Be sure to explore different supply chain models to build your electronic product
When looking for a supplier to take your prototype into mass production, many hardware innovators may pigeon-hole themselves into looking for a supplier who manufactures similar items as to their product. They may believe that such a supplier is the best and only path forward. In reality, there are a lot of different supply chain models you can consider, each with its own advantages and disadvantages.
A recent project for an IoT smart home startup required a built-in customized RF module. The straightforward route was to provide the startup with an RF module manufacturer which could customize its own RF module to fit their requirements. However, we also proposed two other supply chain models for evaluation – one in which an IDH (independent design house) or product development firm would use an off-the-shelf RF module consigned by the startup and customize it to the startup’s requirements; another in which we would leverage an ODM (system integrator) that already had a turnkey solution very similar to what the startup was looking for. Each supply chain model had its own pros and cons:
1. RF module manufacturer
a. Pros: Very little effort for customer as supplier can easily customize their own technology and guarantee the performance. Can also negotiate the unit cost and development cost together.
b. Cons: Locked into using the RF module provided by the manufacturer.
2. IDH w/consigned RF module from customer
a. Pros: Can select the RF module of your choice and have the IDH to customize it. Leads to more flexibility in procurement choices and potentially lower costs.
b. Cons: More effort required from customer to manage own procurement of the RF module.
3. SI w/turnkey solution
a. Pros: Faster development time with little customer effort required. Can be lower cost as no new design work needed.
b. Cons: May not meet all of the customer’s requirements.
These are not the only supply chain models possible, and each project is different in its requirements and possibilities. The selection of which supply model works best for you will depend on a number of factors, e.g., how involved you want to be in the procurement/design process, how customized your solution needs to be, what volumes you expect, whether you anticipate having future versions, etc. If you would like any support in assessing your different supply chain options, please don’t hesitate to reach out to us.
Schedule delays in your hardware development reduce supplier willingness to support
We all know how important staying on schedule is in hardware development. A delay in your launch date can throw your entire planning into disorder and have serious implications for your profitability. What is often overlooked is the impact of schedule delays on supplier interest and willingness to support. During product development, suppliers will often dedicate some resources to supporting a customer, and those resources will be tied up for the duration of the project. And if there are delays in the development process (not caused by the supplier), the supplier’s resources could be inefficiently allocated at best and completely idle at worst. This can lead to suppliers becoming dissatisfied and disillusioned with the project and the customer, which could have implications on future pricing and willingness to support.
For one of our projects to develop a customized peripheral device, the early stages of the product went smoothly. The customer and the supplier had productive discussions to align the specifications and technical details. The supplier then provided the customer with a sample for them to evaluate. Due to issues on the customer side, however, the project did not move forward for many months. When the customer came back to re-engage the supplier, the supplier had lost interest in the project and did not wish to participate any longer. We then had to find another supplier to support the customer and restart the process from the beginning. We tend to think suppliers will always be around when we need them, but in fact they have their own businesses to run and may determine that certain projects/customers aren’t worth the investment.
Another project of ours was headed down a similar path. Our IDH (independent design house) was helping an IoT appliance maker with some engineering design work. The project again started off very smoothly with strong alignment on the services to be performed and the cost. Due to various delays on the customer side, however, the project kickoff kept being delayed. The supplier began to doubt the customer’s determination and wanted to release its engineering resources to work on other projects. Fortunately, we were able to help convince the supplier to stay the course and facilitated improved communication between the customer and the supplier. In the end, the supplier was able to help the customer resolve some of the issues causing the delay, and the project was able to move forward. Since then, the cooperation between the customer and the supplier has improved dramatically and the speed of product development has accelerated as well.
Obviously nobody plans to have schedule delays. Our recommendation, however, is to come as prepared as possible when you begin discussions with suppliers. If you have all of your documents ready, your specifications, budget and schedule are all clear, then not only will you be more likely to move forward without any schedule delays, suppliers will also be more interested in your project and could even provide better costs/support. And if you do run into issues and delays, it is best to maintain close communication with the supplier, letting them know what the issues are and how you are working to resolve them – who knows, they may even be able to help. And of course, if you need any additional support in getting your documents ready or in engaging with suppliers, our PMs are happy to help. Good luck!
ODMs bring many benefits in turning working prototypes into mass-producible products
Imagine you’re a hardware innovator and have been able to put together a working prototype of your product. What’s the next step in your hardware development? Find a manufacturer to produce your product! But what type of manufacturer? Do you need an ODM (original design manufacturer)? While most people have heard of ODMs, they may not be certain what value they provide in the hardware development process. ODMs are critical in ensuring products are optimized for mass production in terms of cost and quality.
In a recent project for an IoT sensor device startup working on their first ever product, an ODM played an integral in helping the startup reach mass production. The startup’s engineer had developed a working prototype and even programmed an application to work with it. They reached out to us for assistance in finding a supplier to mass produce their product. We introduced them to an ODM with technical capabilities and experience in the startup’s technology. The engineer provided his BOM and schematics, and the ODM was able to quickly provide a quote back within 1 week based off their experience on similar projects in the past. The ODM was able to examine the BOM and replace more modular/unique components with mass production components to reduce cost. When doing the detailed design, the ODM will also make certain to follow certain Gerber/design principles to reduce the defect rate and ensure the product will pass all the required verification and environmental testing. Through the interaction with the ODM, the engineer was able to acquire a great deal of hardware knowledge in terms of different design choices and the overall hardware development process.
While Arduino, Raspberry Pi and other development kits have made creating working prototypes much easier for innovators, there is still a large step in turning it into a product that is ready for mass production. ODMs are critical in designing for optimal manufacturing to ensure your product is produced at the lowest cost while maintaining superior quality. If you are interested in finding ODMs with design experience in your technology or application area, we are of course always happy to help!
Stay away from older technologies as they may not be mass-producible
Development kits such as Arduino and Raspberry Pi have opened the door for more entrepreneurs to become hardware innovators and develop their own working prototypes. Selection of the technology for the prototype cannot be taken lightly, however, and we would caution against using outdated technologies. When using an older technology, even if you can get the prototype working, getting suppliers to design and manufacture your product is not a given if the supplier is not able to support the older technology.
A recent project inquiry from a Smart farming startup wanted to create an IoT device using many sensors (temperature, humidity, PIR, etc.) to monitor their production. Their crop involved animals and slight variations in the environmental conditions could greatly impact their production. They used Arduino to develop a working prototype for their IoT system using a 2G GSM technology to transmit the data to their control center. They approached TECHDesign to turn their working prototype into a mass-production-ready product. While many of our suppliers were able to design the product the startup wanted, they had no way to test it given the absence of 2G networks. When we suggested using 4G technology instead, the startup proclaimed that their surrounding systems were built off 2G technology and thus they needed to stick with 2G. Had the startup begun their project with 4G technology, there would have been no issue.
As you set out to create your prototypes, if you eventually want to move to mass production, it is important to ensure supportability of your technology choices. We would recommend shying away from older technologies that suppliers may not be interested or able to support. Even if supportable, suppliers may quote you a higher price as they are not as interested to spend time on older technologies that will not provide any value to them on future projects. As always, if you have any questions on technology choices or are looking for suppliers to mass produce your prototypes, please don’t hesitate to reach out to us.