Top 5 Manufacturing Reasons Hardware Companies Fail
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Having worked with thousands of inventors, hardware startups, and large corporations over the course of 30 years, you can say at Design 1st that we’ve seen it all. We love to see our customers succeed but we have also witnessed many disappointments due to manufacturing missteps.
The reasons differ from company to company, but certain themes always come up. Below is a list of common reasons we see new hardware products fail.
By understanding each of these major reasons that hardware companies fail and do not make it to market, you can avoid the common pitfalls and drive your product towards success.
Top 5 Reasons for Hardware Company Failure:
1) Creating a design that cannot be manufactured
It seems pretty basic, but you would be surprised at the number of designs that we review which simply are not manufacturable. We always try to emphasize the importance of inserting manufacturing strategy and thinking into the overall plan as early on as possible, whether from a capital standpoint or design standpoint. If you are doing your own design, make sure you’ve educated yourself on Design for Manufacturing (DFM) ahead of time.
If you’re working with internal designers or a product design firm, make sure that they have DFM experience appropriate for the manufacturing processes your product will need. For example, firms that primarily design low-volume expensive medical equipment may not be best at optimizing the design of a low-cost consumer product for mass production in Asia. Do your homework prior to committing money and time to a firm that ultimately may provide beautiful designs but do not have the first clue about manufacturability.
Designs that cannot be manufactured are a common reason many crowdfunding projects fail to launch. Photorealistic renderings that bring a concept to reality and working prototypes may help you run a successful Kickstarter campaign, but if it costs 3x to manufacture your product or a complete redesign of the product is required, you probably will fail.
Our friends at DTU Science Park in Denmark put together a research study on why hardware products continue to fail after successful crowdfunding campaigns. Their top reason? Design issues, often due to lack of manufacturing foresight and DFM best practices.
2) Making the wrong type of prototype
Coming up with an idea is one thing but having a functional looks-like, works-like prototype is everything. Simply put, if you can’t get to this stage, you really shouldn’t be building products. Prototypes are required to build, test – and most important identify risks! Removing risks from your design before investing in manufacturing can mean the difference between success and failure.
At Design 1st, we never build only one prototype. We build multiple prototypes at each stage of our product development process to identify risks.
- Concept Design Stage: Prototypes can be simple foam mock-ups to test form-factor and usability.
- Detailed Engineering Stage: We build bench models to test materials and develop cost estimates.
- Prototype & test Stage: We build fully functional prototypes and do our best to break them and find out why.
- Manufacturing Support Stage: We build a “Pre-Production Prototype” that replicates the manufacturing process. This is a high-fidelity prototype that looks, works, and feels like the final product to fine-tune any manufacturing and assemble issues.
3) Failing to control the Product Cost and Gross Margin
Let’s be honest: the ultimate failure of any business is going to come down to money…or as it were, lack there of. Take into heavy consideration the following three subjects:
- Controlling Your product manufacturing Cost
- Budgeting for your product development costs
- Understanding your gross margin and revenue forecasts
We have multiple customers who came to Design 1st with a finished design that cost too much to manufacture. They required help to modify the existing design to lower costs. We did these through rethinking material selection, feature sets, and manufacturing processes. Doing your homework early, and understanding the full scope of product design and manufacturing costs will prevent costing issues.
4) Not understanding your obligations regarding regulatory certifications
Even the largest companies in the world will roll a new product out conservatively, expanding into new countries little by little. Having an understanding of the differences in regulatory certifications (or at a minimum, the knowledge that the rules are different in every country) will save you time, money, and a lot of headaches.
Understanding what certifications your product requires early on helps product design and manufacturing move faster. Trying to backtrack after you complete your design is expensive and often delays product launch.
5) Selecting the wrong partner to assist you in offshore manufacturing
As with any partner you select as a critical part of your business, transparency should be number one. If you don’t know who your factory is and are simply going off of the reassurances of a middle man, then you truly don’t have a partnership. At Design 1st, we help you select the best factory, component suppliers, and logistics support for your product. You deal directly with them and lean on Design 1st’s manufacturing team for support when required.
When possible, we suggest clients travel to the manufacturer with Design 1st manufacturing team to inspect your product line. These visits are always rewarding for our clients as they get to meet face-to-face with the team manufacturing and assembling the final product.
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