how to select a factory - makercon 2014 - may 13, 2014
DESCRIPTION
In this presentation, Dragon Innovation will provide an overview on how to select a factory. This presentation was given at MakerCon in May 2014. Topics will include: - Dragon Innovation Background - Where to Build - Contract Manufacturer Selection Process (RFQ) Share the presentation here: http://bit.ly/Dragon-MakerCon-Factory-Selection About Dragon Innovation Dragon Innovation works with entrepreneurs to launch hardware products and scale companies. Founded by a team of hardware experts, Dragon provides a clear path from prototype through production with unmatched manufacturing expertise and trusted connections. Dragon's client roster includes Coin, MakerBot, LIFX, Scout, Romotive, Sifteo, Orbotix, FormLabs and over 100 more companies paving the road for how new technology gets made. Connect with Dragon Innovation Website: http://www.dragoninnovation.com Blog: http://blog.dragoninnovation.com Twitter: http://twitter.com/dragoninnovate Slideshare: http://www.slideshare.net/dragoninnovation/TRANSCRIPT
DRAGON INNOVATION, INC. !
HOW TO SELECT A FACTORY !
MAY 13, 2014 MAKERCON 2014 | REDWOOD CITY
!!!!!
SCOTT N. MILLER | CEO | @DRAGONINNOVATE | WWW.DRAGONINNOVATION.COM
No Need To Take Notes
<<Slideshare Link>>
STEP 1: DECIDE WHERE TO BUILD
Examples to Talk Through
China?
6
Yes! Manufacture in China If Your Product... Is COGS (Cost of Goods Sold) sensitive
7
Yes! Manufacture in China If Your Product... Requires higher production volumes (>10k units)
8
Yes! Manufacture in China If Your Product... Requires significant manual labor to manufacture and assemble
9
Yes! Manufacture in China If Your Product... Uses existing manufacturing technology (i.e. injection molding, etc)
http://berkeleysg.com
10
Yes! Manufacture in China If Your Product... Is tolerant of variations in supply chain and logistics
http://berkeleysg.comhttp://kilterpulse.com
11
Yes! Manufacture in China If Your Product... Can benefit from low cost Design for Manufacturing (DFM) Non-recurring Engineering (NRE)
http://berkeleysg.comhttp://kilterpulse.com
http://plasticstoday.com
12
Yes! Manufacture in China If Your Product... Has “physically” protectable IP
http://berkeleysg.comhttp://kilterpulse.com
China Drawbacks for Manufacturing
14
China Drawback Significant Distance from USA
http://supplychaindigital.com
http://skeptically.orghttp://studentuniverse.com
15
China Drawback Significant Language Barrier
http://supplychaindigital.com
http://skeptically.orghttp://studentuniverse.com
http://asiasociety.org
17
China Concern Rising Exchange Rate
http://en.wikipedia.org
USA?
19
Yes! Manufacture in the US If Your Product... Requires low volumes
http://berkeleysg.comhttp://kilterpulse.com
http://www.theguardian.com
20
Yes! Manufacture in the US If Your Product... Can be manufactured and assembled through automation
http://berkeleysg.comhttp://kilterpulse.com
21
Yes! Manufacture in the US If Your Product... Is sensitive to shipping time and expense
http://berkeleysg.comhttp://kilterpulse.com
22
Yes! Manufacture in the US If Your Product... Has difficult-to-protect IP
http://berkeleysg.comhttp://kilterpulse.com
http://www.independent.co.uk
23
Yes! Manufacture in the US If Your Product... Requires non-standard capital equipment
http://scientificmachining.com
24
Yes! Manufacture in the US If Your Product... Is part of a government contract
http://en.wikipedia.org
STEP 2: REQUEST FOR QUOTE / CM SELECTION*
!
!
!*THE MOST IMPORTANT MANUFACTURING DECISION YOU’LL MAKE
26
Overview of the CM Selection Process
http://en.wikipedia.org
1. Talk with trusted network connections who have manufacturing experience. 2. Create a differentiated list of 5 - 10 CMs. 3. Down select to 3 - 5 factories based on your product category (why?) 4. Create a Request for Quote (RFQ) Package. 5. Visit! 6. Analyze Results. 7. Negotiate Big Items. 8. Talk with the CM’s customers. 9. Select the winner, and leave the others on good terms.
27
RFQ Package
http://en.wikipedia.org
•Company Overview -Team overview -Funding -Product -What’s done -What needs to be done -Factory Criteria
•BOM -Canonical format (A2A) in Excel -Transparent and Formula Driven -Separate Std, Special and Consigned Margins/Markups -Include all costs to Ex-Factory -Fill in the blanks
•Schedule -Gantt chart (Cloud) -Fill in the blanks
28
Factory Visit Checklist
http://en.wikipedia.org
Do you like the team? Are they experienced and friendly? Do they have the right manufacturing capabilities? Does your intended volume match their volume capabilities? Are they financially stable? Do they have enough working capital to get going? Do they have favorable payment terms? Are they transparent in their costing? Do they take IP seriously? Did they show you something they shouldn’t have? Are they ethical in their treatment of their workers and otherwise? Do you have access to upper management? Are they excited about working on your product?
29
CM Comparison (A2A Decision Matrix)
http://en.wikipedia.org
•Total Material Costs •Labor •Margins/Markup (Std, Special, Consigned) •Pareto of Top 5 Most Expensive Components •Fixed Costs (tooling, fixtures, NRE) •Schedule •Fit Criteria
Recommended Reading
"Factory Girls", Leslie Chang: W.S.J. Reporter Who Lived In China Interviewing Migrant Factory Workers In The Pearl River Delta. Great Insight Into The Workforce.
"Poorly Made In China", Paul Midler: Light, Humorous,
"Mr. China", Tim Clissold: Older Humorous Memoir Of One Of The First Westerners
