Once a clean energy startup is ready to scale a product into full production mode, entrepreneurs are often faced with a number of questions and challenges. Decisions including whether to manufacture the product in house or contract a third party, to creating a realistic plan for shipping and storage, are among the many hurdles to getting products to market at scale.
Outlined below are a few of the common issues that arise when manufacturing a new energy technology, and a few resources that seek to address some of the many related frustrations.
• The R&D/Manufacturing Gap
The brilliant people who develop a new energy technology are amazing at what they do. They are innovators; they can incept, plan, and develop ways to save and generate energy. They use advanced science, data analytics, and their skills in technology development to create breakthroughs that can move the whole of society forward. However, while they may be brilliant at the initial research and prototyping of a technology, they often don’t possess the skills or experience needed to take a complex prototype and redesign it into a product that can be manufactured as cheaply and efficiently as possible. This redesign process can often be expensive and cost valuable time.
With early guidance and training, these issues can be tackled by including manufacturing design principles into the research and development process.
• The In-House or CMO Question
For many start-ups, the prospect of manufacturing in house is both appealing and anxiety inducing. On the one hand – the supply chain is shortened significantly, the product is given priority, and deadlines can be adjusted so that market demand is met. On the other – the expense of building and designing a facility is high, hiring and training staff is time intensive and costly, there are regulations that must be met, and there is a significant learning curve necessary to get that first production run completed. In other words, manufacturing in house is risky.
The second option is to work with a contract manufacturing organization (CMO). There are pros and cons to this approach as well. The CMO must meet their margins which can drive up the cost of goods sold, they are producing multiple products so getting priority can be difficult, supply chains are lengthened, and adjusting deadlines is a complicated and costly process. The pros are that the vast expense of building or purchasing a manufacturing facility and associated risk is eliminated. The first production run can also be completed more quickly, and the manufacturer already has regulatory approval and a trained staff.
These decisions, among many others, must be weighed before deciding on the correct course of action. CMO or in-house is an important decision. Start-ups need to have a full picture of the cost of the manufacturing process before that decision is finalized and understanding these processes is critical to success.
• Working With/Finding a CMO
Finding the best-fitting CMO is yet another daunting challenge. There are several things to consider when deciding on a manufacturing partner. Corporate reputation, product quality, and bottom line are all factors that must be taken into consideration. Finally, make sure to communicate everything to the CMO. Communication is key when ensuring that the product ordered is the product received. Send them good documentation on everything from the technical make-up of the product to the color. When discussing the manufacturing journey, Paul Schwartz, the founder and CEO of ThermoLift (a Wells Fargo Innovation Incubator portfolio company) attests: “There is never enough communication in an early stage company [and] finding a manufacturer with a compatible corporate culture is key.” ThermoLift met their manufacturing partner, Linamar, at the ARPA-E conference. This is another important lesson for start-ups in the benefits of becoming a strong part of the cleantech community: attending conferences such as NREL’s Industry Growth Forum and the GLOBE Forum is a an excellent way to make connections with leading stakeholders throughout the industry.
Resources Available to Entrepreneurs
Luckily, there are fresh resources available to help clean energy companies bring their innovations from prototype to product. Below are some of the best places to go to get information, funding, and education on tackling the many hurdles associated with manufacturing cleantech.
The U.S. Department of Energy’s AIM Onshore prize competition seeks to aid U.S. cleantech companies with funding and training for early stage manufacturing efforts. Aim Onshore provides four $150,000 grants and access to Build4Scale, a new training program that teaches manufacturing fundamentals to energy hardware innovators. The consolidated training provides scientists and engineers with the knowledge they need to assess manufacturing readiness, make and evaluate smart product design decisions, and engage with manufacturing partners.
The U.S. Department of Energy (DOE) is launching a challenge-based prize competition in partnership with the National Renewable Energy Laboratory (NREL) to reenergize innovation in U.S. manufacturing. The American-Made Challenges incentivize the nation’s entrepreneurs to reassert American leadership in the energy marketplace. These new challenges seek to lower the barriers U.S.-based innovators face in reaching manufacturing scale by accelerating the cycles of learning from years to weeks, while helping to create partnerships that connect entrepreneurs to the private sector and the network of DOE’s National Laboratories across the nation.
The Boston area is home to one of the largest concentrations of bright minds and great ideas in the country. If you are a hardware startup looking for manufacturers, talk to the Greentown Labs Manufacturing Initiative. The Initiative’s team will help match you with the right people to make your product. You’ll also gain access to information and educational tools necessary to find the right processes for your product, industry best practices and personalized attention for you and your product.
Manufacturers are more than just contractors. For many early stage companies, they are key partners in the final stage of bringing a product to market. There are numerous challenges in this stage but with the right partner, the right team, and the right vision a new technology can be successfully brought to market and change the world.