A friend of mine designed a split-vamp tennis shoe with two sets of laces, a lower and an upper set. Cheerleaders in particular loved the shoes. With the jumps, tumbling, and stunts they do, a securely fitting shoe is vital, and having two sets of laces allowed them to customize their fit.

When it came to manufacturing, my friend didn’t know what he was doing. He was a former Catholic priest, and this was his first foray into the world of innovation. With a clear market need, though, he was able to raise the money needed to begin mass production. He hired a company in China to manufacture the shoes and sent them a check for $2 million.

A few months later, my friend received his order of shoes, but there was a problem. The company had indeed produced $2 million worth of shoes, but only left shoes. After investing $2 million dollars, my friend did not have a single pair of shoes he could actually sell.

The whole situation was a mess. My friend required a bailout, and even so, he never got the money he was owed.

This is unfortunately the reality for many innovators. You may successfully develop a solution to a real market need, but when it comes time to manufacture that solution, everything can quickly fall apart. Here are three tips to protect yourself.

#1: Hire a Third-Party Representative

Most manufacturing nowadays is done overseas, requiring you to navigate a different culture and language. You need somebody on your side: a third-party representative who can serve as your proxy and provide a bridge between you and the manufacturer. 

Middlemen sometimes get a bad rap, but in this case, they are worth their weight in gold. They can prevent miscommunications and ensure the manufacturing process goes as smoothly and efficiently as possible. Whenever I need manufacturing done in China, I have a trusted consultant I work with. He was raised in Hong Kong, so he knows how to get around and speaks Mandarin. He serves as a translator of not only the language but also the local customs and manufacturing processes. He is able to get stuff done in a way that I simply would not be able to because he knows the culture and he’s actually there to organize and oversee everything.

Hiring a third-party representative will cost you a bit more money, but it’s the safest way to handle manufacturing. If my friend, the former Catholic priest, had a third-party representative to make sure his order was properly done, he would have saved himself far more money and time in the long run.

#2: Never Pay Upfront

One of the best ways to protect yourself in the manufacturing process is to never pay the full amount upfront. Only pay when you receive the order. 

Many manufacturers will cheat or cut corners to save money, especially in countries like China, where there’s a cutthroat, race-to-the-bottom competition on pricing among manufacturers. In other countries, if something goes wrong, you often do not have the same legal recourse you would in the United States. In China, for example, it is nearly impossible to successfully sue manufacturers. 

To hold manufacturers accountable, you need some other form of leverage: a.k.a., money. If you’ve already paid the manufacturer, they have little incentive to correct issues for you. By withholding payment until completion of manufacturing, you place contingencies on their behavior. If, for example, they produce only left shoes, you can insist that they correct the mistake before you pay them. 

While you may need to pay a deposit upfront, you should never pay the full amount. It’s simply too risky.

#3: Conduct Quality Assurance

If a manufacturer tries to cheat you or makes a mistake, you first have to catch it before you can hold them accountable. That means you must do your own quality assurance. You need to confirm for yourself that what you’ve ordered is up to the standards and quality you specified.

On one project at PCDworks, we required parts made from a particular type of steel to ensure adequate strength. The manufacturer claimed they’d used the right steel, but when we tested the parts, we discovered the material was wrong. We had to go back to the manufacturer and say, “We’re not paying you for anything unless the parts are manufactured as specified.” (This is why tip #2 is so important. If we had already paid, we would not have had enough leverage to force the manufacturer to correct their mistake.)

Be sure your testing is thorough. We were once working with a shape memory alloy. Our first shipment passed our tests with flying colors, so we ordered a second shipment. A couple of weeks later, we were banging our heads against the wall because the gadget we were building had stopped working. Finally, we went back to test the second shipment and discovered that only about 50 percent of the shape memory alloys were to the right specifications. Don’t let a few successful tests lull you into a false sense of security. Often, consistency is the big issue.  

The manufacturing process requires oversight. You have to keep their feet to the fire. 

From Idea to Reality

You cannot overlook the importance of manufacturing in the innovation process. No matter how good your idea is, if you cannot manufacture it, it will fail. With these three tips, you can reduce the risk involved in manufacturing and increase your odds of success.

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