Thomas Lee Advisory · Free Resource

Hardware Manufacturing
Readiness Checklist

20 questions every seed and Series A hardware founder should answer before scaling production. Use this checklist to identify gaps before they cost you time, money, or a production delay.

From the desk of Thomas Lee · atconconsulting.com

01Supplier & Contract Manufacturing
Have you selected and qualified your contract manufacturer (CM)?
An unqualified CM is the single most common cause of production delays. Qualification should include an audit, NPI run, and quality agreement — not just a quote.
Do you have a signed MSA and pricing agreement with your CM?
Verbal commitments don't hold at volume. Your CM contract should lock in unit pricing, NRE terms, IP ownership, and liability.
Have you identified and qualified alternative sources for your top 5 critical components?
Single-source dependencies are a production risk. If one supplier fails, you need a qualified backup ready to run.
Are your key supplier relationships at the right level (Director or VP, not just an account rep)?
When supply gets tight, executive relationships get allocation. Account reps can't do that for you.
02BOM & Cost Structure
Is your Bill of Materials (BOM) complete, approved, and version-controlled in a PLM system?
An unmanaged BOM is a quality and cost nightmare at volume. Every change needs a controlled revision process.
Have you done a full landed cost analysis — including duties, logistics, and CM markup?
Unit cost at the CM gate is not your real cost. Landed cost can be 30–50% higher once you add freight, customs, and warehousing.
Have you negotiated volume-break pricing with your top 3 commodity suppliers?
Spot pricing at prototype quantities is not what you'll get at scale. Volume commitments unlock significantly better terms.
Do you know your target cost, current cost, and the gap you need to close before Series B?
Investors will ask. More importantly, you need a cost-reduction roadmap before you're locked into margin-destroying contracts.
03Quality & Manufacturing Test
Do you have a documented test plan covering ICT, functional test, and end-of-line validation?
Without a defined test strategy, quality problems don't show up until customers find them. Test coverage needs to match your failure modes.
Is your first-pass yield (FPY) tracked and above 90%?
Low FPY means rework cost, schedule pressure, and a CM that starts losing money on your program — which changes how they treat you.
Have you established a corrective action process (8D or equivalent) with your CM?
Quality problems are inevitable. What matters is how fast and how systematically you close them. An ad-hoc process creates repeat failures.
Does your CM have documented work instructions for your product's assembly and test steps?
Verbal hand-offs produce inconsistent output. Documented work instructions are the difference between a repeatable process and operator-dependent production.
04Systems & Operations Infrastructure
Do you have an ERP system (e.g., NetSuite) managing purchase orders, inventory, and fulfillment?
Spreadsheet-managed procurement breaks at volume. Investors and auditors expect a real system — and you need it before you think you do.
Is your PLM system (e.g., Arena) connected to your ERP and CM?
Disconnected systems mean engineering changes don't propagate to procurement and production — a leading cause of build errors and excess inventory.
Do you have a 3PL partner selected and integrated for inbound and outbound logistics?
Your CM shouldn't be your warehouse. A 3PL gives you visibility, control, and scalability — and keeps finished goods out of your CM's hands.
Can you generate a purchase order, track it to delivery, and reconcile it to a receipt — without a spreadsheet?
If the answer is no, you're one supply shock away from not knowing what you have or when it's coming.
05Schedule & Risk
Do you have a material plan that covers long-lead components 16–26 weeks out?
Consumer electronics have 16–26 week lead times on key components. If you're not planning that far out, you're always reacting — and paying expedite premiums.
Have you mapped your top 3 supply chain risks and have a documented mitigation plan?
Geopolitical risk, single-source components, and CM capacity constraints are knowable in advance. Unmitigated risks become production stops.
Is your on-time delivery rate to your customers above 95%?
Delivery performance is a lagging indicator — by the time it drops, the root cause is already weeks old. Tracking it gives you a signal before customers escalate.
Do you have a clear owner for supply chain operations — or is it split across engineering, finance, and the CEO?
Diffuse ownership means nobody catches the problem until it's a crisis. Operations leadership — even fractional — closes this gap before it becomes expensive.
How to read your score
18–20
Production-ready. You have the fundamentals in place. Focus on optimization and cost reduction.
13–17
Scaling risk. You have gaps that won't matter today but will create delays and cost overruns at volume.
8–12
Vulnerable. Multiple structural gaps. A single supply shock could stop production.
0–7
High risk. Don't scale until you close these gaps — you're likely to burn cash and miss commitments.
Ready to close the gaps?

Most hardware founders score 8–14 on their first pass. A focused diagnostic sprint closes the critical gaps in 2–4 weeks.

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