While researching another story, I came across MFG.COM and realized right away it was the connector between buyers and suppliers that was predicted in our earlier article from 2006, build your own virtual motorcycle company. At the time, Jeff Bezos of Amazon was promoting the idea of using resources and capabilities from others on an as needed basis, taking your idea and hiring resources from other companies to provide what you need, even making parts. The more work you can hire out, the closer you get to virtual production. The process was being done at the time by a few forward thinking companies but it was a little cumbersome with a lot of “figure it out on the fly” involved. Things have changed, a lot.
Using overcapacity or idle capacity from other companies is not a new idea and it’s always an option when you’re looking to build something, the business with underutilized machinery and skilled employees needs the work, the builder needs the parts. Motus American Motorcycles, the new company started by Brian Case and Lee Conn, is a perfect example:
When companies and manufacturers are doing their best to retain the highly trained and expert designers and engineers they have on staff, they are willing to take on smaller projects they might not find room for in a booming economy. The now available expertise meshes perfectly with the needs of a new company like Motus and projects can now be completed for far less than would have been the case in better times.
Jeff Bezos wanted to simplify the process and he was doing more than just talking about the idea when he first presented it back in 2006, he’s a big investor in MFG.com and, no doubt, the operation runs on Amazon servers. If you’re thinking about building something, you have to check this out.
You can sign up on the site as a buyer or supplier. For buyers, the site is free, you sign up, explain what you need it detail and the suppliers bid on the job. Suppliers sign up for a flat fee and are able to bid on the work. Instead of trying to find someone to do the work, you have companies all over the world bidding on your job. If you want to bid only locally, you can do that, or globally, you can do that, too. You choose from a much bigger pool of available companies no matter how you decide to source your parts. Cool.
The available categories of work are huge and lots of major companies use the site to find what they need, I notice Harley Davidson is among them. Virtual production might also have helped prevent this.
So, there you are, trying to start your new company, great idea, CAD drawings ready, but who has the money and who wants to invest in a new production facility in this economy? Well, now you don’t have to. Virtual production can make the parts, reduce your costs, reduce your startup time, … the rest is up to you. Just one more reason to do it now. I keep saying, this recession can be an opportunity and here’s another way to take advantage of the slowdown. I like it!
Link: MFG.com
Ted says
I suppose that makes Ducati a semi-virtual motorcycle company. Design, assembly, marketing, sales, accessories and dealer support, but no in-house manufacturing — it’s all farmed out to subcontractors. There’s an interesting model to examine.
B.Case says
Great advice for these times. Mfg.com is one of those tools, that once you use it, you wonder how you ever made along without it. It all started with ebay back in the early 90’s, but I think the whole concept of b-2-b electronic bidding was pioneered by people like Glen Meakem of Free Markets, Inc in the mid 90’s. That model paved the way for others, and Mfg.com has to be one of the best for contract manufacturing.
Very useful tool for any size company, even if you’re a lone inventor just trying to get your idea made, or a boutique builder of high-end luxury motorcycles seeking to lower your mfg cost. Free market competition is an amazing thing in my opinion, and It’s what will pull us out of the recession.
-Brian
Tin Man 2 says
What about investers? I would be very carefull investing in a paper company, A manufacturer without brick and mortor can vanish in an instant. China and others have demonstrated a lack of respect for design and intellectaul patents or ideas. You invest in development and design only to have your work stolen by a company with no scrupales or restraints. Welcome to the brave new world.
kneeslider says
Tin Man 2:
“What about investors? I would be very careful investing in a paper company …”
Use your own money, get your own loans, get investments from friends, family or associates who know you, bootstrap.
“China and others have demonstrated a lack of respect for design and intellectual patents or ideas.”
Restrict your suppliers to local companies you know or companies within the US, or whatever country you are located in. Deal with companies you can trust.
Plus mfg.com specifically addresses that issue with controlled access to your info plus NDAs and other info on their site.
If you are always concerned about what others might do, you will never be able to expand your business if you can even start one in the first place. Think about how both of you may benefit and you’ll find yourself open to many partnership ideas.
nobody says
The flip side of all this is that you can buy good cheap used machine tools, etc… with cash (or even credit, if you didn’t abuse the system like 98% of everyone else did) quite easily. I could have either paid for someone else’s time & machinery and gotten the parts I need – or – buy the machine and spend my own time to get the parts I need and keep the machine when I’m done.
That’s why there is a lathe/mill thingy in the kitchen (why yes, my wife is a saint) making parts for my next motorcycle. Progress is being made.
kneeslider says
Nobody,
“The flip side of all this is that you can buy good cheap used machine tools, etc…”
Absolutely true and if you have the skills to use that tool you can build the parts you need, but, the goal there is usually not building a business. A skilled tool user may make a motorcycle himself with self made parts or perhaps become self employed making parts for others but it will be a very small business. If you get sufficiently good and well known, demand will outstrip your ability to make parts, and ship parts and do the books and deal with suppliers and maintain the tools and … you get the picture.
A business, especially a manufacturing business, eventually requires more people. Using a service like mfg.com allows you to have more tools and people quickly, right from the start, maybe even for a short time while you test the market for the product you’re making. If it takes off, you could commit to buying the tools yourself, if you’re so inclined and hiring more people, too, or staying very small or “virtual” while producing like someone much larger. It’s also possible for a less skilled tool user to start a business where high skill is needed. Lots of possibilities.
Many very skilled individuals are self employed but they make a mistake and create a job for themselves instead of a business, they stay in control of the entire process and do everything themselves. It’s very fulfilling but it also consumes all of their time and it doesn’t scale. You can’t build a manufacturing business like that.
Brett says
I have used MFG.com in the past. Fantastic service from the company, and very easy to find a good machinist. I design paintball gun parts, and have a background in product design and engineering, but not machining. I uploaded my design, got bids from numerous sources based on different production levels, and picked a machine shop.
I’ve got zero complaints about the service and would use it any time.
JC says
Very interesting, but will be interesting how they farm out work in the future. If you can dictate it stays local, why not eliminate the middle man? and if you can’t, going to be hard to ensure production quality control
“I suppose that makes Ducati a semi-virtual motorcycle company. Design, assembly, marketing, sales, accessories and dealer support, but no in-house manufacturing — it’s all farmed out to subcontractors. There’s an interesting model to examine.”
Some electronics are made the same way, all subcons. The quality suffers relative to a well run in-house operation
nobody says
Kneeslider,
Understandable, but:
A) In my current situation, I will run out of money far earlier than I will run out of time. Now that I think about it, that sounds like an awful lot of motorcycle startups.
B) I’m prototyping right now – once a design is proven, production parts are a whole lot less risky and less expensive to obtain. Real samples beat virtual ones every time. It is a whole lot easier to venture forth with a functional prototype which is generating results than with the most overproduced (aren’t they all) Powerpoint presentation.
C) I’m working on stuff that’s at the racing end of the spectrum – that’s never a high volume model. Success depends on the ability to prototype & test parts as fast as possible. Being at the mercy of others’ priorities isn’t tolerable.
D) Small(ish) yet REAL CNC machines (not just manual machines with stepper motors strapped on) are getting very very cheap. Considering the above, I find them impossible to dismiss. Those are my next step, I hope.
E) I’ve never taken a lathe or mill class in my life. I have worked around them, but never with them. So I taught myself – there is no shortage of knowledge available. I find it both funny and sad that learning CAD/CAM is so invaluable yet actually learning anything about machining itself is beneath some people’s dignity or something.
F) Back to the money thing: I’m composing this from a hand-me-down laptop. Had I bought it, I would not have been able to afford the machine. Priorities matter. When the bike is done, it is going to the track in a 20 year old van. We’ll have to remove the kids’ seats first.
G) The person who knows more and works harder will beat the person who works less and knows less every time. The insanely vain EuroAmerican business model of “Hide behind your desk and stay as far from production as possible” isn’t the one I’m using.
OK – so I take off and become successful. Yes, a manufacturing model like the one you presented makes a lot of sense. I’m not there yet – where I am is a step towards where you are talking about. After that, I’ll buy a new computer, hide behind my desk, and forget everything I learned and assume that parts come from boxes out the back of delivery trucks.
nobody says
Forgot to add that, yes, indeed, there is the difference between a paying hobby and a business. Knowing when to have others do what is both important to growth and, just as important, maintaining one’s health & sanity.
Tin Man 2 says
Mr Kneeslider, Im afraid I did a poor job of presenting my comments, I was coming from the other direction in my thinking. I was thinking of investing in a start up virtaul company, Not starting one myself. Im a little to old to start something at this stage of my life, I was thinking of the Pros and Cons of Myself Investing in a new enterprise. Sorry for the missunderstanding.
kneeslider says
Tin Man 2, no misunderstanding really, I was pointing out how the virtual company could do things in a way that outside investors, if they were needed, might feel more confident.