One of the key focus areas for companies today is finding ways to increase their rate of product innovation. They need to keep up to date with changes in technology and the market, and continue to differentiate themselves from competitors. According to a recent Thomas survey, 28% of manufacturing and industrial companies in the U.S. are planning on launching a new product or service in the next year, and the Harvard Business School reports that more than 30,000 new consumer products are launched each year.
Companies today need to develop new and innovative products better, faster, and cheaper than ever before, while at the same time minimizing risk. But developing new products is costly, time-consuming, risky, and often requires specialized skills and equipment beyond the firm’s existing capabilities.
One approach that has become increasingly popular in developing new products is to partner with contract manufacturing companies. Many leading companies, such as Boeing, Samsung, and Apple, have turned to product development partnerships as a way of accelerating their development process while simultaneously reducing costs and lowering risks.
Today most leading contract manufacturers can support all phases of the product lifecycle from concept, through commercialization, to product launch. But what exactly are the advantages of this approach?
Here is a list of some of the most significant benefits, and how these translate into business results:
Reduced Development Costs
Combining your investment in expertise and capital with your partner’s investment, allows you to leverage a smaller investment in product development.
This means you can invest more into marketing and sales to help grow your overall revenue and improve your profitability, resulting in a better and faster return on investment. Development projects using a partnership model typically show at least twice the ROI of those that do not.
Faster Time-to-Market
A partner can reduce time-to-market by augmenting your existing resources, bringing in additional expertise and service in critical areas such as engineering, operations, and supply chain, allowing you to shrink your development time.
Accelerating time to market enables you to get your product to market faster than your competitors, giving you a first-mover advantage to gain market share. In addition, time-to-market is the single biggest contributor to profit after product cost. A recent McKinsey study showed that being 6 months late to market results in a 33% drop in 5-year profitability, however being 50% over budget on development only results in a 4% drop in 5-year profitability.
Better, More Innovative Products
Using a partner can give you a better and broader understanding of the innovation and options available to you to use in developing your product. Products developed in this model typically were more innovative, with better product performance, and higher product quality. This allows you to differentiate yourself from the competition and improve customer satisfaction and retention.
Partnering with a contract manufacturer can be an extremely advantageous approach for companies looking to develop new products. By leveraging the expertise and capital of your partner, you can reduce development costs, shorten time-to-market, and create better and more innovative products than if you were to go it alone.
If you're looking for help getting started with product development partnerships, or want to learn more about the benefits of partnering with a contract manufacturer, we would be happy to discuss this with you. Epic Innovations is a product development and supply chain management company that helps clients get their products to market better, faster, and cheaper. Contact us today at info@epicinno.com and let’s talk about how we can help you achieve your business goals!