How to Select a Factory - MakerCon 2014 - May 13, 2014

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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/

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How to Select a Factory - MakerCon 2014 - May 13, 2014

  1. 1. DRAGON INNOVATION, INC. ! HOW TO SELECT A FACTORY ! MAY 13, 2014 MAKERCON 2014 | REDWOOD CITY ! ! ! ! ! SCOTT N. MILLER | CEO | @DRAGONINNOVATE | WWW.DRAGONINNOVATION.COM
  2. 2. No Need To Take Notes bit.ly/Dragon-MakerCon-Factory-Selection
  3. 3. STEP 1: DECIDE WHERE TO BUILD
  4. 4. Examples to Talk Through
  5. 5. China?
  6. 6. 6 Yes! Manufacture in China If Your Product... Is COGS (Cost of Goods Sold) sensitive
  7. 7. 7 Yes! Manufacture in China If Your Product... Requires higher production volumes (>10k units)
  8. 8. 8 Yes! Manufacture in China If Your Product... Requires significant manual labor to manufacture and assemble
  9. 9. 9 Yes! Manufacture in China If Your Product... Uses existing manufacturing technology (i.e. injection molding, etc) http://berkeleysg.com
  10. 10. 10 Yes! Manufacture in China If Your Product... Is tolerant of variations in supply chain and logistics http://berkeleysg.com http://kilterpulse.com
  11. 11. 11 Yes! Manufacture in China If Your Product... Can benefit from low cost Design for Manufacturing (DFM) Non-recurring Engineering (NRE) http://berkeleysg.com http://kilterpulse.com http://plasticstoday.com
  12. 12. 12 Yes! Manufacture in China If Your Product... Has “physically” protectable IP http://berkeleysg.com http://kilterpulse.com
  13. 13. China Drawbacks for Manufacturing
  14. 14. 14 China Drawback Significant Distance from USA http://supplychaindigital.com http://skeptically.orghttp://studentuniverse.com
  15. 15. 15 China Drawback Significant Language Barrier http://supplychaindigital.com http://skeptically.orghttp://studentuniverse.com http://asiasociety.org
  16. 16. 16 China Wages Rising Wages http://en.wikipedia.org
  17. 17. 17 China Concern Rising Exchange Rate http://en.wikipedia.org
  18. 18. USA?
  19. 19. 19 Yes! Manufacture in the US If Your Product... Requires low volumes http://berkeleysg.com http://kilterpulse.com http://www.theguardian.com
  20. 20. 20 Yes! Manufacture in the US If Your Product... Can be manufactured and assembled through automation http://berkeleysg.com http://kilterpulse.com
  21. 21. 21 Yes! Manufacture in the US If Your Product... Is sensitive to shipping time and expense http://berkeleysg.com http://kilterpulse.com
  22. 22. 22 Yes! Manufacture in the US If Your Product... Has difficult-to-protect IP http://berkeleysg.com http://kilterpulse.com http://www.independent.co.uk
  23. 23. 23 Yes! Manufacture in the US If Your Product... Requires non-standard capital equipment http://scientificmachining.com
  24. 24. 24 Yes! Manufacture in the US If Your Product... Is part of a government contract http://en.wikipedia.org
  25. 25. STEP 2: REQUEST FOR QUOTE / CM SELECTION* ! ! ! *THE MOST IMPORTANT MANUFACTURING DECISION YOU’LL MAKE
  26. 26. 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. 27. 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. 28. 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. 29. 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
  30. 30. 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
  31. 31. dragon@dragoninnovation.com

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