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The True Cost of DIY Manufacturing

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MClayton200
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Re: Toyota would disagree
MClayton200   6/12/2015 12:27:24 AM
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Toyota did have a captive chip testing area which screens out "maverick parts" that can impact reliabilitity.  At least they did a few years ago. Their drive for reliability is based on real experience with chip manufacturing but not sure if entire chip fab or just assembly and test part.

All major car makers have IC experts working for them that do the many AUDITS of chip making operations, and demand failure analysis details and corrective action reports from those factories for any field failures, even single part fails in case of Honda for example.   No small startup has that kind of clout.   Many fabless companies have no idea when their foundries make process changes, but the biggest guys do force that kind of input (like Qualcomm).  Consumer products companies, sadly, only piggyback on that reliability push by the automotive and medical device industry, and then don't screen their parts even given the known issues with maverick parts.  

ghenning
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discussion
ghenning   6/11/2015 9:50:53 AM
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Thanks for the good discussion. I am always an advocate of design and manufacturing working closely, whether manufacturing is in-house our outsourced. Good documentation is critical for success in either scenario, as suggested. All too often this can get put aside for other engineering concerns. Working with a CM or your own in house manufacturing team has to be collaborative. There needs to be manufacturing input at design time to assess cost, quality, and test issues etc. and trade-offs may need to be made. Ultimately the goal is the same for both parties: a successful, profitable, high quality product. Without a partnership approach, this outcome becomes less likely.

 While Toyota is certainly known for manufacturing leadership and using manufacturing as a lever to drive design improvements, I would say that they are the exception rather than the norm. My experience is that more often *and particularly for early-phase companies*, the demands of manufacturing can be a distraction from the engineering and marketing work that is so critical. If an aspect of your production is a core competency or differentiator for your firm, then in-house production (at least of that portion) is more likely to be a good choice. However, delivering world-class production performance for standard electronic and electromechanical assembly is an expensive and complex undertaking and outsourcing should be considered seriously.

anon7632755
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Well, what do you expect from a contract manufacturer?
anon7632755   6/10/2015 7:53:27 PM
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Of course the contract manufacturer will say, "outsource to me!" 

That he doesn't understand what the initialism "OEM" stands for speaks volumes.

MWagner_MA
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Re: No strawmen, please
MWagner_MA   6/10/2015 12:40:48 PM
I agree with you, but your statement is incomplete.  Outsourcing is not the right answer for ALL parts of your business.  There will likely be SOME part of your business, not your core competancy, that needs attention.  The correct answer, usually (there are always exceptions), is to outsource that one part and keep your core competancy.  Toyota brings all the components together with excellent qualty.  They don't make the ABS systems, air bags, the seats, nor many other components.  That was what I was referring to.

TonyTib
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No strawmen, please
TonyTib   6/10/2015 12:31:22 PM
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Toyota doesn't mine their own ore, either.  So what?


Toyota treats manufacturing as a core competency, and got to their current position based on their innovations in manufacturing, not design or marketing.  They also outsource a lot less than many other auto companies, and are known for good supplier relationships.

I wouldn't say outsourcing is always wrong.  But it's not always the right choice, and a company should also consider the potential value in process innovation (which is a lot harder to copy than product innovation) and manufacturing innovation.

Navelpluis
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Re: Design for outsourcing even if you aren't
Navelpluis   6/10/2015 10:28:18 AM
I do agree with MWagner_MA, mainly because of prototype flexability and the sake of speed in the design process. Some experience with pick and place, paste dispension and other assembly issues is not bad to have: You have a bigger understanding about the underlaying process and you simply design better products. We recently invested in a small stencil and pick & place lane, including a small vapor phase oven. We are certain that this will give us faster prototype results. And indeed, you understand better about the limitations and problems at assembly houses. For example: Limit the number of reels for the cheapest and best results. Your 5k1 resistor might be a 4k7 because there are already 356 on your board, while the 5k1 is only used once, to mention something silly ;-)

MWagner_MA
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Re: Toyota would disagree
MWagner_MA   6/10/2015 7:14:46 AM
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You don't think Toyota outsources?  Ever see a Toyota chip plant?

dt_hayden
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OEM - Original Equipment Manufacturer
dt_hayden   6/9/2015 1:50:47 PM
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" I strongly believe that OEMs should focus on the marketing and sale of their products:"

OEM - Original Equipment Manufacturer.  I've worked with in house manufacturing as well as outsourced manufacturers, so I've seen both sides.

There are also benefits to having manufacturing in house such as being able to juggle production priorities, protecting trade secrets, optimizing tradeoffs between development and manufacturing, developing value-adding manufacturing processes, providing valuable failure information back to the development team, and ensuring quality levels that in my experience are unobtainable when manufacturing is outsourced. 

 

TonyTib
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Toyota would disagree
TonyTib   6/9/2015 1:21:49 PM
Toyota got to their current market position based on their process / mfg innovations (TPS).

 

KB6NU
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True, but....
KB6NU   6/9/2015 11:41:12 AM
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Of course much of what Mr. Hennings has to say about the costs of manufacturing is true, but outsourcing isn't some magic elixir that solves all of a company's problems. This is especially true if the product is a complex one that may require some special expertise to manufacture and test.

Even if you do choose to have a contract manufacturer make your product, you're still ultimately responsible for product quality, and that means making sure that they do the job right. You can't just hand off your design to a contract manufacturer and expect to have no involvement. Companies need to look at manufacturing, whether in-house or contract, as a crucial part of their business strategy and not a distraction from supposedly more important things.

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