Manufacturing Rules 149
This is the basic test for whether the firm is disciplined and will be able to survive. The organization that fails to satisfy any of these fundamental requirements is doomed.
Does the company have initial ideas and an outline for a manufacturing strategy, including the degree of integration (i.e., which components or assemblies it will buy and which it will build), plant location, critical processes, specialized components, and quality control?
This rule tests whether the organization has given any real thought to manufacturing its product. In the case of software, manufacturing is straightforward and is usually done externally; and in the case of systems that require no new processes, the plan may be quite simple. If the start-up is building a computer component, such as a disk or semiconductor, in contrast, then manufacturing is its principal reason for existing, and thus, the firm must have a detailed outline for an extensive plan. For other systems requiring high volume, such as a terminal or PC, an extensive plan is needed to demonstrate that the organization can meet cost and quality requirements. This plan may involve a partnership for offshore or automated manufacturing.
If a strategic manufacturing partner is required, have candidates and contacts been identified?
This rule tests whether the company is approaching its manufacturing needs by looking for a partner to share in financing the manufacturing operation or by building the required expertise from the outset.
Will contract and/or offshore manufacturing capability be required in order for the start-up to produce effectively in terms of quality and cost?
In 1990, finding an offshore partner is a straightforward process because all governments (except that of the United States) understand that manufacturing is vital to their economy. Manufacturing high-definition computing television and pocket! wallet computers calls for collaboration with offshore manufacturers because of the capital and skilled labor needed to satisfy volume, cost, and quality demands. For complex components requiring skilled assembly (semiconductors and disks),manufacturing has moved to the Pacific Rim, where a higher level of skills is available from a better-trained work force. A study by International Data Corporation (IDC) shows that between 1982 and 1989, the manufacturing of nearly all hard disks, floppy disks, and tape drives moved out of the United States.
By the end of the seed stage, does the start-up have a plan in place (complete with costs) that identifies critical processes, suppliers, and an approach to running the manufacturing operation?