Hardware startups and reshoring unite

Nano Electronic Services’ director, Steve Drew

In this article Nano Electronic Services’ director, Steve Drew, advises electronics startups on hardware development and identifying supply chain partners.

Hardware startups play a crucial role in driving innovation and shaping the future. These ventures bring to life tangible products that often bridge the gap between the digital and physical worlds. Examples range from cutting-edge wearables to smart home devices and advanced robotics.

Hardware development typically requires substantial capital. Investors may be hesitant due to the longer timelines and higher
upfront costs associated with hardware startups compared to software startups. Convincing investors about the viability and market potential of a physical product is a persistent challenge.

Hardware startups often need to navigate a complex web of regulations and standards, especially when their products involve electronics, connectivity or other technologies. Ensuring compliance with safety, environmental and industry- specific regulations can be a time-consuming and resource-intensive process.

Hardware development is heavily influenced by technological advancements. Keeping pace with the latest technologies, components and manufacturing processes is critical for staying competitive. However, this can also pose a challenge as innovations may quickly become obsolete.

Unlike software, where updates and improvements can be rolled out seamlessly, hardware startups face the challenge of convincing consumers to adopt a physical product. Market validation, consumer feedback and understanding user behaviour become crucial in gaining traction.

Developing a prototype and scaling up to mass production is one of the most significant hurdles for hardware startups. The costs and complexities associated with designing, testing and manufacturing physical products can be daunting. Working with companies like Nano Electronic Services means less time looking for your ideal manufacturing partner. Access to a wide network of suppliers means Nano can match the project easily to the right factory, managing the whole process for the customer.

Which leads onto manufacturing location. Obviously the UK is ideal to support development: it’s easy to visit the factory; we speak the same language; and are in the same time zone. However, as volumes increase there is a drive to improve costs, which often comes down to labour rates and pushes people to consider offshore manufacturing.

Since Covid there has been more focus on supply chain robustness and reshoring is now being looked at as customers focus on supply chain resilience. However, as consumers and users, we must recognise we might have to pay more. Cheap foreign labour has been relied on for too long, so it’s going to be painful, but we must strive to support UK manufacturing and accept the costs that go with this.

Offshoring may initially seem cost-effective due to lower labour and production costs. Reshoring can become cost competitive as automation and technology advancements reduce reliance on cheap labour. Additionally, total cost of ownership may decrease when factors like transportation, communication and supply chain risks are considered.

Shorter distances can lead to faster production and delivery times. This is important in industries where time-to- market is crucial for staying competitive. Quick turnaround times also contribute to better responsiveness to changes in customer demands and market conditions.

Proximity to manufacturing operations fosters closer collaboration between design, engineering and production teams. This can lead to increased innovation, faster prototyping and improved communication, ultimately enhancing a company’s ability to bring new products to market.

Reshoring initiatives can contribute to job creation in the home country. This is often a key consideration for policymakers looking to stimulate domestic employment and support the growth of local economies.

Concerns about the protection of intellectual property (IP) can be addressed by reshoring. Closer control over the entire production process reduces the risk of IP theft and unauthorized replication that may be more challenging to manage in distant locations.

Reshoring can align with corporate social responsibility goals and sustainability initiatives. Companies may choose to reshore to reduce their carbon footprint by minimizing transportation- related emissions and ensuring adherence to environmental standards.

In certain industries, reshoring may be seen as a strategic move to enhance national security. Ensuring that critical industries and supply chains are located within the country can reduce vulnerabilities to geopolitical tensions or disruptions.

All this leads to uncertainty, who to speak to and where to go, working with companies like Nano Electronic Services can be a major benefit to companies who aren’t sure where to start or where to go. Using its network of approved suppliers can save customers time and aggravation which is a key factor in Nano Electronic Services success.