norcat entrepreneurship 101 - "contract manufacturing" featuring cmd prototyping
Post on 15-Jul-2015
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What is it?
• Refers to the hiring of an outside firm to deliver all or a portion of a project
• Designed to take advantage of firms who have a higher skill set in specific areas
• Should not compromise core competencies
What is it?
Local Example: Fortin Discovery Lab
• Beyond skill set of some businesses to do 3D design
• Easy to streamline production
• Important to guard trade secrets at all levels
• Don't hire someone to do what you do best
What is it?
Global Example: Apple
• Adept at the software development, but the hardware can be built better out of house
• Offshored to China, specifically to Foxconnfor iPad as well as iPhone
• Foxconn manufactures other devices as well including Kindle, Blackberry, Xbox one, PS4
• This ultimately affects competition
When are you ready?
Design Factor
• Are the parts designed properly to be manufactured?
• Is the product engineered, is the design stamped, does it have all the necessary certifications for its intended purpose?
When are you ready?
Cost Factor
• Upfront costs vs per item costs
• Profit margins: supply and demand
• Certification costs: electronics, retail, underground, etc.
• Retail and storage space
When are you ready?
Sales
• Clients or customers
• Suppliers
• Retail partners
• Service and support
Domestic vs Foreign
Cost
• Lower overall cost associated with foreign manufacturing
• More support opportunities for utilizing domestic options
Domestic vs Foreign
Quality Assurance
• Very little control or guarantees provided when dealing with overseas manufacturer
• Higher standard of care and faster revision implementation with local companies
• More involvement in the process leads to higher confidence in the final product
Domestic vs Foreign
Relationships and Communication
• Face-to-face meetings and site visits to establish better working relationships
• Less likely to have a language barrier or varied interpretation of the design
• More work involved in finding and establishing domestic manufacturing contacts
Costs
Economies of Scale
• Making more costs less
• More beneficial to both sides, with higher quantities
• Important to consider the effects on the company of tying up capital in large amounts of product prior to high sales volume
Costs
Tooling
• Could cost a lot to get proper set up (IE; molds, dyes, etc)
• Cost per unit will then help to offset this
• Aiming to align with experts at this particular skill set
Costs
Lack of Hands-on Control
• Cannot change certain aspects
• Hard to streamline
• Contractors must prioritize, you may not always be at the top of the list
• Cost more for rushed parts
Costs
Unforeseen Issues
• What works in the garage doesn't always work in the field
• Focus group testing may be ideal
• Understanding the needs of your client must be a priority
Design Considerations
Prototyping vs Manufacturing
• Some designs are ideal when prototyping, however are difficult to mass-produce
• Techniques:
– Additive vs Subtractive
– 3D printing vs injection molding
– CNC vs casting
– Arduino vs custom PCB
Design Considerations
Materials
• Product needs to have the right look and feel in order to be successful
• Material can have a high impact on cost, need to optimize for quality and cost
• Minimum strength and other engineering considerations need to be followed
• Allowable tolerances in dimension
Design Considerations
Timing
• First batch will take much longer to produce
• Implementing changes at this point will take significant amounts of time
• Controlling volume flow: managing manufacturing, assembly, shipping and storage times
Intellectual Property
Overview
• IP is intellectual property: it can be protected under copyright, trademarks or specifically in manufacturing, patents
• Compared to Trade Secrets which is a device or procedure kept secret within a company I.E; 11 herbs and spices
• Important to consider the risks of allowing another company to see and use your IP
Intellectual Property
Country vs Global
• Important to recognize if patent is enforceable in Canada only, or in multiple countries
• Canada is part of the Patent Co-operation Treaty – not perfect, but more protection
• Re-engineering and reverse engineering can still occur
Intellectual Property
Protection
• Non-Disclosure Agreements (NDA)
• Non-Compete Agreement (NCA)
• It is the responsibility of the parent company, NOT the manufacturer, to secure this
Risks
Quality
• No longer under your management
• Less room for error
• Higher volume leads to more potential for difficulties in quality control
Risks
Reliability
• Will shipments and supply be consistent?
• Will quality of parts be consistent and stay within given tolerances?
• Is the relationship between you and your contact dependable?
Risks
Scalability
• Will the manufacturer be able to increase volume of production with your growth?
• Will scaling up the volume affect the product cost and quality?
• Can your manufacturer support additional products or product lines?
Risks
Interpretation
• There is potential for the design to be interpreted incorrectly
• Are all details clear and communicated properly?
• Are you confident that they understand the product?
To Conclude
Finally,
• Difficult to start, can ease as it develops
• A necessary difficulty for any product based company
• Be careful to not rush any decisions, this will be an important relationship for your company
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