You have a brilliant idea for some new electronic gizmo: a better mousetrap...
You’re sure there is a market for it, so you prototype it, making many versions until you get it just right. Then you show it, confidentially, to friends and investors to raise the capital to make your startup dream come true. They love it, pony up the capital and you are on your way - you can taste success!
Ahh, not so fast!
The next part that consists of actually manufacturing your gizmo is where most people fail or, more specifically, run out of money. Just like you perfecting your prototype took multiple tries to get it right, defining your manufacturing BOM (Bill of Materials) and all that entails, which is, that it needs input from many sources: marketing, sales forecasting, purchasing, finance, support, warranty (quality control), engineering, and logistics - and that doesn’t happen without multiple iterations of your BOM to get it just right, too. New Product Introduction (NPI) has a lifecycle too, so you can retire manufacturing BOMs that don’t pass muster. Yes, even before you make the first electronic gizmo!
You may be a great idea person and even have experience on the manufacturing side, but no one has all these answers the first time through production.
Maybe, your initial plan to make, sell, and distribute millions of gizmos doesn’t quite meet your cash flow expectations. Maybe you could negotiate better payment terms to your suppliers or get a better price buying in bulk, or even go with slightly less quality parts (which affect your support and warranty). After all, you have a budget but you really don’t know how to synch that up with making your product if you don’t go through some BOM iterations.
Where are you going to make your product, how many, at what costs, and how are you going to get the product to market in time to cover your costs with revenue?
Simplistically, you’d write a spreadsheet version of your indented BOM, and in a sophisticated mode, you’d enter all this info into modules in an ERP system, but neither answers the trial and error BOM iterations you need. Especially at the cost you need or the time and resources it takes to craft such macros and functions in Excel. There are tools that help you model those manufacturing BOM questions and just like your initial prototyping, you need to try multiple BOM variations to find the right mix that meets your budget with the least amount of friction and time. Because remember the manufacturing triangle: Cost, quality and schedule.
Now these startup tools are not necessarily set up for lifecycle management, so here is what I would do.
Enter multiple versions of your BOM (with unique top level part numbers) to mimic multiple versions to see which combination of inherent answers meets you budget and situation best. If you do this, not only will you get off on the right foot, but one of those iterations may also act as a phase two ramp-up of your product.
A prototyping trial-and-error approach to setting and finalizing your BOM will help make your dreams come true!
About the author: Peter d’Anjou is an American Production and Inventory Control (APICs) certified production and inventory control (CPIM) qualified professional with experience in New Product Introduction, Purchasing Management, manufacturing system integration and outsourced vendor management who has helped coordinate & transition companies’ manufacturing growth strategies.