scale up production. We’re small, so how can we do this without killing the product?

Advice from the CEOs:

  • This represents a major change of mentality and culture. Essentially, you’re moving from a “handmade” process to a commodity volume process. You may also be moving from low volume/high margin production to high volume/low margin production – this will change you.
  • If you are sure that you will get the contract for long-term production consider establishing high volume production at a new site.
    • Rent/lease another facility. Also hire a different set of experienced people, and consider giving this facility a new name to suit the new team. This will help you to establish a new culture suitable to the new opportunity.
    • Ask for an option for additional space on the lease.
    • If things don’t pan out, look at this new space as the eventual location for your existing team.
  • Other options to consider:
    • Outsourcing to a 3rd party manufacturer. This is an option, unless you are an OEM outsourced producer yourself. Essentially you could be telling your OEM customer that they could go direct to another source at a lower price.
    • Establishing an overseas production capability – one where you own the facility and manage the QC. This will be a challenge if the customer wants to specify “Made in US”, or where quality concerns are essential.

Key Words: Production, Scale-up, Ramp-up, Outsourcing  [like]