Consultancy or manufacturer?

Let us suppose you need a new product developed.  You have 3 choices:

  1. Develop the product entirely in-house.
  2. Contract a consultancy to develop the product for you.
  3. Contract a manufacturer to develop the product for you.

In the past, companies would develop products themselves, entirely in-house.  In recent years, that model has become less common as companies have reduced their internal R&D teams and looked for collaboration to bring new products to market.

In some markets, engineering and design consultancies have delivered development projects as a service.  More recently, manufacturing companies have hired development engineers and set up development labs.   This article discusses the pros and cons of each method.  If you would like to know more, or have any feedback, do not hesitate to get in touch.

Development strategy Pros Cons
In-house
  • Knowledge stays in-house.
  • Limited IP leakage (other than employees leaving, indiscretions etc.).
  • Lower cost if, and only if:
    • Team and facilities are already in place, and
    • Recruitment, training, site and maintenance costs are not in your budget, and
    • Your team is fully utilised on productive projects at all times.
  • Limited to the skillset of the existing team.
  • Psychological inertia due to historical products and constraints.
  • Large expense of keeping the team when they are not fully utilised.
Consultancy
  • Highly skilled people available. This can make all the difference between a device passing tests and getting to market on time, or languishing in endless cycles of fire-fighting modifications. Removing even one redesign-revalidate cycle can easily save far more money than using a low-fee-rate manufacturer.
  • Flexible team structures.
  • Best option for an impartial view of which technologies would work best.
  • Impartial as to which manufacturer to use: consultancies are the best option if you intend to have more than one manufacturing source for risk mitigation.
  • Some consultancies, particularly those that specialise in your industry, will have relevant up-to-date experience from other projects.
  • Can have high fee rates (particularly those with > 100 employees).
  • Might not have experience in manufacturing. You can ask who will be working on the project, and what their experience is.
  • Consultancies with internal projects might save the best ideas for themselves. Springboard does not have internal projects.
Manufacturer
  • Fee rate can appear lower than consultancies.
  • Sometimes, deep knowledge of a given manufacturing process.
  • Good at making incremental changes to existing products, but not at innovating new products.
  • It will be very difficult to transfer manufacture to another party because the design will be optimised
    for their processes, and there will be no documentation or data necessary for transfer to another company.
  • Manufacturing costs will be high because they will need to recover their costs and make more profit than otherwise to make up for Net Present Value, and their risk.
  • Most manufacturers are trying to build up their own IP portfolio. This might mean they save the best ideas for themselves, or put some of their IP into your product.
  • Limited to the skillset of the existing team.
  • Psychological inertia due to knowledge of their existing processes. For example, if the company is very experienced with aluminium tooling, can you guess what your tools will be made from, even if steel tooling would have been a better option?

How to find the best contract R&D partners

“Most of us understand that innovation is enormously important.  It’s the only insurance against irrelevance”

Gary Hamel

“Innovation requires the ability to collaborate and share ideas”

Bill Gates

Innovation is critical to all businesses. We live in a knowledge-driven economy and, especially in medical devices and drug delivery, giving patients the benefits of new and better products is clearly beneficial for all concerned: patients, payers, healthcare authorities, pharmaceutical companies, and medical device manufacturers.

Collaboration is more important than ever to manage technical risks and build on the best talent available throughout the development process.  But there are very few sources of good information on how to find the best companies to collaborate with.  This article gives an insight based on many years of experience in the field.

We hope that it is helpful and perhaps even interesting!

Working together

Step 1: Consider the pros and cons of working with external experts

Collaborating with external experts works best when you and the relevant stakeholders within your organisation (particularly the development team) see the value.

In some cases, there’s reluctance to collaborate, but it can lead to projects not working very well due to the limits of the skills, capability and equipment of your own development team.

In other cases, where you just want more people in your office or labs to work under your own supervision, a lone contractor may be more appropriate than an external R&D partner. Using contractors is a different mind set from working with external R&D companies because typically the latter will take on leadership to overcome hurdles in the way, and display a greater degree of autonomy on reaching a solution.

It is misleading to compare quotes to salaries. This is a common temptation, but when you consider the salary of yourself or your staff, you are not including pension, bonus, National Insurance, premises, training, recruitment costs, computers, software licences, under-utilisation, lab equipment, lab space, insurance, accounting and legal support and so on. If you add up those things for your internal team, you will find the market rate for R&D work. The quotes from potential partners should match this: they should be the market rate after all. When coupled with rapid and reliable progress on solving a valuable problem, the cost-effectiveness should be clear.

If you and your team do see the value in an external collaboration, move to Step 2…

Step 2: Think about what you’re asking for

What is it that you need?  This will inform what you’re looking for in an external partner.

When it comes to specifying the size and shape of a project, there are 3 competing factors:

  • Quality.
  • Time.
  • Cost.

Typically, you can optimise a project for any 2 of the above.

Step 3: Find out from peers who is good

Reputation is everything. A really good innovation partner will have a good reputation which others in your field will know about.  If you don’t know who to ask, maybe former colleagues at another company can help [Springboard has gained many clients this way].  You can always get in touch and ask us!

You may already know that a company’s name being well-known correlates strongly with its marketing budget, and not necessarily with the quality of its work.

It is about the people, not the brands.  We have found that the most important ingredient in successful development projects is the quality of the people.  Two qualities stand out as being vital:

  • Their technical and project management ability; and (no less)
  • Their ability to communicate and work with you (and you trust them).

Really good engineers and scientists will be able to use the right technique and equipment even if they have not used exactly the same things before.  On the other hand, it could be folly to expect mediocre engineers and scientists to develop market-leading high performance, usable and safe products, or fix non-trivial technical problems.  Perhaps ask yourself this provocative question: “How many opportunities do I have to get this project right?”

There is sometimes a downside to really capable people: they can be arrogant and therefore not so good to work with.  The best way to assess this is Step 4…

Step 4: Talk with the potential partners

It is worth spending the time to speak with potential partners because a website or word-of-mouth cannot give the full picture about the quality and attitude of the people actually working at the potential partner company.  By definition, case studies on websites will be very old because they have to be outside of confidentiality terms.  Therefore, the people that developed those devices might not be working at that company anyway.

Talking with the company can help you assess:

  1. Would I want to work with these people?  Are they listening to me?
  2. Are they capable people who I trust to deliver the project successfully?
  3. Do they understand the constraints of the project?

Here is a list of common pitfalls to watch for:

  1. Be aware of the A-team/B-team.  You might be talking to some experienced, capable people during the negotiation and planning, only to find that you get a completely different set of people working on the project once it starts.  You can minimise this risk by seeking assurances about who would be working on the project: the partner should be able to at least be sure of the project leader.
  2. Ensure the correct incentives.  If the potential partner has internal projects, it will be wanting to secure its own IP.  If it has experience in your field, it is probably going to want to secure its own IP in your field.  Development contracts can say that IP will belong to you, but perhaps you do not want an incentive for people working on your project to keep the best ideas for their company.  The best way around this is to use a partner which does not have internal projects at all.
  3. Location is almost irrelevant.  If you work for a leading multinational organisation, you probably want to find the best team in the world to deliver your projects – why not?  The probability of having an excellent team available down the road is slim.  If you do, that’s great!  If you do not, it does not tend to matter these days whether they are 500 miles away or 1,500.  Weekly web conferences cover most project updates, and regular face-to-face meetings are easy in this age of cheap and convenient air travel.
  4. Size is important, but maybe not how you think.  A partner who is too small (one or two people) might not have the breadth and depth of the skills that you need, and you would be at the mercy of any one person being sick or taking holiday when you need them most.  A large partner will prioritise their largest projects. If your project is many millions of dollars in each phase, great! if not, you might find you are not at the front of the queue for resources if you use large partners.
  5. Will the rest of your company treat your partner well?  You may have found the right partner who you trust and you’re really keen go get a great project going. It helps the relationship, and therefore chances of success, if your procurement department agrees to reasonable payment terms, and your accounts department fulfils its obligation to pay on time.

Step 5: Decide who you want to work with

This may be the hardest step.  There are any number of approaches to come to a decision…

Factors such as trust in the people, and your belief in their ability to deliver are hugely important.  Therefore, a spreadsheet of metrics (beloved by procurement departments) is probably not the best way to decide between potential partners.

Perhaps the best way is to think about which partner you would prefer to have a long-term business relationship with, and see if their match to the current project need is good enough.

 

We hope that you have found this post helpful!

If this post has teased any thoughts or questions, please either write a comment below, or get in touch.  We would love to hear from you.

 

Springboard moves into new premises

Fast-growing product and technology innovator Springboard has expanded into larger offices at St John’s Innovation Park in Cambridge, UK, having outgrown its space in the Innovation Centre itself.

A steady flow of new projects for international clients has required the scale-up and Springboard has built additional capacity into its new HQ.  Now, the labs and offices are under one roof in a 4,000 sq ft unit, which also has self-contained meeting rooms and reception area.

Springboard team

Springboard’s capabilities have been in strong demand, and its project portfolio has been international from day one, driven by recommendations (word of mouth) between major medical device and pharmaceutical companies, especially where they have run into problems with a medical device.  Its focus has already enabled a number of big-name clients to launch devices that they could not have otherwise, and in the process saved time and money in product development. Cul-de-sacs have been moulded into highways of success for a large number of satisfied clients.

The consultancy’s reputation for troubleshooting and technical excellence spread across Europe and the United States. We are proud to say that more than 80 per cent of Springboard’s work is repeat business.

Some problems with delivery devices – injectables for example – cannot be solved “simply by throwing man hours at it”; in-depth technical insight and world-class engineers are required. And that is exactly what Springboard has provided since opening its doors.

Springboard has put much time and effort into recruiting, mentoring and training the best team possible.  The diversity and depth of skills now far outstrips that of the founders and includes skills in physics, optics, thermodynamics, fluidics, materials science, biotech, mechanics, systems engineering, electronics and manufacture engineering. This means the company now takes on cross-disciplinary projects and creates teams that have the breadth of knowledge to ensure success.  Recruiting talented people is a time consuming challenge, but of even more importance is creating an environment in which they can flourish. The company’s focus on professional development means people have opportunities to take responsibility and grow their careers at the company.

This broad church of capability is exactly what the founders wanted to achieve – a turnkey capability in the segment, rather than being pigeon-holed simply for one area of expertise.

We believe another strength of Springboard is its open innovation culture. Springboard can provide a fully self-sufficient team to a project but welcomes input from clients either through brainstorming sessions or weekly updates.  This approach enables the client to retain control of the concept while giving Springboard full rein to suggest enhancements.  “They don’t have to hand-hold us but they get to contribute; we believe in a highly collaborative approach”.

Springboard is also renowned for its highly ethical approach to projects. Its mantra is to work on innovation that are technically challenging but also ethical and worthwhile.  Staff like to be able to say that they are working on a project that will certainly improve peoples’ lives and might, for example, lead to a cure for cancer.  This approach is helping the business recruit the highest calibre of engineers and scientists; the ongoing recruitment process is also enhanced by Springboard’s outreach activities with schools, colleges and Cambridge University.

If you would like to know more, please get in touch.

New technology development company launched today!

A brand new technology development company has launched today to provide innovative companies across the world with specialist skills in new technology and product development.

Springboard delivers technology development of the highest quality with crystal clear project leadership and inspired creativity.

This will help you accelerate your time to market, access new markets, increase profitability and build your intellectual property portfolio.

Springboard’s clients operate in high value markets where outstanding technology, inspired creativity, risk management, quality control and project leadership need to be of the very highest level. Read more…