©2007 Leardon Solutions Design. Manufacture. Deliver. TM © 2010 Leardon Solutions From Idea to...

©2007 Leardon Solutions

Design. Manufacture. Deliver.TM © 2010 Leardon Solutions

From Idea to ProductYou have an idea. Now what?

Joseph DonoghueMurray Learmonth

Leardon SolutionsSan Diego, California

www.leardon.com



Taking an idea from early concepts into the customer’s hands

An orchestration of the competing requirements of cost, schedule, budget, and product features

A process of constraining the ability to change

Product development is simply a process followed by a team

What is Product Development?



The Process of Product Development

Product Development Phases

Definition FeasibilityPrototype

Design

Production

Prototype

Production

Ramp

Stable

ProductionDiscontinuanceDefinitionDefinition FeasibilityFeasibility

Prototype

Design

Prototype

Design

Production

Prototype

Production

Prototype

Production

Ramp

Production

Ramp

Stable

Production

Stable

ProductionDiscontinuanceDiscontinuance

Product Development Checkpoints

Production ProtoCheckpoint

(PPC)

Production ProtoCheckpoint

(PPC)

Product Release Checkpoint

(PRC)

Product Release Checkpoint

(PRC)

Definition Ready Checkpoint

(DRC)

Definition Ready Checkpoint

(DRC)

Product FeasibilityCheckpoint

(PFC)

Product FeasibilityCheckpoint

(PFC)

Product DesignCheckpoint

(PDC)

Product DesignCheckpoint

(PDC)



For each Product Development Phase…. Activities to Perform

Practical Considerations

Pitfalls to Avoid

Format of this Presentation



Definition Phase: Activities to Perform

FeasibilityPrototype

DesignDefinition

Production

Prototype

Production

Ramp

Stable

ProductionDiscontinuanceFeasibilityFeasibility

Prototype

Design

Prototype

DesignDefinitionDefinition

Production

Prototype

Production

Prototype

Production

Ramp

Production

Ramp

Stable

Production

Stable

ProductionDiscontinuanceDiscontinuance

Intellectual Property Product Data Sheet (IS and IS NOT) Program Budget Preliminary Program Schedule Product Cost Program Priorities (Cost, Scope, Schedule)



Things to know about Patents Patents give you the right to exclude or prevent others

from infringing (“negative” right) Infringement litigation is very expensive Time-to-market, first-mover advantage, and brand

development are sometimes more important than IP protection.

Approximately 3% of all patents in the U.S. make money for their owners (Source – U.S. Patent and Trademark Office)

Definition Phase: Practical Considerations



Schedule Rules of Thumb1. Determine total time required for engineering: Ask an engineer how

long it would take them to design. Multiply by a factor of 2 for an schedule “pad”.

2. Determine time required for unique tooling: Rules of thumb for tooling: 8 weeks for a large unique part; 6 weeks for a small unique part.

3. Determine time required for prototyping: Prototyping time is the time it takes to procure parts, build products, and ship. Expect this to take at least 3 weeks for a simple product and 6 weeks for a complex product.

4. Determine time required for qualification: Simple testing should take 2-3 weeks but some country-specific compliance testing can take up to 3 months.

5. Determine number of prototype phases: You can determine the number of phases by asking the engineer how many revisions of design they will need to complete design.

Total Schedule Time = No. of Prototype Phases x (Design Time + Prototyping Time +

Qualification Time) + Tooling Time




Creating a Development Budget1. Calculate the engineering budget: 2 x (No. of Engineers) x (Schedule

Time in Months) x ($8,000/month)

2. Calculate the tooling costs: Talk to somebody familiar with manufacturing. Rules of thumb for unique parts: Small Fab Tool: $8,000; Large Fab Tool $15,000. No tooling costs for off-the-shelf parts and components.

3. Calculate the prototype costs: 10 x (No. of Prototype Units) x (Direct Material Cost of Product). 10 is used since prototype units are ten times more expensive than production units

4. Calculate the prototype qualification costs: Determine how many tests required to verify the design works properly. Multiply this by $5,000 if you can’t do the testing yourself.

Engineering Cost

+ Tooling Cost

+ Prototype Costs

+ Qualification Costs

Total Development Costs




Do not spend all your budget on obtaining IP Patents can cost as much as $15,000 each Many inventors/entrepreneurs spend all their money on

IP and then don’t have any money for a proof-of-concept device

IP without a proof-of-concept device isn’t very attractive to investors

Be aware of creeping features throughout your project

You must understand the customer “pain” you are resolving

Document your product IS and IS NOT and don’t deviate unless you can correlate incremental revenue to new features

Don’t just add new features to a product because it seems like customers will like it. You will never satisfy all of your customer needs.

Definition Phase: Pitfalls to Avoid



Feasibility Phase: Activities to Perform

Prototype

Design

Production

Prototype

Production

Ramp

Stable

ProductionDiscontinuanceDefinition Feasibility Prototype

Design

Prototype

Design

Production

Prototype

Production

Prototype

Production

Ramp

Production

Ramp

Stable

Production

Stable

ProductionDiscontinuanceDiscontinuanceDefinitionDefinition FeasibilityFeasibility

Design and Build a Proof-of-Concept Prototype Test and Verify Functionality of the Prototype Determine Product Cost Refine Program Schedule Refine Program Budget



Proof-of-Concept Device The proof-of-concept device sometimes bears little

resemblance to the final product. The objective of the device is to prove functionality

Feasibility Phase: Practical Considerations



Proof-of-Concept Device Example Printer Paper Pick System


Proof-of-Concept Device Production Device



Proof-of-Concept Device Example High-Speed Envelope Feeder




Ways to Estimate a Product Direct Material Costs

1. Work with a vendor who is an expert with the part type Get a quotation for the part cost over different volumes Use the vendor as a resource on how to decrease the cost Be sure to understand all costs including tooling and setup

charges





2. Use the following guidelines to estimate mechanical part costs


~ 10,000 >100,000

Small Part

$0.50 $0.35

Large Part $1.50 $1.00




3. Use the following guidelines to estimate electrical part costs

Electrical Printed Circuit Board Assembly Price per square inch

Use Digi-Key on-line catalog to estimate electrical component prices




Don’t move into the next phase until you have proven functionality of all the product features

Never accept the statement “We’ll take care of that down the road.” from an engineer.

Design change is easier early in the development process Changes late in the development process take twice as long

and cost five times more than early in the process

Feasibility Phase: Pitfalls to Avoid



Prototype Design Phase: Activities to Perform

Production

Prototype

Production

Ramp

Stable

ProductionDiscontinuanceDefinition

Prototype

DesignFeasibility

Production

Prototype

Production

Prototype

Production

Ramp

Production

Ramp

Stable

Production

Stable

ProductionDiscontinuanceDiscontinuanceDefinitionDefinition

Prototype

Design

Prototype

DesignFeasibilityFeasibility

Product Design with all Integrated Features Fabrication of a Design Prototype with Rapid

Prototyping Verification of the Product Feature Performance



Primer on Rapid Prototyping Stereolithography (SLA):

A laser is used to cure liquid material and generate a part Parts are great for verifying form and fit but not usually function Takes about 3 days from release

Prototype Design Phase: Practical Considerations



Primer on Rapid Prototyping Machining

It is possible to machine most plastics and metals Turnaround times are around 1-3 weeks Produces parts that can be used to test form, fit, and function


Machined Parts Before Glueing

Final Prototype Assembly



Primer on Rapid Prototyping Silicone Molding

Take a machined plastic part and create a silicone mold for producing 15 parts

Costs more than a tooled part but lead-time is much faster




Primer on Rapid Prototyping Quick-turn Printed Circuit Boards (PCB):

Normal PCBs take around 3-4 weeks to produce. This process take 3 days but costs around 10 times more than an

normally produced PCB.




Comments on worldwide engineering costs An on-shore experienced U.S. engineer can earn $150,000 per

year An off-shore experienced Taiwan engineer can earn $50,000

per year Off-shoring engineering is an extremely difficult task but can

be done Keep all “core” work on-shore (Core is work that strategically

differentiates you from your competitors) Move “non-core” work off-shore (Non-core is work that is

considered a commodity)

Example Core: Industrial design (look and feel) of the product Non-core: Structure, design details, and 2D drawings for the

product




Be sure to properly qualify your product Non-operating temperature storage Moisture absorption Condensation Operational vibration Packaged random vibration End user handling Temperature and humidity operating performance Transportation shock Altitude performance testing Bare and package drop Thermal shock Regulatory tests (ESD, safety, Radiated and Conducted Immunity)

Prototype Design Phase: Pitfalls to Avoid



Avoid engineering cost run-ups Never work on an “open checkbook” contract with hourly

engineering rates Some design services firms will charge up to $150/hr for an

expert

Regroup and evaluate budget, product cost, schedule, and product features

Prototype Design Phase: Pitfalls to Avoid



Production Prototype Phase: Activities to Perform

Production

Ramp

Stable

ProductionDiscontinuanceDefinition Feasibility

Prototype

Design

Production

Prototype

Production

Ramp

Production

Ramp

Stable

Production

Stable


Prototype

Design

Prototype

Design

Production

Prototype

Production

Prototype

Design Product for Production using Standard Manufacturing Processes (e.g. plastic molding)

Choose Final Vendor Base Produce and Qualify Production Prototypes



Do not assume that you must manufacture in the lowest cost country

Production Prototype Phase: Practical Consideration

Hourly Compensation Costs in Manufacturing

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

Germ

any

United K

ingdom

United S

tate

s

Japa

n

Singap

ore

Hungar

y

Taiwan

Mex

icoChina

Bureau of Labor Statistics. International Comparisons of Hourly Compensation Costs in Manufacturing, 2007. www.bls.gov




How to find a competent vendor1. Open the yellow pages: There are many competent vendors

in your own backyard. L.A. County has the largest manufacturing base in the

U.S. Orange County ranks 8th in the U.S. Riverside-San Bernardino Counties ranks 16th in the U.S. San Diego County ranks 19th in the U.S. L.A. 5 county + San Diego County is 3rd largest

manufacturing “state” in the U.S. behind California and Texas.1

2. Professors in the Engineering and Business Schools are well connected to industry professionals

3. Visit websites such as alibaba.com and globalsources.com for off-shore vendors (especially China sources)

1. Manufacturing in Southern California, L.A. County Economic Development Corporation, March 2007.




How to evaluate a vendor1. Ask for at least 5 references for customers with similar

products

2. Contact each of the references and ask about level of service and quality of product

3. The turn-around time for a quotation should be less than 2 weeks

4. Ask the vendor about the normal minimum order quantities (MOQ) of their existing customers

5. Visit the vendor’s factory

6. Evaluate the vendor’s flexibility when scheduling the factory visit

7. Ask to meet the actual people you will be working with when your product is in production

8. Ask for them to documentation that describes their quality processes

9. Ask them for a list of quality data that will be supplied with each shipment




Outsourcing and Offshoring Outsourcing: subcontracting a process to a third-party

company Offshoring: relocation of a business process from one country

to another

Things to consider when offshoring Offshored supply chains become quickly difficult to manage Don’t underestimate the difficulty in offshoring a product or

design Entrepreneurs typically don’t have the leverage or economics

of scale to approach off-shore manufacturers and get world-class pricing

A thorough understanding of the culture and how to effectively communicate with them are keys for successful offshoring

Non-disclosure agreements and patents mean little in Asia Relationships are key to the successful of the offshoring

project



Production Prototype Phase: Pitfalls to Avoid

How to Avoid Vendor Disasters Maintain an extremely close relationship with your vendor A vendor relationship is about teamwork: expect co-

accountability for the success of your product and don’t “point fingers”

Expect an “open door” policy at your vendor’s facility Some vendors will tell you that they can do anything you ask

them to do. Check references. Resolve all product issues prior to starting production Have a written Change Request process in place with the

vendor Be sure to have the product cost quotations as a function of

volume in writing



Production Ramp Phase: Activities to Perform

Stable

ProductionDiscontinuanceDefinition Feasibility

Prototype

Design

Production

PrototypeProduction

Ramp

Stable

Production

Stable


Prototype

Design

Prototype

Design

Production

Prototype

Production

PrototypeProduction

Ramp

Production

Ramp

Start Production of the Product under Revision Control

Audit Functionality and Manufacturing Process for Quality

Review Product Cost Fill Distribution Pipeline



Shipping and Logistics Be sure to include import duties and shipping costs in cost of

goods sold calculations when procuring your product from offshore vendors

Expected import duties can be found at the United States International Trade Commission website www.usitc.gov/tata/hts/index.htm

Shipping costs depend on method of shipment: Air shipment: Takes around 3 days but is expensive. Fedex and

DHL both have excellent worldwide services. Good for small volumes and prototype shipments.

Ocean shipment: Estimate around 5 weeks to get from Asia to the United States. A 40’ ocean container shipment costs is about $5,000

Production Ramp Phase: Practical Considerations

$1,500



Returns and Repairs Your supply chain must accommodate returns and repairs This is sometimes referred to as a Reverse Supply Chain or

Reverse Logistics Only repair returned products if it makes financial sense.

Sometimes it is best to just send the customer a new product. Set up a process with your vendor to recycle returned

products

Production Ramp Phase: Practical Considerations



Inventory = Cash Don’t produce too much inventory unless you understand your

demand Don’t let vendors talk you into producing a large number of

products by giving you a small discount

Production Ramp Phase: Pitfalls to Avoid



Stable Production Phase: Activities to Perform

DiscontinuanceDefinition FeasibilityPrototype

Design

Production

PrototypeProduction

Ramp

Stable


Prototype

Design

Prototype

Design

Production

Prototype

Production

PrototypeProduction

Ramp

Production

Ramp

Stable

Production

Stable

Production

Fulfill Product Demand Listen to the Customer and Feed Back into

Production



Even if things seem to be going flawlessly…

DON’T GET COMPLACENT!!!

Continue to perform quality checks, resolve all issues, and listen to the customer.

Stable Production Phase: Pitfalls to Avoid

©2007 Leardon Solutions Design. Manufacture. Deliver. TM © 2010 Leardon Solutions From Idea to...

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