Manufacturing companies are constantly working to improve production processes. However, not all production improvement activities qualify as SR&ED.

The key distinction is whether standard methods were sufficient to achieve the desired result, or whether the company had to conduct systematic experimentation to solve a technical problem without a known solution. 

When businesses move beyond routine optimization and begin investigating uncertainty through testing, analysis, and iteration, the work may become eligible for SR&ED. 

What Qualifies as Process Development 

Manufacturing process development may qualify when a company is attempting to create or improve a process where no standard solution exists. 

For example, a metal fabricator may need to test different die temperatures, pressure profiles, and material pre-treatment methods to reduce scrap rates from 15% to 3%. If standard production methods and existing industry knowledge fail to achieve the required performance, the company may need to systematically experiment until an effective solution is discovered.

This is where the distinction becomes important. 

Following established lean manufacturing practices or applying known optimization methods is generally considered routine operational work. However, testing novel approaches because standard methods that fail may qualify as SR&ED.

Equipment Adaptation Beyond Manufacturer Specifications 

Manufacturers often push equipment beyond its intended capabilities in order to process new materials or achieve higher performance standards. 

An injection molding company, for example, may attempt to process polymer blends that fall outside the equipment manufacturer’s documented specifications. Standard operating procedures may no longer produce acceptable results. 

To overcome the issue, the company may need to experiment with: 

• Custom temperature profiles  

• Modified screw designs  

• Altered cooling sequences  

• Non-standard process configurations  

The important factor is that the required solution does not exist within the equipment documentation. The company must systematically test modifications and analyze results until acceptable performance is achieved. 

Process Parameter Optimization 

Parameter optimization may also qualify when companies are attempting to achieve results that cannot be reached using known methods. 

A coating manufacturer scaling from pilot production to full-scale manufacturing may begin experiencing defects that were never present during smaller production runs. Existing operating parameters may consistently produce unacceptable outcomes. 

The company may then systematically investigate different: 

• temperature and humidity combinations  

• application speeds  

• cure time profiles  

• material flow rates  

Through structured experimentation, the business eventually identifies a stable production window capable of meeting quality requirements. 

This type of work qualifies because the operating conditions required for success were not already known or documented. 

The Bottom Line 

Manufacturing process development work may qualify for SR&ED when companies are solving technical problems without known solutions through systematic experimentation and analysis. 

Whether the work takes place on a production floor, in a machine shop, or during pilot-scale development, the key factor is the presence of technological uncertainty and the structured investigation required to overcome it. 

Get in Touch Today

CCG | SR&ED & Government Funding Specialists 
info@ccgcompany.ca 
www.ccgcompany.ca