Contract manufacturers are one key to innovation

Almost daily we hear depressing news reports regarding the economy, the loss of manufacturing, a crumbling infrastructure and seemingly impending decline of the U.S. While there are fundamental problems, of course, often ignored is the current reality that at no other time in our history has it been easier to innovate.

That’s right, today is the Golden Age of innovation. And what makes that possible?

Outsourced resources are available to entrepreneurs to provide high skill for low cost. At the heart of those resources are contract manufacturers that are U.S.-based, highly competent and as entrepreneurial as their clients.

I recently visited two different companies that exemplify what is available for the innovator. The first is a contract electronic pc assembler located outside of Philadelphia. Their’s is a small facility, with two product lines and about 10,000 square feet of space. They are highly adaptable, easily moving from assembling medical device housings to rigorous testing of military electronics. The project manager works intimately with clients, often suggesting design solutions and doing anything it takes to meet tight deadlines.

The benefit for the innovative entrepreneur is that by engaging with a firm like this, you instantly add expertise without adding fixed cost. Contract manufacturers can debug designs, develop pre-production prototypes and provide fulfillment – essentially filling in the latter half of the development process. And if the entrepreneur has cash flow problems, the project can be put on hold with no questions asked. Try doing that with a full-time staff that drains tens of thousands of dollars per month from cash reserves.
 
The second company I visited is a Massachusetts-based firm focused on the design and development side of the innovation process. The company is a full-service design and prototyping firm, with graphic designers, industrial designers, engineers and machinists. The staff can go from sketch to 25-unit pre-production runs extremely quickly.

Their work includes consumer products, medical devices, toys, baby equipment, and sporting goods. The speed of development and quality of the prototypes fabricated is truly world-class. And it’s all done within an unassuming, small office building in a neighborhood south of Boston. For the entrepreneur, adding design and engineering talent can mean the difference between an also-ran product and the next iPhone.
 
This Golden Age of innovation powered through an outsourcing model of development is a recent trend, starting approximately 10 years ago with the convergence of three revolutions: wide adoption of the Internet combined with services like www.MFG.com; the commercialization of easy-to-use and transfer digital design tools and files (i.e. low-cost computer-aided-design or CAD like Solidworks); and globalization along with the need for U.S. firms to lower costs through outsourcing.
 
Today, a single person can have an entire network of outsourced service providers from manufacturing to design to fulfillment all managed virtually, often for much less cost and risk than staffing internal resources, full time. Additionally, designs can be prototyped and limited production can be done for testing before committing large investments in volume tooling and inventory – lowering risk and needed investment further.

This approach is not limited to physical products. Just visit Cambridge, Mass., and you’ll see dozens of 1- and 2-person biotechnology firms that use contractors for synthesis, diffusion and manufacturing of new biologic compounds to dedicated low-volume contract manufacturers.

While we can’t ignore the many challenges in reviving U.S. manufacturing, we also can’t ignore the opportunity at our domestic doorstep. If you have an idea, develop it. Finding expert resources from design to manufacturing is a click away.

--Tucker Marion is an assistant professor in Northeastern University's College of Business, School of Technological Entrepreneurship.