Step 1. Determine Your Product Distribution Plan
Your plan of record for where and how you’ll sell your product has never been more important. This may seem basic at first glance, but the retail landscape is evolving rapidly; 100-year old retailers are shuttering brick and mortar stores, while direct-to-consumer brands are carving out profitable market niches versus simply defaulting to sell on Amazon.
One thing is clear though, traditional product distribution approaches from just a few years ago might not make sense, which raises the question: Is it critical to pause and meticulously map out the value stream for your product? If so, how will customers purchase your product? How quickly should customers receive your product, and how will you meet customer service needs?
You can certainly evolve your approach over time, but you need to have a sound, upfront plan to optimize your initial product launch so you can wow customers on day one.
Step 2. Decide What to Do Yourself
Determining what to do yourself and what you want to purchase can seem daunting. A thorough evaluation of what you’re good at – e.g., have relevant experience in – is a good place to start. A great decision-making approach is to review your needs and determine 1) if it’s cheaper, or 2) if it’s faster for someone else like a supplier to do. If your answer to both questions is “yes”, then it’s usually best to partner with a supplier to outsource this part of the product value chain. For example, you might choose to manage your own website, but outsource the shipment of customer orders to a third-party supply-chain firm.
“Partnering with a focused supplier can reduce blind alleys as they typically have a better idea of what works and what doesn’t from the sheer volume of like work that they see across customers,” adds Pallister.
Furthermore, new product teams populated with a mix of company and third-party team members tend to perform at or above the level of internal teams, mainly due to the fresh perspectives and added capabilities a diverse team offers.
Step 3. Build the Budget
Before you talk to potential partners about the stuff you don’t want to do, it’s best to outline at least a rough list of needs, costs, and timelines to take your product from prototype to production. Today, all the below core needs and example support processes can be managed by one or more partners, which affords entrepreneurs greater flexibility:
Engineering – Launch support, print updates, technical specification updates, and design changes
Manufacturing – Tooling, work instructions, processes, and assembly
Quality – Critical-to-customer characteristics, requirements, procedures, and final inspection
Procurement – Negotiation, supply agreements, component ordering, and supplier management
Packaging – Product packaging, product bulk dunnage, labeling, and product instructions
Order Fulfillment – Scheduling, inventory, returns, and logistics
Step 4. Engage Partners to Verify Budget
Once you have a list of estimated needs, costs, and timing, meet with potential partners to align your needs with suppliers and verify your budget. Sometimes this step gets skipped with the idea that it’ll save time to simply get started, but you can drastically reduce your launch timeline risk by simply verifying each major need cost and timing with potential partners ahead of kicking off support. Experienced partners can easily provide rough order magnitude costs and timing ahead of working with you.
Step 5. Outline RASIC Chart
Once you’ve verified your budget, add detail to your needs document by creating a RASIC chart. This chart is a proven communication tool to outline each major need, which internal company resource or partner is responsible, needs to approve, needs to support, should be informed, and should be consulted for on your product launch. Streamlining communication with this approach during a product launch allows your team to move at a faster pace.
Step 6. Define the Scope of Work
The reason we position this step later, after you’ve examined if an internal resource or external supplier will be responsible for a need, is that it can save you a lot of time trying to painstakingly create a detailed scope of work for a process you might simply want to outsource.
A small business hack frequently used to save time is to approach a potential supplier, knowing what your high-level need is, and to ask them to draft a proposal to support your need, say component procurement for your product. This will not only save you time, but also the supplier will typically have deeper expertise and be in a better position to create a more robust scope of work. A true win-win.
Step 7. Map Your Production Launch Plan
Launching manufacturing for an all-new product requires many things to go right. A common exercise to increase your success rate is to create a breakdown of all the items that need to be accomplished, by whom, and when. A Gantt chart is a tried and true tool to accomplish this.
Don’t skimp on creating a detailed plan, in the bigger picture it’s a relatively low-cost investment that will have an outsized impact on your likelihood of success. Make sure to review your plan with experienced advisors or partners. Vital areas often overlooked are tooling validation, production product testing, and test shipments.
Step 8. Review & Finalize Contracts
Suppliers have standard contracts. Start with theirs instead of creating one from scratch. You’ll be able to avoid large legal fees trying to draft the perfect contract. Typically, the contract includes the scope of work and can be a great way to accelerate conversations. There are many standard sections of agreements, regardless of the needs above, payment terms, duration, etc., another reason to start with your supplier’s contract.
Apart from the standard contract language, similarities deviate rapidly. Considerations often overlooked are tooling repairs, volume guarantees, quality requirements, service parts, and returns.
“Don’t be afraid to call in a subject matter expert to support you. The extra cost this involves is minimal compared to the extra revenue from sales if a product ships a month or two earlier without problems,” says Pallister.
Step 9. Choose Production Partner(s)
The above six core production needs are traditionally siloed capabilities that only large firms can afford to manage entirely in house. Often choosing multiple partners can not only lower costs, but also add bandwidth enabling small businesses to better compete with larger competitors.
Leveraging established processes and a broader spectrum of specific skillsets make outsourcing a lower cost option, allowing you to do more with fewer resources.
As an example, if you don’t have an in-house supply-chain team, you could partner with a supply-chain managed services firm to oversee your contract manufacturer. This will also create a check and balance system and avoid a “fox guarding the henhouse” dynamic where all of your product cost and manufacturing process data goes into a “black box” only your contract manufacturer understands.
To be blunt, most traditional contract manufacturers aren’t well versed in newer, direct-to-consumer order fulfillment, or in supporting orders on Amazon or Shopify. The stakes are changing rapidly and consumer brands, especially newer ones, need a seamless end-to-end solution to reduce customer buying friction. Thus, at a minimum, you’ll likely need to choose a supply-chain firm with the technology to connect your accounting system, online selling platform, manufacturing partner, component suppliers, and order fulfillment.
Step 10. Launch Production & Sustain Success
Launching production is the immediate goal on the horizon. Post-launch, how you maintain operations will define your success. Before you launch, make sure you outline, in detail, how ongoing production will be managed. Specifically, the KPIs throughput, product quality, on-time delivery metrics, and Net Promoter Scores are all things to consider ahead of the contract step. Furthermore, you should allow for refinement to your production plan after launch to incorporate lessons learned so your venture can improve early and often.
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