This is the third article in a multi-part series about sourcing components for a 2000 unit build. These posts are meant for new hardware teams going through the process for the first time.
- Part 1: Sourcing COTS parts
- Part 2: Sourcing custom parts
- Part 3: Final Assembly
- Case Study: How Kinderlab Robotics Built the First 1000 KIBOs
With a bunch of effort and with help from either your own experience base, your product design partner, or your manufacturing and operations consultant, you have found suppliers for everything in the entire Bill of Materials (BOM). Now the question is: who does the final assembly? Here are some options to consider.
Do it yourself (yes, you, yourself)
- This is the absolute scrappiest method. There are many entrepreneurs who have assembled thousands of units in their basement with their own hands.
- This is the cheapest method, because you do not need to pay yourselves.
- What are the pitfalls?
- Opportunity cost (what is not being done while you spend 4 weeks personally building, boxing, and shipping products?)
- Scalability. What happens when you go from 2000 to 20,000? Do you have space in your basement to store all that product?
- Consistency and quality of build. A great engineer may not make the absolute best assembly technician. You may not follow your own instructions. You may also be tempted to improve things every time you build a unit – and the result is a collection of units that all behave slightly differently from each other.
- This may be the right way if you are at a pre-funding stage and watching every penny. You will need to accept that things will take longer and you will have to field quality issues down the line.
Build it with interns
- This is the second scrappiest method. You can get college students to build the product for you – or you can enlist friends and family to help you build it in their free time.
- This approach, while not free, is more cost effective than hiring assembly and test technicians from a placement agency.
- What are the pitfalls?
- Your assemblers and testers do not have years of experience doing this. Their ability to build quality product is limited by your ability to train them, and their ability to absorb what needs to be done.
- Your interns and friends may have limited availability, and you may need to train a large number of people to aggregate enough hours to build the entire lot – resulting in even more variability.
- This may be the right way if your product is relatively simple to build, you have a high level of confidence that you can teach your interns the right skillset, and you want to minimize the cost while optimizing for faster time to market.
Build your own production facility (including space, equipment, and staff)
- This is the most expensive method. You rent space. You buy equipment. You hire staff technicians to do the production.
- The good news is that the people doing the assembly are professionals. You can trust their workmanship.
- What are the pitfalls?
- This is almost always the most expensive way.
- You may not have a consistent enough pipeline to keep the staff busy full time.
- You will almost certainly miss something fundamental – such as manufacturing test, as a separate discipline from manufacturing engineering, as a separate discipline from assembly and test technicians. Quality and consistency can suffer as you scramble to learn to set up and run a repeatable manufacturing line.
- This may be the right way if your product mix changes constantly, the skill level required is high, and your margins can tolerate the overhead of owning your own production facility.
Hire a contract manufacturer (CM)
- For many startups this may be the right way – especially if they have expectations of rapid growth (for example, if you believe you will need to build 10,000 in year 1 and 25,000 in year 2).
- If this is the case, it is almost never worth the trouble of setting up your own temporary line. Instead, you should spend the energy up front identifying the right contract manufacturing partner, and co-developing a production process and associated documentation to consistently produce your product for the next year or two.
- If this is the route you want to take, Scott Miller of Dragon Innovation has a fabulous talk on how to select a factory on SlideShare that you should check out.
In my next post, I will explore a case study of a company that went with a modified “Build it with interns” approach and made it work for them.
About the Author
Elaine Chen is a startup veteran and product strategy and innovation consultant who has brought numerous hardware and software products to market. As Founder and Managing Director of ConceptSpring, she works with executives and leaders of innovative teams to help them set up and run new product innovation initiatives with the speed and agility of a startup. She is also a Senior Lecturer at the MIT Sloan School of Management and the Martin Trust Center for MIT Entrepreneurship. Follow her at @chenelaine.