19 Apr Product Production
Post the design process the next stage is usually production. This is where we take the product into commercial reality. This is the ultimate objective of the design process in most cases.
During the design process manufacturability is one of the key influencing factors in the design. There is no point in designing a product that cannot be manufactured or costs so much it is not commercially viable. The design process must consider the environment the target product location and application. The need for any special materials standards or compliance requirements. The clearest example of this is the mining industry where very detailed requirements will impact the design process. Only certain materials are allowed to be used.
At this point we now need to select a manufacturer and a location to manufacture. There are several factors that influence the where and with whom. Some of these factors are detailed below.
If a product has a complex assembly or production requirement or the product has very tight tolerances there may only be a few suppliers that can achieve the required assembly. Discussion with the production house is important to understand their limitations and capabilities.
Intellectual Property Protection and Security
If your product has a unique design and perhaps patents or other important aspects. Protecting your IP is critical. Some manufacturers/countries have poor reputations for stealing or allowing to be stolen IP content. During production we see “overruns” occurring. This is where a production run is done for a client and the manufacturer then does more and then sends the extra to the grey/black market. Some of this can be mitigated during the design process to protect your IP.
Traditionally China has been the worlds global manufacturing location, this is starting to change as China become increasingly more difficult to deal with. Vietnam is starting to emerge as next low labor cost location. The main reasons these countries are used is the basic labor rates and government compliances costs are considerably lower. With careful design that minimise the labor during assembly the labor cost impact can be reduced. It will surprise many to realise that local in country manufacturers have been working to trim the company structures and in some case can be within 10% of using China. In cases where the materials are required to meet a local certification traceability can often be a problem where dealing with overseas suppliers where English is not their first language.
This is probably the biggest impact on costs. The more you make the lower the piece part will be. This is influenced not only ton the cost of the base materials but also the setup costs are amortised over a larger volume. Often the setup costs are the same for making 100 or 100,000.
Product Time to Supply
This is a very important aspect of production, when the product demand is there being able to make them in a timely and efficient manor will allow the best results to the market. This can be influenced by many factors shipping time material availability production scheduling. All of which can be affected by the volume in production.
Shipment and Customs
When product is manufactured it then needs to be shipped to the location for sale. If product is mad overseas then the cost of freight can be significant. Air freight during the pandemic soared in cost. Sea freight is lower cost but takes time. Suitable for applications where the consumption is predictable and historically know. If made overseas there are customs and entry requirements that need to be attended to. These are additional costs and delays. When manufactured locally these costs do not exist. When product is shipped it creates a carbon foot print, reducing the shipping helps reduce the green house gases.
Taking into account the above influencing factors, when I recommend the best production solution. The customer will drive the decision based on gaining more information. If the product is very high volume with known historical volumes and small margins. The solution regrettably ends up being an overseas country with low-cost labor. If there is a reasonable margin, we usually recommend a local production company. If IP protection is a critical factor, then we only recommend a local production company. If there is inconsistent volume needs then a local production solution can be more flexible and responsive to changing needs. If the product is destined for a government authority, then a locally made product will gain more favour. For more complex products made up from many assemblies some cases it is more efficient to have some assemblies or parts made over seas and some locally.
Generally, we strive to try to “keep it local” where we can. It is better for jobs and better for the environment.